Mainstream banks such as Lloyds Banking Group PLC (LSE:LLOY), Barclays PLC (LSE:BARC) and NatWest Group PLC (LSE:NWG) have lost around £100 billion in deposits as more savers move their money to online banks and building societies offering better rates, according to figures from KPMG.
The traditional banks’ share of savings has fallen from 84% in 2019 to 80% in 2024.
The sector also experienced a drop of £3.7 billion in pre-tax profits last year, the first major fall since the pandemic, with average returns expected to decline further in the coming years.
KPMG warns that rising costs and increased competition are putting pressure on traditional lenders and that banks may need to adopt new technologies, such as artificial intelligence, to maintain profitability.