A Comprehensive Guide to Banking in the United Kingdom

The United Kingdom has a well-developed banking system, with a long history dating back to the 17th century.

The UK is home to some of the world's largest and oldest banks, including Barclays, HSBC, and Royal Bank of Scotland.

To open a bank account in the UK, you'll typically need to provide proof of identity and address, which can usually be done with a passport and utility bill.

There are several types of bank accounts available in the UK, including current accounts, savings accounts, and business accounts.

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The history of banking in the UK is a long and fascinating one. The 17th century saw the rise of goldsmiths who became known as 'keepers of running cash', accepting gold in exchange for receipts and written instructions to pay back, a precursor to modern banknotes and cheques.

The first provincial bank was opened by Thomas Smith in Nottingham around 1650, and in 1694, the Bank of England was founded. The Bank of Scotland was established soon after, with a focus on supporting Scottish business and a monopoly on public banking in Scotland for 21 years.

During the 18th century, banks expanded their services, introducing clearing facilities, security investments, and overdraft protections. The Industrial Revolution and growing international trade led to the establishment of new merchant banks, particularly in London, which facilitated trade growth and profited from England's emerging dominance in seaborne shipping.

By 1784, there were over 100 provincial banks, and the industrialist-turned-banker could assist his own industry by providing a local means of payment and accepting deposits. The Bank of England suspended cash payments in 1790, prompting Parliament to authorise the Bank and country bankers to issue low-denomination notes.

In the 19th century, joint stock banks became more prominent, with the Bristol Old Bank converting from a private to a joint stock bank in 1826. The National Provincial Bank was the first to be considered a truly national bank, with 20 branches across England and Wales.

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The 18th century saw a significant expansion of banking services in the UK. Clearing facilities, security investments, and overdraft protections were introduced, making banking more accessible to the general public.

The Industrial Revolution and growing international trade led to an increase in the number of banks, especially in London. Merchant banks emerged to facilitate trade growth, profiting from England's emerging dominance in seaborne shipping.

Two immigrant families, Rothschild and Baring, established merchant banking firms in London in the late 18th century, and came to dominate world banking in the next century. They played a crucial role in shaping the banking landscape.

Many merchant banks were established outside London, especially in growing industrial and port cities such as Manchester, Birmingham, Newcastle, and Liverpool. By 1784, there were more than 100 provincial banks.

The industrialist turned banker, such as Fox, Fowler and Company, could assist his own industry by providing a local means of payment and accepting deposits. This allowed them to support local businesses.

In 1790, the Bank of England suspended cash payments due to England's threat of war, and a handful of Frenchmen landed in Pembrokeshire, causing a panic. Shortly after, Parliament authorised the Bank of England and country bankers to issue notes of low denomination.

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The 19th century was a time of significant change in the UK banking system. The first joint stock bank, Bristol Old Bank, was formed in 1826 after converting from a private bank.

The Bristol Old Bank was soon followed by other institutions, including the Manchester & Liverpool District Banking Company and the National Provincial Bank. The National Provincial Bank was notable for being the first truly national bank, with 20 branches across England and Wales.

In 1844, the government introduced the Bank Charter Act 1844 to regulate the issuing of bank notes. This led to improved record keeping and accounting, but also caused two major banking collapses in 1866 and 1878.

The banking collapses led to the creation of huge bureaucracies with a board of directors, general manager, secretary, and many accounting clerks. This was a significant shift from the smaller, more private banks that had existed previously.

In 1896, 20 smaller private banks formed a new joint-stock bank, which would eventually become Barclays PLC. The founding families of Barclays had a long history of family, business, and religious connections, earning the bank its nickname as the "Quaker Bank".

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The 20th century was a time of great change for banking in the UK. Between the wars, banks declined significantly due to the general depression of the time.

Banks fought back by targeting less wealthy customers and introducing small savings schemes. This helped them recover from the decline.

It took until 1950 for the banking industry to fully recover, with a significant increase in provincial branch offices and the emergence of the high street bank. The high street bank became a staple of British towns and cities.

The 1960s saw consolidation in the banking industry, with the Big Five becoming the Big Four, and several regional banks being taken over. This led to a more streamlined banking sector.

The government launched the National Girobank, a new banking service, during this time. The Banking Act 1976 increased the supervisory role of the Bank of England, which helped to regulate the industry.

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Computing, credit cards, and new services drove the expansion of banks in the latter half of the century. This led to increased competitiveness and improved services from banks.

Banks refurbished their premises and introduced new technologies, such as ATMs, to improve customer experience. Today, most banks in the UK offer similar services, with the main difference being their interest rates.

Tesco Bank was acquired by Barclays on 1 November 2024, marking a significant shift in the UK banking landscape.

The acquisition of Harrods Bank by Tandem Money Limited on 11 January 2018 was another notable event in the history of banking in the UK.

This change in ownership has had a lasting impact on the banking industry, with both Barclays and Tandem Money Limited continuing to shape the market in their own unique ways.

Here's a brief summary of the two acquisitions:

The banking system in the UK is quite complex, with 344 banks and 52 building societies operating in the country. This number includes both private UK banks and international banks.

A few large banks dominate the sector, competing for market position. The country's central bank, the Bank of England, has been state-owned since 1946.

Banks in the UK are regulated by the Financial Conduct Authority (FCA), which helps ensure that they operate fairly and safely.

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Online banking has become increasingly popular in the UK, with many online-only banks offering accounts that can be operated remotely.

One of the most notable online-only banks is Revolut, which offers a range of features similar to traditional banking.

A selection of online banking providers can be found in our directory, but it's worth noting that some online services, like Suits me, are not technically banks but provide accounts with many of the features of traditional banking.

Mobile payments in the UK haven't taken off as much as in some other countries, with only around 13% of the population making mobile payments in 2018.

There are various types of mobile payment providers offering services to UK customers, including Apple Pay, Google Pay, and Samsung Pay.

To contact a selection of banks directly and prevent financial scams, you can dial 159 on your phone under a scheme launched in September 2021.

The UK banking sector is dominated by a few large banks competing for market position. There are currently 344 banks in the UK and 52 building societies.

The Bank of England is the country's central bank, having been state-owned since 1946. Banks in the UK are regulated by the Financial Conduct Authority (FCA).

Physical banking still remains popular, with around 20,000 locations across the UK.

The UK's currency is the British Pound Sterling (GBP), with a value of 0.89 against the Euro (EUR) and 0.79 against the dollar (USD) as of June 2019.

You can find coins in circulation with values of 1p, 2p, 5p, 10p, 20p, 50p, £1, and £2, and notes in circulation with values of £5, £10, £20, and £50.

The £5 and £10 notes are now made from polymer, making them more robust and harder to forge. A new £20 note is also coming in 2020.

You might come across Scottish banknotes from three Scottish banks: Bank of Scotland, Royal Bank of Scotland, and Clydesdale Bank. These are mainly used in Scotland, but can also be used as legal tender in other parts of the UK.

The banking system in the UK has a fascinating history. In the 20th century, banks faced a decline during the depression, but they fought back by introducing small saving schemes.

After World War II, there was a huge increase in provincial branch offices and the emergence of the high street bank in 1950. This marked a significant turning point in the banking system's growth.

The 1960s saw consolidation in the industry, with the Big Five becoming the Big Four, and the takeover of several regional banks. This shift led to increased competitiveness and the introduction of new services.

The Banking Act 1976 gave the Bank of England a more supervisory role, which helped to stabilize the industry. The act marked a significant change in the way banks were regulated.

Computing, credit cards, and new services drove the expansion of banks in the following years. The introduction of ATMs and other technologies improved services and made banking more convenient.

Today, most banks in the UK offer similar services, with the main difference being interest rates. This has led to a highly competitive market, where banks must differentiate themselves to attract customers.

The UK has a diverse banking system with many international banks operating in the country. This is reflected in the fact that over 10 foreign-owned banks have a presence in the UK.

These international banks have a significant presence in the country, with some of them being among the leading banks in Northern Ireland. For example, Bank of Ireland UK is one of the leading banks in Northern Ireland and has a presence in Great Britain to a lesser extent.

Many foreign-owned banks have branches in the UK's bigger cities, offering services similar to those offered by national UK banks. Some of these international banks include Bank of America, Citibank, and Santander.

If you need to transfer money to overseas accounts, you'll need the IBAN and SWIFT/BIC number of the recipient. These transfers can take anywhere from minutes to 4-5 working days, depending on where the money is going and the bank or provider you're using.

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Some alternative money transfer solutions to banks can offer easier and cheaper international transfer options. For example, CurrencyFair, Wise, and Zing are alternatives to traditional banks.

Here are some examples of international banks in the UK:

Additionally, there are many foreign-owned banks in the UK, including:

Setoff is a crucial concept in the banking system that allows banks to reduce the amount of money owed to them by a customer. It's like a credit on your account.

A setoff occurs when a bank deducts a debt from a customer's account, usually when the customer has an outstanding loan or credit card balance. This is often done automatically.

Banks can set off debts against deposits in the same account, making it easier to manage multiple financial obligations. This can happen even if the customer has enough money in their account to cover the debt.

For example, if a customer has a credit card balance of $1,000 and a deposit of $2,000 in their checking account, the bank can set off the debt against the deposit, leaving the customer with $1,000.

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The UK has a diverse banking system with various types of banks catering to different needs and preferences.

High street banks, also known as retail banks, are the most common type of bank in the UK, with major players like Barclays, HSBC, and Lloyds.

Building societies, on the other hand, are member-owned banks that offer more personalized services and competitive rates.

Online banks, also known as digital banks, have gained popularity in recent years due to their convenience and lower fees.

In the UK, you'll find a variety of national private banks to choose from, each offering unique services for expat residents.

The main UK banks have branches on high streets across the country and provide online and mobile services. Most banks open from around 09:00–17:00.

Some of the biggest banks in the UK include Barclays, Co-operative Bank, Halifax Bank of Scotland, HSBC, Lloyds Banking Group, Metro Bank, NatWest, and Royal Bank of Scotland.

If you're looking for a more specialized experience, you might want to consider Coventry Building Society, which offers a range of services including financial planning, mortgages, and insurance products.

Here's a brief rundown of the five largest building societies in the UK as of October 2020:

Retail banks are a type of bank that provides services to the general public. They are usually known as High street banks as they traditionally had multiple branch locations in cities and towns across the UK.

Between 2012 and 2022, 40% of retail bank branches closed. Four British retail banks have never had a physical branch presence.

The retail and commercial banking markets are dominated by five big banks: HSBC, Barclays, Lloyds Banking Group, NatWest Group, and Spanish-owned Santander UK, who operate more than one banking brand in the UK.

Here are some key statistics about the top retail banks in the UK:

Some retail banks have online-only branches, such as Atom Bank, Monzo, and Starling Bank, which provide services to customers through digital channels.

Credit cards are a type of payment method that's not as widely used as debit cards in the UK, with 60.1 million credit cards issued to residents as of January 2019.

The most popular types of credit cards are Visa and Mastercard, which are widely accepted in stores and online.

Many people also use American Express credit cards, which can be applied for through a bank, directly from the provider, or from other companies like Sainsbury's, Virgin, and Marks & Spencers.

You can pay off your credit card bill in installments, such as monthly or quarterly, rather than for each transaction at the point of sale.

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The Big Four refers to the four largest banks in the UK, which have dominated the retail and commercial banking markets since the early 20th century. These banks have been highly consolidated, with a significant reduction in the number of independent local banks.

HSBC, Barclays, Lloyds Banking Group, and NatWest Group are the four major players in the UK banking scene. They have a strong presence in the market and are well-established brands.

HSBC Holdings is the largest of the Big Four banks, with a market capitalization of $183.48 billion and a total assets under management (AUM) of $3,038.80 billion. It is also the largest bank in Europe and the 7th largest in the world by total AUM.

The Big Four banks have a significant presence in the UK, with a large number of branches and employees. Lloyds Banking Group, for example, has 63,000 employees and 892 branches in the UK.

Here is a table summarizing the key facts about the Big Four banks:

These banks have a significant impact on the UK economy and are well-established brands in the market.