EXPECT fewer trendy winebars - banks should retain local branches as a key weapon in the fight to win customers, a new report says today (August 13).

Banks should see branches as their biggest asset - most consumers still prefer the face-to-face contact offered by branches, says market analyst Datamonitor.

Up to 15 per cent of people chose their current account provider because it had a branch close to their home or work.

And 80 per cent of people said they had initially approached their mortgage lender through a bank branch - while 57 per cent arranged a personal loan through an adviser at their bank.

"Banks should be viewing their branch networks as their biggest asset rather than a costly burden," said the report's author, Andrew Birkett.

Britain's big banks took the cost-cutting axe to their branch networks in the 1990s, sparking a public outcry in both urban and rural communities.

The practice was further embedded in the public consciousness when NatWest capitalised on the backlash, running advertisements featuring a pensioner whose branch had been turned into "a trendy winebar".

Banks have since been pinning their cost-cutting hopes on the internet with some setting up separate online brands, such as Abbey's Cahoot.

But Datamonitor said take-up rates for online banking across the various brands had been slower than expected.

Of the 48,000 people questioned by Mori Financial Services, only 11 per cent had arranged a mortgage over the phone and just two per cent had arranged one online.

Take-up for loans was not much better, with eight per cent of people taking out a personal loan over the phone and 12 per cent arranging one through the internet.