The face of British banking will undergo cosmetic surgery in the next year as HSBC rolls out "megastores", HBOS and Abbey plan their biggest expansions for decades and Woolwich branches disappear.

Branches are back in vogue as banks recognise that online services cannot replace face-to-face transactions and more space in the premises can be devoted to selling new products as back offices have moved to other locations.

"Not all branches are in the right places or the right size or have the right things, but the banks are definitely in love with branches because the public are still in love with branches," said Nick Sandall, head of retail banking at advisory firm Deloitte.

It is a stark change from five years ago, when branches were out of favour and internet and telephone banking were tipped to displace them.

"There's been a mindset change," said Mark Weill at Mercer Oliver Wyman, the financial services consultancy. "If you go back to the height of the dot-com frenzy then it's a big change. At that point banks saw their branch as a dead weight that was a costly legacy and they were really running their branches down." Now, he said branches are back at the heart of the customer offer, supplemented by internet and telephone services, and banks are investing in them again.

Plans to expand the branch footprint mirror a trend seen in the US in the last three years following years of shrinkage. At the same time, banks are trying to gain an edge with new, concept branches with a sharper image.

Perhaps most dramatic will be HSBC's plan to open five megastores, which likens to computer and music firm Apple's flagship stores.

HSBC's megabanks will be about 35,000 square feet and include a coffee area, Internet access and meeting rooms.

A more typical branch of the future is also likely to be open-plan and brighter, with music, Internet terminals, designated areas for small-business banking and more room to discuss personal products in private. Banks are also distancing themselves from a "stuffy" past - such as Barclays' move to rename its cash machines as a "Hole in the Wall".

They are already following retailers to out-of-town retail parks, and that trend could accelerate, while opening hours are getting local flexibility, with branches near busy train stations opening early to suit commuters, for example.

"The look, the location and opening hours will change in time, it won't happen instantaneously. It's expensive and banks have to decide what sort of investment they make," Mr Sandall said.

"There's not much growth in products or the overall market size, so they've got to eat each other's cake. So they've got to prove that they're better than their peers to their customers, so do what the customer wants."

More than half the respondents in a Britannia Building Society survey released last week said not being able to choose whether to use a branch, the Internet or phone was the biggest failing of some organisations.

The plans of the major banks would halt a long shrinkage in the branch network, although the overall number may be balanced by the closure of Barclays and Woolwich branches.

The Big 5 banks (including NatWest and other banks taken over) closed more than a third of their branches between 1989 and 2003, according to research by the University of Nottingham, driven by cost cutting, including the internet banking push.

Since 2003, all the major banks other than Royal Bank of Scotland have trimmed their number of branches further, leaving about 11,000 branches in the country. RBS/NatWest has kept almost 2,300 branches, the biggest UK footprint.

But now Halifax, part of HBOS, and Abbey, owned by Spain's Santander, plan to open as many as 100 new branches each in the next few years in their biggest expansions since they were demutualised from building societies.

HSBC plans to open another 50 branches and will relocate and refit 150 existing branches, in addition to its megabanks.

But Barclays will close up to 200 branches as it removes the Woolwich fascia from the High Street, moving the name to become the bank's mortgage product brand within each branch. Some of the sites closed are likely to be taken by rivals.

Some analysts question why the consolidation of Woolwich - bought six years ago - took so long, but after the infamous closure of 171 branches on one day in April 2000, Barclays and other banks have been sensitive to bad publicity.