Digital banking adoption

How many people are switching to digital-only banks?

Updated

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Would you switch your main current account to a mobile-only bank? People all over the country are increasingly opening bank accounts with digital-only banks such as Starling Bank, Monzo and Revolut, which have no bricks-and-mortar branches and allow you to control your finances from your phone. Every year we carry out digital-only banking adoption research to see what stage this potential revolution is at and to get a feel for what the British public thinks.

This year’s research showed that currently, around 12 million Brits have a digital-only bank account, and this number could almost double over the next five years. Digital banks aren’t all about banking, though. Some digital banks, such as Revolut, allow you to open a share trading account to trade stocks and shares commission-free. If you prefer to keep your investments separate to your banking, then we’ve compared the best trading apps to help you choose one that’s suited for you.

How many people have taken up digital bank accounts so far?

According to our survey, almost a quarter (23%) of British adults have opened an account with a digital-only bank, equating to 12 million people.

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And how has this changed over the last year?

Last year, 1 in 10 Brits (9%) had a digital-only account, meaning there has been an increase of 165% in the number of people with a digital account over the past 12 months.

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How many of us will go digital in the future?

14% of Brits plan on opening a digital-only bank account within the next 12 months, and 7% intend to do so within the next five years. This means an estimated 11.2 million new accounts will be opened by 2025 and a total of 23.2 million Brits (44%) will have an account by 2025.

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Why are people switching to digital-only or sticking to incumbents?

We asked Brits who have already opened an account with a digital-only bank or intend to in the next five years why they made this decision. For the second year in a row, the convenience that comes with digital banking was named as the main reason for opening an account (41%).

Customers are also motivated by better rates that digital-only banks may offer, which is the second most popular reason for Brits opening an account (39%). The third most attractive reason is the low transaction fees when using these bank cards abroad (28%).

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For now, it seems that a lot of people still have no intention of switching to a digital-only bank account. 54% of our survey participants said they don’t plan to do so. The top reason for Brits not going digital is that their current banks treat them well (65%). In addition to this, half of customers who have no plan to go digital (51%) said that they value being able to visit a member of staff in a branch.

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Challenger bank adoption by age group

As you might expect, the number of digital-only bank account holders is higher within younger age groups. Almost half (46%) of generation Z (those born after 1996) have a digital bank account, compared to just 12% of baby boomers (those born 1946-1964) and 2% of the silent generation (those born 1928-1945).

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Uptake of digital-only banks by gender

A quarter of men (25%) have an account with a digital-only bank, compared to just 1 in 5 women (20%). In addition to this, men are more likely to go digital-only, with 24% aiming to open a digital-only account in the next five years and only 19% of women intending to do so.

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The adoption rates of these challenger banks also depend on where you are in the UK

Londoners have the highest adoption rates in the country, with 39% of them having opened a digital-only bank account. This is over double the rate in Wales, where only 16% of people have opened a digital-only account, making it the most reluctant region to get involved with the banking trend.

Commenting on the findings, Jon Ostler, CEO of Finder UK says:

“Last year’s research showed that digital-only banks were gaining traction, but this year’s research shows that they should now be viewed as true competitors to incumbents. The number of people opening accounts over the past 12 months exceeded the intentions of those who took our survey in 2019, so the trend appears to be gaining momentum.
“Of course, there are still many who have no plans to try digital-only banks. Some customers are satisfied with their bank and see no reason to change – especially with the big players significantly improving their app offerings recently. In response, the challengers are all playing to their budgeting, visualisation and spending-insight strengths and Monzo has gone one step further, offering an incentive which allows people to be paid a day early.
“Research we previously carried out found that almost half of those with digital-only accounts kept less than £1,000 in them, so the challenger banks will need to keep innovating if they are to convince customers to use them as their main bank.”

Methodology

  • Finder commissioned Onepoll on 10-15 January 2020 to carry out a nationally representative survey of adults aged 18+.
  • A total of 2,000 people were questioned throughout Great Britain, with representative quotas for gender, age and region.

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