Over a quarter of UK adults have at least one bank account with a digital bank, according to research by personal finance comparison site Finder.
As of January 2021, 14 million Brits have an account with a digital bank, and this number could increase by almost 10 million over the next 5 years.
Finder surveyed 2,000 people in the UK and found that 27% of British adults have opened an account with a digital-only bank, a percentage increase of 16% on last year’s figures and three times the number of Brits who had one in January 2019.
According to Finder, 5.7 million Brits plan on opening a digital banking account in 2021, and the number of people in the UK with a digital bank account could reach 23 million by 2026.
Convenience was the most popular reason given for making the switch to a digital bank account, with better rates and receiving real-time spending notifications also emerging as popular reasons.
As expected, the number of digital-only bank account holders is higher within the younger age group, with 46% of those aged 24 and under having a digital bank account.
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Londoners have the highest digital banking adoption rates in the country, with 46% having a digital-only bank account.
However, while many are embracing digital banking, the survey revealed that 55% of participants said they currently had no plans to open a digital bank account, an almost 2% increase from 2020. The reason for not wanting to switch is being treated well by their current bank. Some 36% said they value being able to visit a member of staff in a branch.
Jon Ostler, CEO of Finder UK said:
“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 who opened accounts over the past 12 months exceeded the intentions of those who took our survey previously, 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 insights strengths, and Monzo has gone one step further, offering an incentive which allows people to be paid a day early.”
Moving forward, Ostler believes that challenger banks will need to focus on customers opting for a digital bank as their main bank:
“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.”