Digital-only banks are set to be a hit with UK banking customers when they launch this year, new research has found, with one in eight (13 per cent) claiming that they plan to switch to an account with a digital-only provider this year. Several providers are set to launch services in the UK this year, including Atom and Starling.
The online poll of 2,000 Brits, conducted by digital financial services software provider Intelligent Environments, also reveals that more than a third of those surveyed believe digital-only banks will soon become the norm. 34 per cent said that within five years they expect more people to have an account with a digital-only bank than a traditional provider.
The research indicates that many consumers feel more confident about digital-only banks, in part due to the increasing importance of mobile and digital banking. 60 per cent of respondents said mobile and digital banking services are very important to them, and almost a third (31 per cent) believe that a digital-only bank would offer better mobile and digital banking services than a traditional bank.
Additionally, 14 per cent say they would trust a digital-only bank more than a traditional bank, and 16 per cent believe digital-only banks will have fewer security problems than their traditional counterparts.
However, not all are so confident in digital-only banks. The research also showed that more than half (52 per cent) of UK banking customers don’t like the idea of not being able to speak to someone in person if they have a problem, along with 44 per cent claiming that they wouldn’t switch because in branch services are important to them.
David Webber, managing director of Intelligent Environments, says:
“Digital-only banks are in a strong position to cause major disruption to traditional providers when they launch in the UK later this year. Our research shows that people believe these new providers will offer superior online and mobile services. When taken together with the lower operating and efficiency costs naturally incurred by not having any branches, digital-only banks will be in a very competitive position indeed.
“However, digital-only banks do not spell the end for traditional branches. As our research shows, many of the UK’s banking customers still like the personal touch. In-branch services are still highly valued by a significant proportion of the population, while others have voiced concerns about not being able to speak to a customer service representative in person if they had a problem. In fact, traditional providers have a fantastic opportunity now to improve their digital and mobile services, and to focus on providing a superior in-branch experience for customers.
“What is certain is that the introduction of digital-only banks will shake up the personal banking sector. Whether or not digital-only banks outstrip traditional providers within the next five years isn’t nearly as important as the benefits consumers will experience as a result of their introduction. More competition, more choice and an increased focus on mobile and banking services guarantee that digital-only banks entering the UK market will be a big win for consumers.”
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