You are here: Home - Saving & Banking - News -

More than one in 10 new bank accounts opened are with fintech brands

0
Written by: Emma Lunn
18/09/2019
The 2019 State of Pay report from Vocalink reveals a steady rise in the popularity of digital-only banks.

Fintech banks such as Monzo and Starling are driving competition in banking, accounting for more than one in 10 (13 per cent) new bank accounts opened in the past six months, according to The State of Pay report from Vocalink, a Mastercard company.

A quarter (24 per cent) of digital bank accounts being opened are used as main current accounts, while the remainder are being used as a secondary account.

Many respondents to the Vocalink survey hold multiple current accounts to manage their money – four in 10 (40 per cent) of these hold a secondary current account, increasing to nearly half (48 per cent) among respondents aged 25 to 34-years-old.

Of these secondary current accounts, 3 per cent are with digital banks such as Monzo or Starling although this doubles for the 16 to 34 age group (6 per cent) and increases to 8 per cent among respondents in London.

While the mainstream banks are still retaining the vast majority of their customers, the State of Pay report suggests the influx of new banks in recent years may be starting to have an impact. The research also shows there has been a 5 per cent drop in new accounts among the big high street banks in 2019 compared to 2018.

Increase in digital bank popularity

When looking at a typical customer of a digital-only bank compared to a high street bank, the average age is slightly younger (31 years vs 48 years) and they are more likely to live in an urban area (66 per cent vs 56 per cent).

They are also more than twice as likely to use mobile payments (68 per cent vs 30 per cent) and tend to have a higher household income (£46,000 vs £33,000).

The report found two main factors that may be behind the increasing popularity of the new digital banks:

  • Improved functionality of digital banks’ apps
  • Fee-free card use abroad

These factors may particularly appeal to the younger generations. Vocalink found nearly a third (30 per cent) of respondents aged 25 to 44-years-old are considering opening a digital-only account.

However, it’s not solely younger respondents using them – one in 20 (6 per cent) respondents aged 55 to 64-years-old also have an account with a digital bank.

Gregor Dobbie, CEO of Vocalink, said: “After years of discussion around increasing competition in the banking sector, our latest State of Pay report suggests this is finally coming to fruition. While at present the rise in digital-only banks might be most common in urban areas and among younger generations, we expect to see this trend occurring more widely among other demographics in years to come.

“Many are choosing digital-only banks for the improved technology and lack of charges abroad, and it will be interesting to see how the traditional players respond to these new customer expectations.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • RT @Defaqto: Will your home insurance leave you out in the cold? 🤔 Only a fifth of home contents insurance policies, and a quarter of home…
  • Will your home insurance leave you out in the cold? 🤔 Only a fifth of home contents insurance policies, and a quar… https://t.co/zdrVTUduNB
  • 10 reasons to get your #TaxReturn done now - and they could all mean more money for you! 💷 Questions about your ta… https://t.co/QqA42ylJEj

Read previous post:
House price growth hits lowest level since 2012

Annual house price growth has continued to slow and is now spreading out from London and the South East, according...

Close