Survey reveals Brits are aware of digital banks, but aren’t convinced

Interest in digital-only banks like Monzo, Revolut and Atom, has never been higher. But a new survey, conducted by MoneySuperMarket, has revealed that, while a large proportion of the British public are aware of digital banks, they’re not quite willing to commit to them just yet.

The research found that, whilst 60% of Brits are aware of at least one such bank, two in five wouldn’t trust them with their financial data.

Respondents were asked which digital banks they were aware of, revealing that 19% had heard of Atom, 10% had heard of Monzo, while only 8% had heard of Loot and 7% of Revolut and Starling.

The survey also revealed that three-quarters of Brits would be willing to choose a ‘digital only’ bank for a financial product, yet only one in ten Brits would prefer to use a ‘digital only’ bank over a ‘traditional’ high street bank.

The issue, it seems, is one of trust. Nearly two in five (37%) of survey respondents stated that they didn’t trust these new banks enough to allow them to share their financial data with other providers under the new Open Banking rules, suggesting that there is much more education for these industry innovators to do before gaining the trust of the nation.

Over half of respondents considered a bank’s digital services to be a major factor when opening an account – rising to 71% of those aged between 25-34. App-based digital banks offer consumer-focused solutions such as real-time spending notifications, 24/7 in-app support and the ability to instantly freeze/unfreeze a card. However, this trend hasn’t gone unnoticed by the high street banks as they rally to upgrade their digital offerings with new designs and a selection of their competitors’ features.

With two-thirds of Brits signed up with more than one bank for their financial services and one in five using as many as three banks, the data suggests that people are now used to the idea of shopping around for their money needs – yet many households could be missing out on unique products, and possible savings, offered by these challengers.

The research also discovered that Brits may not be ready for ‘digital only’ banks as they still prefer to visit their branch rather than use an app for the majority of common banking services, in addition to concerns about sharing data.

Despite Open Banking and PSD2 opening the doors to a wealth of mobile-friendly financial services, the survey results indicate that the majority of Brits would still rather take care of their finances in-branch.

 

Unlike ‘traditional’ high street banks, ‘digital only’ banks have typically worked to grow the number of people signing up with them by perfecting one financial product before expanding further. However, the research shows that Brits are more comfortable signing up with these banks for certain services over others. Current accounts are twice as likely to be experimented with compared to any other product. Second to current accounts are credit cards and then new savings or ISA accounts with app-based banks.

And, in what might be seen as a sign of the growing trust in these young ‘digital only’ banks, roughly half of Brits suggested that they’d be likely to deposit their savings into one.

“Traditional banks often struggle to truly innovate. Many face costly bills to improve the tech they need to build new products including intuitive apps. However trust plays a big part in finance especially when it comes to where people keep their money,” Sally Francis-Miles, money expert at MoneySuperMarket told PaymentEye.

“This is often the strength of traditional banks – consumers know what to expect and they trust what they know.”

“Digital-only banks have a bigger job of convincing consumers, especially when it comes to current accounts and savings,” she continued. “Having FCSC protection (up to £85,000) provides reassurance, but with data hacks and the fear of losing money, sacrificing a top savings rate for a middle-of-the-road one provides added comfort to many consumers. With mortgages and loans, it might be an easier conversation – after all, it’s them lending you money, not the other way round.”

“Both can take learnings from each other but eventually, top products, innovation and service, whoever that’s with, will come out on top. The financial landscape is changing – digital-only and traditional banks are looking at ways they can be part of its future and they’re having to work harder to get customers through the door.”

Find out more about the research here.

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