Third of millennial Brits say primary bank is a challenger
More than one in five UK consumers, and one in three millennial Brits, say their primary banking relationship is with one of the host of challengers to have emerged over the last decade, according to a report from AT Kearney.
Having remained largely unchallenged for a century, since the 2008 crash, Britain’s high street banks have been facing up to competition from a slew of tech-savvy upstarts, including Monzo, Starling and Atom.
Many of the new entrants claim to have already secured seven figure customer bases, a boast backed up by a survey of more than 2000 Brits by management consultancy outfit AT Kearney.
Of those surveyed, one in five customers — and one in three millennials — already considers their primary account to be with a challenger bank, while one in eight consumers say they prefer to use challenger banks for shopping online.
Asked why they switch to challengers, 39% cite the ease of use, 36% the ease of opening an account, and 28% the bank’s attractive use of technology.
However, customers mostly use challenger bank accounts for everyday expenditure such as going out, shopping or travel, but overwhelmingly choose to use traditional lenders when it comes to important financial transactions such as bills, salaries and mortgage and rent.
The survey suggests that this could be changing. Some 40% of challenger bank customers say they would consider taking out a loan with their provider, and 49% are willing to consider using them as a mortgage provider.
Simon Kent, global head, financial services, AT Kearney, says: “Traditional banks continue to dominate the market, considered more financially stable and trusted by loyal customers and challenger banking customers alike with the biggest and most important transactions, but with many millennials opting for the younger and hungrier competition, the market is set to change dramatically if high street banks fail to act. “
The consultancy has previously cliamed that one in ten European banks may disappear over the next five years as more agile digital challengers embrace the changes wrought by Open Banking to increase their market reach.
Data from the firm’s Retail Banking Radar shows that neobanks’ customer bases across Europe have grown by over 15 million since 2011, compared to a decrease in two million customers for retail banks. Up to 85 million Europeans will be customers of these banking models by 2023 according to the study – which equates to around 20% of the population over 14 years old.
Says Kent: “If traditional banks want to stay relevant, they must quickly adapt whilst capitalising on their biggest asset: trust.”