If you monitor or track your banking and spending from a digital app, make transactions from a digital wallet, or use online tools to manage your finances, you're not alone.
Digital-only banking services, such as digital and neo-banks, have grown rapidly in popularity in the last few years and people often prefer to use digital banking instead of going into a bank's branch.
Traditional banks were once more popular, but with many branches closing, digital banking is on the rise.
This article looks at how digital banking has risen, the different ways you can use it to manage your money, and the most current digital banking statistics.
Key digital banking statistics
Here I've summarised key statistics for digital banking from 2020 to 2023.
- More than 90% of British people used online banking services or mobile banking in 2023
- Approximately 37% of all payments were made through contactless technology in 2022
- 83% of British people use contactless payments
- 16% of over 55s increased their use of smartphone payments in 2020
- For 81% of British people, the most important factor for choosing online banking services is the quality of experience
- 24% of consumers have a digital-only bank account, this rises to 50% for those aged 18 to 24
- 12% use their digital-only bank account as their primary bank
- 67% preferred using online banking for daily requirements in 2022
How many people use digital-only banking?
Approximately 24% of people had bank accounts that function on digital-only platforms in 2023.
We estimate that nearly 45% of British people will have digital-only bank accounts by the time we reach 2028.
What will happen with UK digital bank accounts?
Multiple factors are innovating UK digital bank accounts. Artificial intelligence and chatbots are personalising the banking experience for UK users, which we predict will continue. Many people are using these services offered by digital-only banks.
For instance, nearly two-thirds of Generation Z use digital-only banks. Although this has decreased from 2022 by 10%, other generations are keenly using these services.
64% of millennials use app-based banking, and only 2% of Generation Z use in-branch banking. Considering this trend, it's expected that UK digital bank accounts will be favoured by many in the younger generations. Of those millennials who do not currently use digital-only banking, 17% will begin using it by the beginning of 2024.
Why do people open digital banks?
As traditional banks close in many local areas, many people have turned to digital-only banks. 16% of individuals who opened a digital bank account switched because there were no physical bank branches in their local area.
However, there are additional reasons people are using these services. With convenient mobile apps that have an easy-to-use user experience, many prefer the simple interactions these apps offer.
It's with low overhead costs that digital banks can afford to extend many perks to their customers. UK individuals, therefore, look forward to low or no fees, zero minimum balance requirements and easy set-up processes without having to visit a high street bank.
Backing up this point, 20% of British people said getting better rates is one reason they opened their digital bank account.
Why do people not open digital banks?
Nearly one-third of people do not want to open digital-only banks. Some reasons include a lack of trust in the technology or software and a preference for human interaction when completing transactions.
20% of individuals who do not want to open digital-only banks are worried specifically about security when using the internet for banking, and a growing number of the silent generation prefer the customer service they receive. They consider this a key reason to continue using traditional banking.
Digital-only banking trends
Digital-only banking trends have changed over time. Digital banking is slowly rising, with new digital-only banks appearing on the market frequently. There are around 50 digital-only or neo-banks available in the UK market.
Between 2023 and 2027, we predict that the digital-only or neo-banking market will increase by 17.5%. Neo banks such as Monzo have gained millions of customers, with Monzo itself reaching 8 million in 2023 and Kroo Bank aiming to reach 1 million customers over a five-year timeframe.
Digital banking is more than online banking
Digital-only banking offers a vast selection of services and functions besides traditional and online banking services.
This difference means digital-only bank users can benefit from integrated financial management services into the platform. They can use smart budgeting software and tailored financial advice based on your transactions.
With digital banking, you also access enhanced security benefits that protect your account when you pay, make deposits or use the account. With secure biometric access to your account, you can use the platform without concerns about security breaches.
Digital banking in the future: our verdict
The steady increase in the popularity of digital banking is undeniable. Online banks and many banks offering services for digital banking means that convenience is offered to many UK individuals. It's also clear that digital banking experiences play a role in the popularity of these platforms.
Whether you're transferring funds from savings accounts to current accounts through digital channels or mobile devices or simply need to track your spending or complete actions such as paying bills, you can do this with these digital-only services.
Customer data shows that many people prefer using digital banking platforms, and with their handy tools and services, the benefits largely outweigh the drawbacks.
