Mobile banking is set to overtake the popularity of branch services by 2021, according to new analysis.

A report by data firm CACI found that the rising use of smartphones for a range of services, including digital banking apps, would lead to further challenges to the traditional High Street banking model.

The study found an average of five million mobile log-ons per day to banking services – a number four times greater than that of five years ago. It predicted that the proportion of customers using a banking app will reach 71 per cent by 2024, while bank branch users will drop to 55 per cent in the same time frame.

The tipping point at which mobile banking draws level with branches for customer is expected to arrive in 2021, when 59 per cent of customers are projected to use mobile banking.

However, despite perceptions that digital challengers such as Monzo, Starling and Revolut are the preserve of the younger Millennial and Generation Z age groups, CACI found that the growth of mobile banking is now being fuelled by uptake among older generations, including more well-off older families and those nearing retirement.

It said that digital savings accounts would become the “new frontier” in the battle of disruptor FinTechs versus banking incumbents, with a growing interest in mobile savings accounts amongst older, wealthier demographics.

The report predicted that by 2024, 75 per cent of new savings accounts are expected to come from online channels. Peer-to-peer (P2P) lending is attracting new audiences to the savings market, according to CACI. In the first three months of 2019, there were around 16,000 web searches for the term.

While only 49 per cent of those classified as ‘starting out’ in their financial lives hold a savings account today - compared to 83 per cent of ‘asset rich greys’ - these younger, digitally-engaged individuals are tempted by the higher returns without being deterred by the risks involved.

This as-yet-untapped age group could be a ripe opportunity for P2P players to make their mark, the study suggested.

Jamie Morawiec, associate partner at CACI and author of the report, said: “While digital - and mobile in particular - is clearly a front-runner for the future of banking, there is a huge potential for financial institutions to tap into unexplored markets such as younger customers who have current accounts but aren’t necessarily saving yet.

“The increase in popularity of peer-to-peer lending, alongside the rise of the challenger banks, will change the landscape for traditional banks,” he continued. “To stay tapped into the savings cross-sell, banks must offer a seamless, tech-driven user experience.”

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