Digital banks set to treble customer base in next year

British digital banks such as Revolut and Monzo are set to treble their number of customers in the next year, as the challengers increase their efforts to complete against high street rivals and disrupt the retail lending market.

While there has been widespread concern over the long-term profitability of these banks, the online lenders are on track to amass 35 million new users globally over the coming 12 months, analysis from Accenture revealed.

The digital banks have accrued roughly 5 million new accounts in the first half of 2019, therefore broadening their consumer base beyond millennials and winning older customers outside of the capital.

However, despite the strong growth, the fintech banks have struggled to transform their growing popularity into profit, with the typical online bank losing an average of £9 per customer.

Challenger banks started gaining momentum and became a threat to traditional banks in the wake of the financial crisis. The challengers have achieved stronger cost and customer experience scores when compared to their traditional counterparts.

Despite this, they have encountered a number of hurdles, namely over gaining primary account customers, scrutiny over governance and increasing digital investment from incumbent banks.

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