Pandemic accelerates trend towards digital-only finance providers

An increased focus among consumers to engage with online-only banks and apps is narrowing the gap between challengers and traditional high street banks, according to a new study from TransUnion.

Figures revealed that 11% of consumers intend to open an account with an online-only bank or app in the next 12 months, compared to 12% who intend to apply to high street banks.

TransUnion suggested this could indicate the gap is closing when compared to its pre-pandemic research published a year ago, which showed a 3% gap between the two at 10% and 13% respectively.

The study, based on a survey of 2,000 nationally representative adults, also showed that one in 10 consumers have changed their current account since March last year, with 32% of these switching from a traditional bank to an online-only one.

TransUnion director of fintech, Stephen Wishart, commented: “What we’re seeing in the financial landscape isn’t new but the pandemic has accelerated the trend toward digital-only finance providers.

“Consumers cite convenience (67%) and speed and ease of service (65%) as the biggest appeal factors of online-only banks or apps, so these challengers have been able to play to their strengths through lockdowns and social distancing.”

The research also highlighted attractive rates (41%) and being paperless (30%) as appealing factors, with the findings showing that one in 10 customers (10%) have taken out a loan with an online-only bank or app in the last 12 months.

Wishart added: “Looking ahead, our research suggests consumers will be more cautious with credit than last year in some areas, with just 11% planning to take out a mortgage in the next 12 months, compared with 17% pre-pandemic.

“Fewer plan to take secured personal loans too, at 7% now versus 11% at the start of 2020, although the demand for credit cards remains unchanged at 13%, as it was before COVID-19.

“That said, there’s a growing sense of financial optimism, and we’re seeing that one in five consumers (21%) are planning on opening a new savings account which is a really positive indication. This mixed picture is something all banks, whether digital-only or traditional, are having to consider when assessing customers’ needs.”

    Share Story:

Recent Stories

Deep Neural Networks for FX Prediction
Adam Cadle speaks to Richard Turner Head of Research and Mike Emambakhsh, Ph.D. Senior Research Scientist at Mesirow Currency Management about their work with Machine Learning, specifically Deep neural networks for FX prediction.


Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.