Author: David Webber
The launch of the online banks set to revolutise the financial services industry
A new wave of challenger banks – known as digital-only banks, providing all services online rather than in-branch – are set to revolutionise the financial services industry when they launch in the UK later this year. A number of organisations are set to launch, hoping to disrupt the banking sector, including German e-bank Fidor.
Managing your money digitally
Customers’ relationships with their banks are changing dramatically, with more people than ever managing their money digitally. According to our research, 81% of UK consumers prefer to manage their money via digital channels than through any other method. Furthermore, a recent report by British Bankers’ Association and EY highlights the rapid growth in popularity of digital services among bank customers, with digital transactions now surpassing £1billion each day.
There is clearly a huge opportunity for these new digital-only disruptors. By focusing entirely on digital services, using technology and social media to overcome the cost and complexity of traditional banking, and providing services to customers at the touch of a button, they can help meet consumers’ ever-increasing digital expectations. Our research reveals that these new services will be a hit with UK banking customers, with one in eight planning on switching their current account to a digital-only provider this year. Furthermore, one in three people believe that digital-only bank accounts will outnumber traditional ones within five years.
Time for the high street branches to adapt to change
This may be causing alarm bells to ring at some traditional providers, but it’s important to note that digital-only banks don’t signal the end for the branch or for the current banking giants. In fact, today’s high street banks are actually being presented with a tremendous opportunity to adapt, evolve and improve.
Various studies have shown that branches still remain a critical part of the banking relationship for many customers, especially for application and advisory purposes. In fact, our own research reveals there is still a large dependence on branch services, with more than half (52%) of UK banking customers disliking the idea of not being able to speak to someone in person if they have a problem, and 44% stating they wouldn’t switch to a digital-only bank as branch services are important to them.
Improving digital and in-branch service
Banks therefore now have the chance to focus on improving their digital and mobile services, and providing a supreme in-branch experience for customers.
When digital-only banks launch later this year, they are set to shake up the personal banking sector. Whether or not digital-only banks outstrip traditional providers within the next five years isn’t nearly as important as the benefits consumers will experience as a result of their introduction. More competition, more choice and an increased focus on mobile and banking services guarantee that digital-only banks entering the UK market will be a big win for consumers.