Will dig­i­tal new­com­ers beat the high street banks?

The Daily Telegraph - Your Money - - FRONT PAGE -

You’re more likely to get di­vorced than change bank. So how are the chal­lengers com­pet­ing to win, asks James Con­ning­ton

The high street bank has been a fix­ture of the Bri­tish fi­nan­cial ex­pe­ri­ence for gen­er­a­tions, but a new wave of dig­i­tal-only chal­lengers is threat­en­ing to change that. They have no branches, no pa­per­work and a va­ri­ety of fea­tures they hope will prise cus­tomers away from the in­cum­bents.

Of the best known, Monzo and Star­ling both of­fer full-blown cur­rent ac­counts, Atom Bank of­fers sav­ings ac­counts and mort­gages, Tan­dem shows all your ac­counts in one place and of­fers a credit card, and Revo­lut (which doesn’t yet have a bank­ing li­cence) of­fers bill split­ting, spend­ing anal­y­sis and cur­rency ex­change. Ac­counts can be set up and man­aged us­ing a smart­phone app, with no need to leave the house, talk to any­one or fill in a form.

De­spite the hype, th­ese chal­lengers re­main small com­pared with the es­tab­lished banks they are go­ing up against – and the gi­ants have enor­mous re­sources on hand to com­bat them. Will the chal­lengers be able to win life­long cus­tomers from the high street, or will the be­he­moths’ vast spend­ing power main­tain their po­si­tion at the top of the pile?

A ma­jor chal­lenge is that high street bank cus­tomers have his­tor­i­cally proven to be in­cred­i­bly loyal, even when given lit­tle rea­son to be. Tom Mac­don­ald, of con­sul­tancy nsul­tancy Deloitte, said: “You’re u’re more likely to get di­vorced ced than change your bank. . There is a legacy of trust – peo­ple eo­ple don’t want to en­trust their eir money to some­thing they don’t on’t know.”

In a re­cent sur­vey ey of bank­ing cus­tomers rs by re­search firm GFK, K, the av­er­age cus­tomer mer sat­is­fac­tion level of the 16 banks in­cluded was 63pc. RBS and HSBC, BC, two of the largest banks in Bri­tain, had sat­is­fac­tion lev­els of just 49pc and 55pc. De­spite es­pite this, in the first half of this year only 569,000 cus­tomers omers across all banks switched witched providers, ac­cord­ing ng to pay­ment com­pany y Bacs.

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