Will digital newcomers beat the high street banks?
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.