Just over two in five (44%) UK adults will have a digital-only bank account in five years, equivalent to 23.2 million Brits, according to a study.
Currently, almost a quarter (23%), about 12 million, Brits have a digital-only bank account, a survey of 2,000 Brits by finance comparison website finder found.
A further fifth (21%) of Brits plan to get one in the next five years, with two-thirds (65%) of those planning to do so over the next year.
Last year only one in 10 (9%) of Brits had an account with a digital-only bank, meaning there has been a 165% increase in the number of people banking with banks like Starling, Monzo and Revolut.
The convenience that digital-only banks and their apps can offer is a high priority for consumers. For a second year in a row, they voted it as the top reason for having a digital-only account, at 41%.
Customers are also motivated by better rates that digital-only banks may offer, making it the second most popular reason for opening an account (39%). The third most attractive reason is the low transaction fees when using these bank cards abroad (28%).
However, 54% of Brits have no intention of opening an account, and say their current bank has treated them well (65%).
In addition to this, half of customers (51%) who have no plan to go digital said that they value going to their local branch.
Those born after 1996 have the highest percentage of digital-only bank accounts over any other generation, with almost half (46%) saying they have opened an account.
However, more millennials than any other generation are likely to join the digital-only trend over the next five years, with 28% intending to open an account.
A quarter of men currently have an account with digital-only banks compared with one in five women.
Additionally, men are more likely to go digital-only, with 24% aiming to open an account in the next five years, while 19% of women intend to do so.
Jon Ostler, CEO of finder said: “Last year’s research showed that digital-only banks were gaining traction but this year’s research shows that they should now be viewed as true competitors to incumbents.The number of people opening accounts over the past 12 months exceeded the intentions of those who took our survey in 2019, so the trend appears to be gaining momentum.
“Of course, there are still many who have no plans to try digital-only banks. Some customers are satisfied with their bank and see no reason to change – especially with the big players significantly improving their app offerings recently. In response, the challengers are all playing to their budgeting, visualisation and spending insight strengths and Monzo have gone one step further, offering an incentive which allows people to be paid a day early.
“Research we previously carried out found that almost half of those with digital-only accounts kept less than £1,000 in them, so the challenger banks will need to keep innovating if they are to convince customers to use them as their main bank.”