Neobanks Gain More UK Customers As High Street Banks Lose Ground
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Digital banks are growing fast in the UK, taking customers from traditional high street banks. More Brits are now using neobanks like Monzo, Starling, and Revolut for their main debit cards. A new study found that 9% of people in the UK now keep their main bank account with a neobank.
Digital financial providers have grown their customer base from 16% of UK adults in 2018 to 50% in 2024. This means half of the country’s adults now use neobanks or fintech services like Klarna. Many of them also use these banks as their main provider, which is a big change from previous years.
Neobanks Are Taking More Market Share From High Street Banks
The number of people who use neobanks as their main bank has grown fast. At the end of 2020, only 1% of people had their main debit card with a neobank. By the end of 2024, this had risen to 9%. This shift has caused big banks to lose market share. The share of the ‘Big Six’ banks dropped from 85% to 71% during this time.
According to the update, people who use neobanks also spend 20% more on their debit cards compared to customers of traditional banks. This shows that neobank users are more active with their accounts.
Neobanks are especially popular among younger people like Gen Z and millennials. Hubert Petka, a director at RFI Global, said younger generations prefer digital banks because they are easy to use and have better technology. Many of these banks offer faster payments, better savings tools, and user-friendly apps.
More People Are Using Savings And Credit To Handle Living Costs
The research also shows that many Brits are using their savings to cover everyday expenses. Nearly half of UK consumers said they are taking money from their savings to pay for household bills and unexpected costs. This is the highest level seen in over ten years.
According to the update, one in four people said they will need more credit this year. Some plan to get new credit cards, while others will use ‘buy now, pay later’ (BNPL) services. More than one in ten people are already using BNPL to cover daily expenses, while one in three uses both BNPL and credit cards together.
Brits are also becoming more comfortable switching banks to get better deals. Many banks now offer rewards like cash bonuses, higher interest rates, and other perks to attract new customers. Half of those who are thinking about changing their main bank account in the next year said they want better rewards.
Hubert Petka noted that banks are working harder to win over customers. He said these rewards are changing the way people choose their banks and how loyal they are to the firm. With competition increasing, it will be interesting to see how traditional banks respond to this new challenge.
