Up to one third of new revenue in the banking sector is being amassed by digital challengers, putting unprecedented pressure on established banks to compete for customer loyalty, according to Accenture.

A study of more than 20,000 banking and payments institutions conducted by the consultancy revealed that the UK has seen the most profound disruption in overall market structure, with a 63 per cent rise in new players in 2017.

New players in the sector, such as Monzo, Starling, Revolut and OakNorth, have captured 14 per cent - equivalent to £24 billion - of the business, while traditional players saw revenues fall.

However, the study noted, the majority of these revenues are going to non-bank payments institutions.

The report showed that the overall number of banking and payments institutions in the market has decreased by nearly 20 per cent over the last 12 years – from 24,000 to less than 19,300 in 2017.

However, nearly one in six of those now in the market (17 per cent) are considered ‘new entrants’ – those which have launched since 2005. The report suggested that this share of the market has yet to “raise alarm bells” amongst traditional banks, but is set to grow in the coming years.

The analysis led Accenture to predict that the shift in revenue to new entrants will soon begin to have a “material impact” on the profits of incumbent banks.

The digital challenger effect will begin to bite traditional banks’ balance sheets once leading challengers start surpassing the one million customer threshold and 15 FinTechs have been granted full banking licenses, the report suggested.

It also predicted that £775 million is set to be invested in challenger banks under the RBS Alternative Remedies Package this year, which is likely to drive further competition amongst FinTech startups vying to convert business customers to digital banking services.

Julian Skan, senior managing director for banking and capital markets at Accenture Strategy, said: “Ten years after the financial crisis, the banking industry is experiencing a level of competitive intensity and disruption that’s much greater than what’s been seen before.

“With challenger banks and platform players reducing traditional banks’ competitiveness and the threat of a power shift looming, incumbent players can no longer rest on their laurels.”

The 20,000 institutions analysed as part of the survey were located in Australia, Brazil, Canada, China, the European Union, the United Kingdom and the United States.

Some 3,200 of the institutions were classified by Accenture as “new players” and included licensed banks, payments providers, non-licensed players and FinTech startups who have entered the market since 2005.

Alan McIntyre, head of Accenture’s global banking practice, concluded: “Banks can’t simply digitally enable their business as usual and expect to be successful.

“So far, the conservative approach to digital investment has hindered banks’ ability to build new sources of growth, which is crucial to escaping the tightening squeeze of competition from digital attackers and deteriorating returns.”

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