Digital challenger banks in the UK are outperforming their incumbent counterparts when it comes to overall satisfaction, according to new research from FIS.

The study, which quizzed over 1,000 UK banking customers, found that 76 per cent of digital-first bank customers say they are ‘very satisfied’ with their banking relationships, compared to 69 per cent of those who bank with one of the top 50 global banks.

These direct banks also outperform established High Street banks on key performance metrics including privacy, security, problem solving and real-time payments. However, incumbent banks outdo their challenger rivals when it comes to providing easy-to-use digital payments – the payment mode of preference for younger consumers.

Findings showed that all generations except Baby Boomers turn to their mobile phones first when interacting with their bank; more than desktop PCs, ATMs or bank branches. This trend is led by young Millennials (18-26 years old), with 76 per cent of digital bank interactions conducted via mobile, while only 21 per cent prefer desktops/laptops. For Baby Boomers (those over the age of 53) however, desktops/laptops remain the preferred channel at 66 per cent.

When asked who they would trust more to provide a financial mobile app - a bank or technology provider - the majority (61 per cent) said bank. Of those who use one of the top 50 global banks, just four per cent said technology provider, which rose to 12 per cent for those using direct banks.

“This year’s findings show just how competitive the UK market has become,” noted Bruce Jennings, strategic development director at FIS. “Consumers are demanding ever-more consistent and convenient banking experiences, and it’s the mobile interface – not physical locations or even personnel – that are now the face of a bank.”

“This presents a clear advantage for the digital-first challenger banks that have entered the market in the wake of PSD2. For long-established banks, open banking provides an opportunity to leverage consumers’ favourable views of their security protocols and engage the right technology partners to add the ancillary products and services customers want,” he concluded.

Share Story: