Traditional banks in the UK are losing ground to challenger banks when it comes to providing customers with a digital experience, according to a new report from P.A.ID Strategies.

The study, which scores the digital bank account opening process for 10 banks, found that the majority still require consumers to go through manual processes like visiting the branch rather than using digital identity technology to onboard applicants.

Mobile-first banks Starling and Monzo scored highest, leading the way on their identity verification and account activation processes, while HSBC scored the lowest. RBS was the only incumbent bank allowing applicants to submit proof of identity electronically, but not via smartphone or tablet.

Challenger banks scored an average of 9.2 out of 15, against traditional banks which scored an average of seven. Lengthy processes such as awaiting documents in the post and delays in sending out cards and PINs caused banks such as Barclays to score lower than their competitors.

The research also discovered that the majority of banks have failed to use digital identity services, including biometrics, which exist to enable mobile onboarding while meeting regulatory requirements.

John Devlin, author of the report, said: “We were surprised to see so few traditional banks had made progress towards a 100 per cent digital experience through the mobile channel. Many failed to offer a fast, secure and digital account application and activation process, including verification of the applicant’s identity. This means the banks are not truly digital, degrading the user experience at first point of contact and increasing the chance of abandonment.

“With banks now facing high fines if they fall foul of fraud, the time is now to embrace a mobile-first digital approach to reduce risk and remove risk from the user experience.”

The report reviewed Barclays, HSBC, Lloyds Banking Group and RBS (including NatWest), as well as challengers Atom Bank, Monzo, Revolut, Starling Bank and Virgin Money.

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