Cash incentives keep Brits sticking with the high-street
Digital banks are luring a number of Brits away from traditional providers, but cash incentives are leading many to stick with high-street banks.
Almost 50 per cent of UK adults have now opened a digital only bank account, a near 10 per cent increase from last year, according to the latest report from comparison site Finder.
In 2019, just nine per cent confirmed they had opened a digital account, reflecting the challenger’s rapid rise among mainstream savers.
Savers cited the ease of being able to transfer money as the main reason for going to a digital bank, followed by the want of a more user-friendly app and better interest rates.
Free transactions abroad were also a popular incentive, giving a particular appeal to expats and those who travel frequently for work.
Customers were also more likely to recommend challenger banks than high-street lenders, with 97 per cent recommended First Direct, Starling, Revolut and Chase.
But this was closely followed by NatWest and HSBC, at 95 per cent and 94 per cent respectively.
Switching offers gives tradition the edge
Despite the growing number of digital banks pulling in customers, high-street banks still appeal as Brits’ primary bank account.
More than half of UK adults have two or more personal bank accounts, meaning some are keeping accounts with traditional banks to access switch offers.
Switch offers are financial incentives, typically cash bonuses ranging from £100 to £500, offered by banks to entice new customers to move their current accounts to them, but often have requirements for monthly deposits and active direct debits.
Nationwide maintained the top spot in the battle for current account switchers in the final quarter of last year.
The building society secured a net gain of 41,450 switchers after it relaunched its £175 switching deal.
But this was closely followed by fintech Monzo who secured nearly 10,000 switchers, the second highest in the final three months, showing that digital banks are taking note of offers from traditional banks.
Over 20 per cent also confirmed they had no intention of opening a digital only bank account, while a further 14 per cent remained unsure.
Loyalty to the high-street
Respondents cited loyalty to their provider as the reason for not looking elsewhere, while others preferred the option of speaking to someone in person and using branch services.
While many prefer to enter a bank rather than use an app chat service, high-street providers are pulling back their presence, with Lloyds, Natwest, Santander and Halifax having plans to close branches in 2026.
Nationwide is the primary provider who has pledged to keep branches open until 2030.
Kate Steere, personal finance expert at Finder, said: “While switching offers can be tempting, don’t let a one-off cash incentive blind you to a poor user experience. It’s important to look for a current account that genuinely suits your financial needs.
“If branch support and face-to-face service are more important to you, this should be your priority when choosing a current account.
“Banking is ultimately a very personal decision so choose the bank that supports your day-to-day finances – rather than just the one waving a shiny reward in your face.”