UK and US digital challengers see strong growth in 2020
With digital banking gaining popularity during the Covid-19 pandemic, challenger banks on both sides of the Atlantic have seen surging customer growth over the last year.
Chime, which leads the challenger pack, saw its customer base rise from eight million to 10 million over the year. Acorn saw a rise from 6.2 million to eight million, while Dave grew its base from five million to seven million.
Trading Platforms says that the strong growth can be partially attributed to the Covid-19 pandemic, arguing that some traditional lenders were not “ready” for the challenge of 2020 thanks to outdated legacy technology architecture.
Separate data from personal finance comparison site finder shows that 27% of Brits now have an account with a digital-only bank, up from 23% a year earlier.
A further 17% of Brits intend to join a challenger over the next five years, with 11% planning to do so over the next year. This could mean that 44% of Brits could have an account with a digital bank by 2026.
The top reason for opening an account continues to be convenience that digital-only banks provide, for the third year running (26%). The second most common reason was that users needed an additional account and setting up a digital one seemed to be the easiest option (20%). Customers also wanted to transfer money more easily (19%).
People wanting a trendy card is still driving signups as well, with one in 10 existing, or future, customers citing this as a reason to get an account.
Despite the increase in digital-only banking customers, the numbers who are not considering one have actually risen. Last year, 23% of respondents said they aren’t considering a virtual bank account, but this has risen to 42% in the latest survey.
This good news for traditional players is in line with research from App Annie, which shows that NatWest, Lloyds and HSBC all made the top five list for finance app downloads in the UK last year, beating out the fintech upstarts.