Would you trust your salary to a digital-only bank? Nearly half who use one say they don’t pay theirs in
- Smartphone banks like Monzo, Starling and Revolut are increasingly popular
- But customers aren’t fully committed to paying their salaries in, research shows
- 47% surveyed by comparison site Finder say they put in less than £1,000
The likes of Monzo and Starling may be gaining thousands of customers each quarter, but almost half of them don’t appear ready to place their full trust in the challengers.
According to data from comparison site Finder, some 47 per cent of Britons with a digital-only bank account keep less than £1,000 in it, while three in 10 have less than £100 deposited.
The survey of 2,000 people appears to chime with the prevailing narrative that challenger banks are not seen as a home for your salary, at least not yet.
Many Britons use smartphone banks to pay money out, but a new survey suggests some trepidation about whether you’d pay your salary in to one that was digital-only
The most well-known of the challenger banks Monzo, which passed 2million account holders last weekend, revealed in its most recent accounts published in July 2018, that four in five current account customers did not deposit their salaries with it.
The average deposit was less than £150, though chief executive Tom Blomfield insisted 40 per cent of new customers deposited at least £500 a month with the bank.
According to Finder’s survey, 38 per cent said they planned on keeping their traditional bank account as their main account for at least the immediate future, while also keeping a smartphone account for auxiliary use.
Often new customers open accounts with challenger banks before they go on holiday because of fee-free foreign ATM withdrawals and a better exchange rate compared to established high street names.
Others sometimes use them like prepaid cards and deposit their spending money, taking advantage of features like instant notifications and the ability to round up change.
While just 12 per cent of those surveyed had already gone fully digital with their banking, more than three in five said they eventually planned to deposit their salaries into a challenger bank and use it as their main account.
Challenger banks are gaining ground
The most recent figures from the Current Account Switch Service found Monzo and Starling gained almost 10,000 customers in the last three months of 2018, up from just under 4,500 in the preceding quarter.
However, it’s almost important to bear in mind the survey is only of those who already hold an account with a digital-only bank, and previous findings from the same comparison site revealed one in five didn’t know what one was.
Just over half told the January survey they had no plans to open an account with a smartphone bank, and even 50 per cent of those born after 1996 – the likeliest group to have opened one – said they didn’t intend to do so.
Jon Ostler, Finder’s chief executive, said the results revealed it was ‘clear fintech challengers have a way to go in convincing customers they are a safe, long-term option for their money’, even if scepticism of digital banking was ‘softening’.
He added: ‘Technology has enabled digital-only banks and personal finance apps to offer some amazing features like spending analytics, automatically investing your spare change and safety features such as being able to instantly freeze and unfreeze your card.
‘However our research shows that consumers are still hesitant about putting significant amounts of money in these accounts, and making them their primary ones.’
THIS IS MONEY’S FIVE OF THE BEST CURRENT ACCOUNTS