Digital challengers are chipping away at the dominance of high street giants in the UK, with nine per cent of Brits now holding their main debit card with a neobank.
Digital-only financial providers - including neobanks such as Monzo, Starling and Revolut and fintechs like Klarna - have expanded their reach from 16% of UK adults in 2018 to 50% in 2024, according to a survey of 4000 people from RFI Global.
Many of these people are also using these upstarts as their main providers: the percentage of respondents holding their main debit card with a neobank rose from one per cent at the end of 2020 to nine percent at the end of 2024.
In the same period, the market share for the Big Six banks decreased from 85% to 71%. Neobank users also spend 20% more on their debit cards than customers of the high street rivals.
"Everywhere you look neobanks are becoming a bigger part of the system. They are popular among younger generations such as GenZ and millennials who value their advanced digital capabilities and convenience," says Hubert Petka, group director, RFI Global.
The research also shows that nearly half of UK consumers are dipping into their savings to cover rising household expenses and unexpected costs, the highest amount for over a decade. A further quarter say they will need to access more credit this year to cover continued rising costs - opening additional credit cards or using BNPL.
More than one in 10 are using BNPL to cover the cost of living and one in three combine BNPL use with credit cards.
Brits are becoming more comfortable with switching providers to cash in on attractive deals and to access rewards such as cash bonuses, interest and other perks. Of the consumers who are strongly considering switching their main current account in the next 12 months, half cite incentives or better rewards.
Says Petka: "Amidst fierce competition, banks have ramped up their efforts to win over consumers. These attractive rewards are reshaping the landscape of consumer loyalty and engagement."