Digital-only financial institutions are increasingly challenging the established high street banks in the UK, with nine percent of the population now using a neobank as their primary debit card provider.
Research conducted by RFI Global reveals a remarkable growth in the adoption of digital financial services, highlighting that the share of UK adults engaging with neobanks—such as Monzo, Starling, and Revolut—has surged from 16% in 2018 to an impressive 50% in 2024.
The trend towards neobanks as primary financial providers is evident, with the percentage of respondents utilizing a neobank for their main debit card rising from just one percent at the end of 2020 to nine percent by 2024.
During this same timeframe, the market share of the traditional Big Six banks has seen a notable decline, dropping from 85% to 71%. Additionally, neobank users report spending 20% more on their debit cards compared to those using traditional banks.
Hubert Petka, Group Director at RFI Global, comments, “Neobanks are increasingly woven into the fabric of the financial system, particularly appealing to younger consumers like Gen Z and millennials who prioritize digital innovation and convenience.”
The research indicates a growing financial strain among UK consumers. Nearly half are tapping into savings to manage rising household expenses—marking the highest reliance on savings in over a decade. Moreover, a quarter of respondents anticipate needing additional credit this year to cope with escalating costs, leading to increased interest in credit cards and buy now, pay later (BNPL) options.
Over ten percent of adults are now utilizing BNPL to address the cost of living, with one-third of them combining BNPL services with credit card usage.
British consumers are becoming more adept at switching financial providers in search of better deals and rewards, such as cash bonuses and favorable interest rates. Among those considering a switch in their primary current account over the next year, half are motivated by attractive incentives.
Petka adds, “In this competitive landscape, banks are intensifying their efforts to capture consumer interest. The introduction of appealing rewards is transforming consumer loyalty and engagement across the market.”