New research published by Zopa has revealed a fundamental shift in the way that Britons are now banking, as new technologies, a new breed of fintech entrants, and changing attitudes to the high street banks, shape the future of the sector in the UK.
Zopa’s research found that over half of British adults don’t think their banks operate with customers’ best interests at heart*, this, combined with the plethora of new entrants offering better value and ease of access, means that monogamous banking is a thing of the past. Three quarters (71%)** of the UK adults surveyed stated that they no longer needed a relationship with their main bank, regarding it as purely functional. In fact, the average person now has products with seven different financial providers.
After years of apathy, people are starting to look beyond the incumbents for better value and easier to use products, shopping around for a broader mix of features that better suit their banking needs.
And it is the current account that is undergoing the most significant change, with 1 in 3 people in the UK (34%) or 17 million adults now holding two or more current accounts, a 36% increase on the amount recorded in 2015.
Zopa’s research also found that 2 in 3 people in the UK are actively using products from banks and financial providers other than their main current account provider. The most popular products to hold away from the current account provider are motor, home and travel insurance (80%, 77% and 64% respectively); followed by investments (71%); stocks, shares and ISAs (66%) and fixed term savings (45%). In addition, almost half of all people that have a credit card (45%) don’t have it with their main provider and 1 in 4 now look elsewhere for their regular savings account (27%) and instant access savings (26%).
This is the clearest sign yet that people are shunning “loyalty” to their main banks and instead actively seeking out the most appropriate credit card, personal loan, savings product or mortgage for them.
The Open Banking opportunity
Zopa says that while consumers are now enjoying a broader mix of financial products from a range of providers – in practice – the process of managing many different financial accounts is both complex and time consuming.
However, as Open Banking gathers steam amongst consumers throughout 2019 and into the future, people will be able to access a more complete view of all of their financial products and will be free to compare a variety of providers and products – essentially re-bundling their finances in an app of their choosing.
As that happens, people will naturally gravitate towards those financial providers which can deliver transformative value – whether financial value through their products, time value through ease of use, or valuable insights into managing their money better.
Jaidev Janardana, Zopa CEO, said: “The last decade of fintech revolution has fundamentally changed the way that people bank in the UK. Technology is enabling consumers to take control of their own finances, resulting in traditional banking relationships becoming purely functional. The apathy on which the traditional banking model has relied will soon be resigned to the past.
“Consumers now have more choice and are actively choosing to shop around for products and providers outside of the main banking relationship. The key to Zopa building a successful next gen bank will be delivering transformative value. We’ve demonstrated this already with our loans business – which has lent over £4bn to UK consumers, proving that savvy customers will consider new alternatives.”
Later this year, Zopa will launch its own savings and credit card products, plus a money management app harnessing the opportunity of Open Banking.
*YouGov Plc. Total sample size was 2017 adults. The figures have been weighted and are representative of all GB adults (aged 18+).
**Opinium Research. Total sample size 2,009 UK adults.