mobile banking woman using smartphone

Mobile banking to overtake physical stores by 2021 in the UK

Image credit: Dreamstime

Mobile banking is expected to overtake high street branches and other forms of internet banking in the UK by 2021, according to a new report.

Data experts Caci found that 25 million people in the UK, half the country, are now banking on mobile.

Mobile banking’s growth is fuelled by increasing adoption and migration by older demographics, especially wealthier older families and the “pre-retired” the firm said in its report, The Growth of Digital Banking 2019.

It also anticipated that in five years’ time more than three quarters of savings accounts will be opened through digital channels. The proportion of customers using app banking is expected to continue to rise over the coming years, reaching 71 per cent by 2024.

Meanwhile, the proportion of branch users will steadily decline to 55 per cent by that year, according to the predictions.

The tipping point at which mobile banking is expected to draw level with branches in terms of the proportion of customers using it and then overtake this method is predicted to happen in 2021, when 59 per cent of customers are expected to use mobile banking and 59 per cent are predicted to use their branch.

In November research from Which? found that the UK had lost two-thirds of its physical bank branches over the last 30 years raising concerns that less tech-forward people may have more difficulty accessing financial services.

Caci said that rather than mobile banking app users giving up using bank branches, the technology is supplementing branch use rather than replacing it.

The report also found that peer-to-peer (P2P) lending is attracting new audiences to the savings market.

Jamie Morawiec, associate partner at Caci and author of the report, said: “While digital - and mobile in particular - is clearly a front-runner for the future of banking, there is a huge potential for financial institutions to tap into unexplored markets such as younger customers who have current accounts but aren’t necessarily saving yet. The increase in popularity of peer-to-peer lending, alongside the rise of the challenger banks, will change the landscape for traditional banks.

“To stay tapped into the savings cross-sell, banks must offer a seamless, tech-driven user experience.”

Trade association UK Finance’s annual Payment Markets report said more than two-thirds of UK adults (71 per cent) used online banking and 41 per cent used mobile banking in 2018.

A spokesperson said: “More and more customers are now opting for the speed and convenience of using mobile banking to check their balances and make transfers while on the move. This rapid rate of technological change is set to continue over the coming decade as people embrace the ever-widening number of ways to pay and manage their finances, depending on their needs and lifestyle.

“But technology is not for everyone and maintaining access to cash is vital to ensure no customer is left behind.

“That is why all the high-street banks have arranged for everyday banking services to be available through 11,500 post offices across the country and mobile bank branches to reach more rural communities, while working with the government, industry and regulators to ensure cash remains widely accessible for those that need it.”

In May Chancellor of the Exchequer Philip Hammond quashed speculation that the UK would be abandoning 1p and 2p coins any time soon and that the Government considered cash payments to be an important part of the UK’s economic structure. 

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