Challenger banks leading the way in UK, research shows

Challenger banks are leading the way in the UK, outperforming their high street counterparts in meeting the needs of their customers when it comes to digital payments, innovative services and account connectivity, according to research from financial services technology provider FIS.

The third annual PACE (Performance Against Customer Expectations) study surveyed 1,000 British banking customers, asking them about their banking experiences and how well their provider is meeting their banking needs.

Underperforming

Whilst UK banks overall were found to be underperforming in areas such as reliability, safety, security and providing financial advice, their overall PACE index score increased, rising by six points from 2016 and placing them close behind German and US banks.

The survey highlighted the rise in digital banking, with around three quarters of the contact that consumers in the UK have with their bank being via digital.

Mobile banking is becoming increasingly popular with millennials, with consumers choosing this method of banking over online banking, ATMs and branch banking, whilst younger and older millennials were found to be three times as likely to contact their bank digitally rather than at a branch.

However, traditional methods were found to still be important to the success of UK banks, with those who visit a bank branch more frequently being found to have more accounts on average with their main banking provider than those who do not visit branches on a regular basis.

Important

FIS Strategy Director, EMEA Banking and Payments Bruce Jennings said that the new study reveals how important digital banking is becoming to customers in the UK, and that digital channels have become the main way that customers connect with their bank.

He added that with UK challenger banks leading the way in this respect, it is necessary for high street banks to catch up quickly or be at risk of losing future customers.