Fintech challenger banks steam ahead of high street stalwarts in CMA ranking
Fintech challenger banks Starling and Monzo have leapt ahead of their high street rivals in an official ranking of UK lenders today, in a sign of growing demand from for digital banking among businesses and consumers.
Starling and Monzo came out on top for both personal and business banking, while the Co-operative bank, Virgin Money and HSBC UK tumbled to the bottom of the list for business banking in the closely watched bi-annual survey from the UK’s competition watchdog, the Competition and Markets Authority.
Royal Bank of Scotland, Virgin Money and TSB fell to the bottom of the list for personal current accounts in the survey of “thousands” of customers, which rank’s the UK’s top banks across areas including the quality of online and mobile provision, branch and overdraft services and the relationship management they receive.
The CMA made it compulsory for lenders to participate in the survey in order to provide a “full picture” of the market to customers, after an investigation into retail banking in the UK 2016 that aimed to boost competition and choice for consumers and businesses in the UK.
Starling Bank boss and Morning Wire business personality of the year Anne Boden said the results showed that banks did not need to “rip off customers” to deliver good service.
“You can be fair,” she said in a statement to Morning Wire. “It all starts with identifying customer needs and working back from there.”
CMA senior director Adam Land said it was crucial for banks not to let slip service as both businesses and consumers grapple with soaring inflation and a cost of living crisis this year.
“When times are tough you find out who’s fighting your corner and if your bank doesn’t match up to the competition – you can vote with your feet and make a switch,” he said.
The findings underscore a shift in expectations of banking services as app-first lenders guzzle up market share and challenge the old bricks and mortar stalwarts of UK retail banking.
Covid lockdowns accelerated the shift to digital banking as branches were shuttered and customers were shunted onto digital platforms. A survey by YouGov earlier this year found that 81 per cent of people say the quality of online experience determines who they bank with, while the over 55 age group saw a sharp 60 per cent jump in more frequent digital banking usage after the pandemic.
The incumbent UK lenders have been looking to rapidly upgrade their digital systems to keep pace with fintech challengers.
In a statement today, a spokesperson for the Royal Bank of Scotland accepted it “can do more to improve the experience for customers in certain aspects of our service”.
“We’re investing in dedicated teams focussed on making targeted improvements for customers in order to address the areas where our service falls short of expectations,” they said.
A Co-operative bank spokesperson told Morning Wire that it had made “significant investment” in into its business banking services including “improvements to digital banking channels and the broader customer service experience”.
Virgin Money said today the bank was “determined to provide positive experiences for customers” and it was confident that its “ongoing investment in compelling customer propositions and digital innovation will deliver on that ambition.”