The Monzo effect: Challenger banks make life increasingly difficult for traditional high street rivals
Challenger banks are outperforming traditional and established financial institutions more and more, with a growing number of Brits taking up accounts with Starling, Monzo or Triodos.
According to new data shared with Morning Wire this morning, the digital-only banks beat traditional institutions when it comes to customer service and mobile apps.
Consumer group Which! asked more than 4,400 people what they think about their current account providers.
Starling Bank received a high enough score in Which?’s product analysis to be named a Which? recommended provider (WRP), joining First Direct and Nationwide Building Society.
Four challenger banks achieved high customer scores, but missed out on becoming WRPs by not meeting all of Which?’s criteria.
Triodos and Metro Bank received lower-than-average scores in Which?’s own product analysis, while Monzo and Triodos have not signed up to an industry code for reimbursing scam victims.
Royal Bank of Scotland (RBS) finished bottom of the table.
Current accounts
When Which? asked people what they like about their current accounts, many cited online banking facilities (47%), positive past experiences (34%) and mobile banking facilities (32%).
But one in seven (13%) current account holders said they never use their smartphone to bank and 5% use it less than once a month.
Of those who never or rarely use mobile banking, half (49%) prefer to use online banking via a computer or tablet, around four in 10 (43%) do not feel the need to use it and three in 10 (31%) think it poses too much of a security risk.
Accessibility is also an issue, as one in five (18%) of those who never use mobile banking or use it occasionally lack the confidence to use mobile banking technology and 10% have phones that are not suitable for apps.
Local branch
Being near a local branch is something a quarter (27%) of people in Which?’s survey said that they particularly like about their accounts.
But it said banks continue to make drastic cuts as 736 branches shut their doors in 2021, and more than 220 are already scheduled to close in 2022.
Jenny Ross, Which? Money editor, told Morning Wire this morning: “While many current account holders stick with their banks over many years, we found leading challenger banks are ahead of the traditional high street names in terms of customer satisfaction.
“Our research shows a clear gap between the best and worst providers and this should encourage customers unhappy with their service to switch banks, as it’s never been easier.
“With the cost of living soaring, it’s vital to get the most out of your current account. Switching can bring great incentives such as cash bonuses, accounts paying interest on your balance and even cashback on your purchases.”
Full list
Here are banks’ expert product scores followed by their customer scores, according to Which?
– Starling Bank, 73%, 85%
– Monzo, 64%, 83%
– Triodos Bank, 57%, 83%
– First Direct, 93%, 82%
– Revolut, Not applicable, 78%
– Metro Bank, 65%, 77%
– Nationwide Building Society, 75%, 75%
– Cumberland Building Society, 53%, 73%
– Smile, 63%, 72%
– The Co-operative Bank, 57%, 70%
– Halifax, 77%, 67%
– NatWest, 78%, 67%
– Santander, 76%, 66%
– Lloyds Bank, 80%, 66%
– Barclays, 81%, 65%
– Bank of Scotland, 77%, 64%
– Virgin Money, 70%, 63%
– TSB, 67%, 59%
– HSBC, 75%, 57%
– Royal Bank of Scotland, 78%, 56%