The study of 2,005 UK adults, entitled ‘Rise of the Instant Bank,’ conducted by Census wide and commissioned by Five Degrees, shows that challenger banks are leading the way in an instant bank account set up but traditional banks are catching up. 4 in 10 (40%) UK challenger banking users and over a third (37%) of traditional banking customers report an instant bank account set-up.

The findings also uncover the preferred form of banking among consumer and business customers. 95% of Brits report to use a traditional bank, and are more likely to take out a mortgage with their traditional bank (21%) than a challenger bank (11%).

Meanwhile, there is a growing customer base of challenger banking business customers and high earning individuals on an income of £75k+ a year.  1 in 5 (22%) customers are using challenger banks for business, compared to less than 1 in 10 (9%) of traditional banking customers, and over a quarter (28%) of higher earners of £75k+ income are using challenger banks. Challenger banking customers use cash management and currency trading (FX) the most frequently.

Current customer satisfaction among Brits is also examined by the report. Traditional banks risk losing customers due to service outages, more commonly reported than customers of challenger banks. The data shows that almost double the number of UK customers of traditional banks (38%), experience disruption to their service on a yearly basis compared to challenger banking users (21%).

The report outlines recommendations on how banks can win and retain customers. The findings uncover that financial incentives and higher interest rates are the key motivations behind why Brits switch banks.  Meanwhile, millennials and higher earners will switch banks for a better online experience and customer service

Peter-Jan van de Venn, managing director and banking IT specialist, Five Degrees, said: “Our research shows that the majority of traditional and challenger banks in the UK are currently lagging behind customer demand for an instant account set up, and risk missing an opportunity to attract new customers and retain existing ones.”

“With the rise of ‘big tech’ such as Google and Amazon, consumers are now used to fast, personal, safe and always-available portable solutions.  Banks must ensure that they take the same highly personalised and nimble approach as big tech, otherwise they will risk alienating existing and new customers with lengthily on-boarding processes.”

“For banks to stay ahead of customer demands they must ensure they champion customer satisfaction across all channels, harnessing ‘Open Banking’ to increase efficiencies within account setup processes, and align with regulation effectively.”