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Digital Banks Need to Collaborate to Compete

Digital Banks Need to Collaborate to Compete

42% of the UK not ready for digital-only banking, favouring banks with a branch network.


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  • 42% of the UK not ready for digital-only banking, favouring banks with a branch network 
  • 11% use a digital-only bank as their main account
  • Cash is no longer king – only a third (34%) of under 35s still carry cash

On the week of SIBOS, KPMG UK uncovers the UK’s attitudes to digital finance, finding that two fifths of UK consumers would not use a digital-only bank. Although, when it comes to day to day purchases, digital firmly outpaces cash.

Whilst digital payments make up most day-to-day purchases, it seems that the UK is not ready to place all of its trust in digital-only banks. In a nationally representative survey of UK consumers, 24% said they already use a digital-only bank. One in ten currently use a digital-only bank as their main account. Whilst 13% use a digital-only bank for a secondary account, half said they would not consider switching to digital-only for their main account.

However, when it comes to payments, the picture is more positive for fintech. KPMG asked people how they most commonly pay for daily purchases, 45% told KPMG they use a contactless card, 10% use chip and pin and 4% use a digital wallet. That leaves 41% of the UK still using cash. Looking at 18 – 35 year olds, those numbers shift to 8% using a digital wallet, 51% using contactless and just 34% using cash. Amongst the over 55s cash remains the most used payment method at 53% versus 37% who use contactless and 0% using digital wallets.

Commenting Anton Ruddenklau, Head of financial services digital and innovation, KPMG UK says:
“The fact that two fifths of UK consumers won’t even consider using a bank with no presence on the high street demonstrates that there is a way to go to instil confidence. Few people rave about their bank, yet so many of us are cautious about trying a new way of doing things. The hurdle for digital banks is to get consumers to experience first-hand what the next generation of banking looks like. Countless statistics on customer journeys tell us that people find digital banking easier than the traditional high street model, but a lot of consumers aren’t tech-confident enough to give it a go in order to find that out. To really compete, digital-only banks should be considering how they collaborate as an industry to help customers feel digitally literate enough to give their services a try. The payments industry works in a far more collaborative way to bring new offerings like contactless payments to market, this could be a good example for digital-only banks to follow.”


Fintech use by City

Top users of digital-only banking Top users of digital payments 
Brighton (33%) Brighton (75%) 
Newcastle (32%) Cardiff (68%)
Plymouth (29%)  Southampton (65%)


Whilst London accommodates much of the UK’s financial services and fintech providers, 38% of Londoners said they would not use a digital-only bank at all. Meanwhile, Liverpool, Nottingham and Leeds are leading the way having the most citizens using digital only banks as their main account. People in Brighton and Bristol are twice as likely as the national average to pay with a digital wallet at 9% and 8% respectively.

Judd Caplain, Head of Banking and Capital Markets, KPMG Global, adds:
“In the first half of 2019, almost $38bn was invested into global fintechs and a healthy portion of this was driven by payments technology and digital banking. In the UK, digital-only banks have matured quickly with a number of the leading players now looking to expand globally. The direction of travel is clear, we are moving towards a fully digital financial services landscape. But, this study highlights some of the areas that need to be addressed to make sure no consumers are left behind. Fintech developments should not outpace consumer confidence or be implemented in place of the existing system, it’s vital that those who still rely on cash or visiting a physical bank still have options.”


For media enquiries, please contact:
Olivia Shalofsky, KPMG Corporate Communications
M: Tel: +44 (0)7469441308

Christina Bridge, KPMG Corporate Communications
M: Tel: +44 (0)7789 504905

About KPMG in the UK
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 16,300 partners and staff. The UK firm recorded a revenue of £2.338 billion in the year ended 30 September 2018. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 154 countries and has 200,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
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