One in four people under the age of 37 - those in so-called Millennial and Generation Z demographic groups - are using digital-only challenger banks and 14 per cent of UK bank customers across all age groups have at least one mobile-only digital banking provider – with up to a third of under 37s having two or more accounts with challenger banks.

This is according to an independent study undertaken by Censuswide on behalf of Crealogix in November, interviewing 2,000 18-65 year olds who currently have a bank account.

While the major banks maintain their dominant market share of current accounts at 87 per cent, the digital-only banks are gaining ground amid high levels of activity in new account opening – 44 per cent of respondents have opened at least one new bank account in the last five years, increasing to almost 80 per cent of Gen-Zs.

The research found that 61 per cent of UK bank account customers are thinking about opening an account with a new provider in the next three years. This trend increases with Millennials and Gen Zs, with 75 per cent looking to open a new account in the next three years.

It also suggested that newcomers are picking up market share at a rapid pace.

German challenger bank N26 feature in the survey results even though it only just launched in the UK in October – three per cent of Gen-Zs and 2.5 per cent of Millennials said they have an N26 account, which would include people who signed up for early access or are still on a waiting list.

The most popular mobile-only digital challenger banks were found to be Starling, Revolut and Monzo - Monzo being the most popular for the under 37s.

Preferences changed markedly for older respondents, which overall are much less likely to use a challenger bank – only six per cent of over-55s said they had an account with one of the leading challenger brands. Those who do have accounts with challengers preferred to use Revolut and Atom Bank.

Jo Howes, commercial director at Crealogix, said the figures clearly show that the challenger banks are making rapid progress and gaining market share.

“Our research shows that consumers are attracted to the convenience, usability, and personalisation available from the challengers – to respond to the challenge, established banks need to accelerate their digital transformation and prioritise customer-oriented features and benefits.”

Anton Zdziebczok, head of product strategy at Crealogix, added: “The question for incumbents - including both bank and building societies - is how they can transform their own offerings into something with enough appeal to compete with this influx of innovative competitors.”

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