The Growth of Digital-Only and Fintech Banks: A millennials' perspective

Feature

If you’re anything like me, money has always been a difficult thing to manage. It was only when friends recommended I tried a digital-only bank that things began to change, and it seems I'm not the only Millennial who is trying a new pathway when it comes to banking.

One in ten new current accounts opened between June and December 2019 in the UK was a digital-only bank. Our generation is also defined as the ‘Net Generation’, a population of young(ish) adults who grew up as the internet, mobile phones and social media began their rapid journey into normality. From my experience, over the last few years of having a digital-only bank, I've seen how popular they have become with many of my age group. From research generated by Assurant, ‘86% of 18-34 year olds would be happy to do all of their banking via an app’. This way of banking appeals to many - not only for managing money, but for easy accessibility and greater visibility of where our hard earned salaries are going. One in two people aged 25-34 agree that ‘worrying about running out of money between paydays is stressful’, so having options like, creating multiple saving spaces or a ‘bills only’ area to allocate my cash within one current account is a godsend! And this all comes without the need to try and get down to a local branch during lunchtime.

For anyone who is reading this and wondering ‘what is a Fintech bank?’, let’s start with the basics…

What is a digital-only or Fintech bank?

Fintech

A digital-only or Fintech bank can be described as ‘A bank that provides all its banking facilities online and through app platforms on smartphones and tablets, with no physical branches. ‘Fintech’ refers to providers offering innovations in both financial services and technology. There are many providers on the marketplace including, Monzo, Starling, Revolut and many more!

What do we expect to see happen with traditional banks over the next few years?

According to KPMG, digital-only banks ‘…are on the rise, but don’t look for them to supplant traditional financial institutions anytime soon.’ However, most digital-only banks offer niche services such as real time spending notifications, the ability to freeze and unfreeze cards immediately, direct in-app support, bill splitting and savings pots, meaning that traditional banks need to find a way to increase their service offering and digital innovations. For most people though, digital-only bank accounts are used more as a ‘secondary card’ to help manage spending habits or for use abroad as holiday money. The Financial Times said: While millennials are more likely to open an account with a digital bank, they are still reluctant to use them as their main bank account.’ Therefore, there is some way to go before Fintech banks can build the trust held by the big banks and see consumers using them for their primary banking needs.

Why is it important to keep my phone protected if I'm a digital-only bank account holder?

Well let’s face it, as a Millennial if our phone breaks, we are fully guilty of feeling like we are completely out of touch– that is until we’ve either replaced the screen or had to buy a totally new phone! With our precious salaries not appreciating our clumsiness, it’s mad to think that most of us don’t have mobile phone insurance. Protect Your Bubble’s most recent research (January 2020), indicates that ‘only 39% of UK users polled have phone insurance’, and nearly ‘20% of people in the UK are walking around with a smashed phone’. What’s worse is that, if like me, you only rely on your phone for banking, not having a phone means not having proper access to your money, nor being able to understand why you are left with just 57p at the end of the month…when you’re convinced you only went on a night out once in the last few weeks and kept frivolous avocado on toast purchases to a minimum.

The new year has only just been and gone, yet already in 2020, more than 64 million smartphones will have been dropped on the ground. That’s concerning, considering our research indicated that ‘over half of our respondents use a mobile device for their banking activities, and this increases to 81% of millennials’.

So maybe it’s time to invest a little more in protecting what matters most to us?

Here at Assurant, we can help ensure that a mobile phone mishap doesn't feel like the end of the world! From our research, 'more than two thirds of digital-only bank customers would be interested in taking out mobile phone insurance…with Assurant.' So why not check out our products and services and see how you or your business could benefit. Whether it is our  Mobile Phone Insurance or our award winning Rapid Service*, we could help you continue banking through your device and watch those pennies turn into pounds. Alternatively, if you’re a business looking to give your customers peace of mind, talk to us about how we could help them stay connected to their money 24/7!

*For business customers only. Terms and Conditions apply, see website for details.