Mobile banking ‘to be more popular than high street branches by 2021’

Mobile banking is set to overtake high street bank branches by 2021 in terms of popularity, according to projections.

Data experts Caci said growing numbers of people owning a smartphone is partly behind the increase.

It said mobile banking’s growth is now being fuelled by the increasing adoption of the technology by older generations, in particular wealthier older families and those nearing retirement.

The proportion of customers using app banking is expected to continue to rise over the coming years, reaching 71% by 2024.

Meanwhile, the proportion of branch users will steadily decline to 55% by that year, according to the predictions.

The tipping point at which mobile banking is expected to draw level with branches in terms of the proportion of customers using it and then overtake this method is predicted to happen in 2021 – when 59% customers are expected to use mobile banking and 59% are predicted to use their branch.

Caci said that rather than mobile banking app users giving up using bank branches, the technology is supplementing branch use rather than replacing it.

It said the decline of branch visitors is modest – and even in five years’ time, more than half of customers will still be visiting branches.

The Growth of Digital Banking 2019 report also said that peer-to-peer (P2P) lending is attracting new audiences to the savings market.

Jamie Morawiec, associate partner at Caci and author of the report, said: “While digital – and mobile in particular – is clearly a front-runner for the future of banking, there is a huge potential for financial institutions to tap into unexplored markets such as younger customers who have current accounts but aren’t necessarily saving yet.

“The increase in popularity of peer-to-peer lending, alongside the rise of the challenger banks, will change the landscape for traditional banks.

“To stay tapped into the savings cross-sell, banks must offer a seamless, tech-driven user experience.”

Trade association UK Finance’s annual Payment Markets report said more than two-thirds of UK adults (71%) used online banking and 41% used mobile banking in 2018.

A spokesman said: “More and more customers are now opting for the speed and convenience of using mobile banking to check their balances and make transfers while on the move.

“This rapid rate of technological change is set to continue over the coming decade as people embrace the ever-widening number of ways to pay and manage their finances, depending on their needs and lifestyle.

“But technology is not for everyone and maintaining access to cash is vital to ensure no customer is left behind.

“That is why all the high-street banks have arranged for everyday banking services to be available through 11,500 post offices across the country and mobile bank branches to reach more rural communities, while working with the government, industry and regulators to ensure cash remains widely accessible for those that need it.”