Digital banks and the future of personal finance

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Digital banks are revolutionising the way people manage money. In today’s age of the smartphone, more and more customers are joining banks which are fully online, entirely relying on apps for all transactions. It seems banking customers no longer place as much importance on their bank having a local high street branch, which reflects a trend that’s already reshaping other sectors. We shop, communicate and entertain ourselves online – so why not bank there too?

Digital banks market themselves on having slick apps, promise more transparency and pledge to put customers first. They are disrupting the traditional banking industry, despite it being a highly regulated environment. This growing fintech market makes for a great investment opportunity right now – but who are the big players and what is customers response to it?

One of the best-known start-up online banks is Monzo, founded in East London. Its easily recognised coral-coloured cards are now used worldwide. Despite only beginning in 2015, Monzo now has over 600,000 account holders, a number that looks set to continue growing.

Starling, another popular mobile-only bank also launched in the UK, offers personal and business accounts. In a recent tweet, the company announced it’s growing at a monthly average of 20% and investing in improving customer service.

But what do customers really think of online banking vs traditional banking and when will we reach the plateau?

onefourzero looked at online conversations towards some of the most popular digital and traditional banks since 2015. The data shows a trend of growth in popularity towards Monzo and Starling, with these companies overtaking traditional banks such as HSBC and Santander in volume of mentions.


Demand for online banks is increasing at a rapid rate, and the figures show that digital banks are a real competitor to traditional banks. While the results for Tandem and Atom are lower, the overall trend is optimistic in the sector.

Smaller banks ready to grow such as these could be a great investment opportunity, especially because sentiment towards digital banks is generally positive. Just last month, for example, 86.7% of online sentiment towards Monzo was positive or neutral, despite a couple of technical issues that affected customers in the period.



During the same period, online sentiment towards the giant HSBC was 24.1% negative, while Santander in fact performed better than Monzo. This may indicate that it’s not a question of digital vs traditional banks, but how well individual brands are engaging with customers. And, as expected, the traditional big players in the industry are ready to fight back.

That said, this should not discredit the incredible progress Monzo and other digital banks are making in an industry dominated by huge, international players. Santander is a well-known global bank, and for a startup to be receiving a similar volume of online interaction to them is a noteworthy feat. Like Santander, Monzo generally experiences incredibly low levels of negative feedback, only really receiving negative comments when faced with technical problems.

This is something digital banks are working diligently on improving –  Monzo, for example, is creating a system status page as a solution to update customers in real time about any issues. The move contributes to their promise of transparency, and it seems to be working. Online-only banks put a lot of effort into such technology and innovation in order to retain customers, and this reflects on their positive feedback. In the US, where customers are still sceptical about this new form of banking, the industry watches carefully the slow, but consistent growth.

Smaller digital banks such as Atom and Tandem offer a lot of opportunities to grow, which makes them an interesting investment. But investors shouldn’t disregard larger players in the digital banking scheme either – Monzo is expected to announce another funding round soon.

With demand and sentiment growing towards those who actively engage in digital banking, there are good indicators that this will continue to grow, so fintech and digital banking make for interesting growth investments.

To find out more about how onefourzero’s data analysis and insights can help you identify opportunities for growth and potential risks, click here or contact