Over a third of British residents plan to move their financial dealings entirely to digital banks this year.

In the rapidly evolving world of finance, digital-only banks are set to shake up the UK personal banking sector. Atom and Starling are among the providers gearing up to launch their digital-only services, leveraging innovations like AI and open banking.

Severy digital-first banks (neobanks) are launching new services this year, aiming to disrupt traditional banking. Major neobanks such as Aion, DiPocket, and Modulr are expanding their digital offerings in partnership with Mastercard, potentially causing significant disruption to traditional banks.

According to David Webber, managing director of Intelligent Environments, digital-only banks are in a strong position to disrupt traditional providers. However, Webber also suggests that digital-only banks do not necessarily spell the end for traditional branches, as many people still value in-branch services.

The introduction of digital-only banks has sparked a debate about their potential impact. While 44% of UK banking customers claim that in-branch services are important to them and would not switch to digital-only banks, more than half of UK banking customers don't like the idea of not being able to speak to someone in person if they have a problem.

On the other hand, more than a third (31%) believe digital-only banks offer better mobile and digital banking services than traditional banks. Moreover, 16% believe digital-only banks will have fewer security problems than traditional banks, and 14% of respondents trust digital-only banks more than traditional banks.

Webber's research indicates that people believe digital-only banks will offer superior online and mobile services. In fact, 60% of respondents consider mobile and digital banking services as very important. One in eight UK banking customers plan to switch to digital-only banks, and within five years, more people are expected to have an account with a digital-only bank than a traditional provider.

Despite the potential disruption, traditional providers have an opportunity to improve their digital and mobile services. They can focus on providing a superior in-branch experience to cater to the needs of those who value traditional banking.

As the digital-only banks launch in the UK this year, the future of personal banking is set to be an exciting one, with traditional and digital-only banks vying for customers in a bid to offer the best services.

Over a third of British residents plan to move their financial dealings entirely to digital banks this year.