Why UK consumers are opening new bank accounts - and what banks can do to keep them

In a quest to encourage stickiness among new customers flicking to set up accounts, banks might want to prioritise both technology and service, while also rewarding customers for their loyalty.

WHO is opening new bank accounts?

The cost-of-living crisis and persisting uncertainty have created a climate where consumers are taking chances by opening new bank accounts with little risk. Four in ten (42%) UK consumers have opened a new personal or joint current account in the last six months.

Gen Z and Millennials are the main groups opening these new accounts, with 67% and 60% respectively doing so. Interestingly, one in four of these accounts is a first account, but over a third (34%) are switches.

WHY are consumers opening new bank accounts?

People’s reasons for switching banks are numerous. The primary reason is that it’s often free to do so, but tech features are also a significant factor, with 32% citing a good mobile banking app as one of the main reasons for opening an account. These have a much higher impact than higher interest rates on savings and deposits or cashback incentives when influencing decisions to open new accounts.

Service issues with current providers are also contributing factors, with one in five mentioning this as a reason for opening a new account.

WHERE are consumers opening new bank accounts?

Despite mobile apps being a popular driver, digitalisation has not influenced demand completely. Nearly one in four UK consumers cite having a physical branch as a contributing factor when choosing to open a new account.

Consequently and perhaps unsurprisingly, over a third (34%) of new bank accounts were opened with the Big 4 High Street banks (Lloyds Banking Group, Barclays, HSBC and NatWest Group), with only 13% of UK consumers going to Neobanks, and Monzo garnering almost half.

Encouraging loyalty amongst new customers

In a quest to encourage stickiness among new customers flicking to set up accounts, banks might want to prioritise both technology and service, while also rewarding customers for their loyalty. Instead of focusing solely on offering high incentives to new customers, banks may need to look to build long-term relationships with their clients.

Switching banks has become much easier in recent years – younger generations are especially likely to take advantage of new technology, and while older generations may not be early adopters, they are becoming more comfortable with technology as digital adoption has accelerated since 2020.

Incentives, such as high savings rates, cashback, BNPL deals, and money management support, are readily available. Nearly half of those opening new current accounts are either in the process of buying a property or have plans to buy in the next 12 months. Banks could encourage customers to stay by offering attractive mortgage deals or advantageous savings accounts.

By prioritising loyalty and offering valuable incentives, banks can build strong relationships with new and existing customers and retain their business over the long term.