UK digital-only banks—particularly neobanks—have broken into the mainstream, but not into steady profits. Under pressure from investors, neobanks are trying a range of strategies to diversify their revenue streams. Whether they can pull it off remains to be seen, so incumbents should seize this moment of flux to secure a bigger share of UK digital account holders.
By 2025, the UK’s cohort of digital-only banks—predominantly neobanks—will have captured more than half of the UK’s digital banking users, and almost 40% of adults overall.
Neobanks will maintain their grip on younger consumers, giving incumbents an uphill battle for digitally minded providers’ prime target audience. Penetration will be highest this year among 18- to 24-year-olds, and it will remain so into 2025 when it hits 64.9%.
