Only 5 years after the launch of the first challenger bank accounts, the UK’s major financial institutions are facing a new revolution; this time in the shape of the nation’s savings accounts.

New insight by data expert CACI also reveals that the way we bank is changing dramatically, with almost half of the UK’s adult population, 25 million customers, now banking with mobile. The report shows that by 2021, mobile will become the biggest channel in terms of users – over-taking branches and desktop banking to claim the number one spot.

Indeed, over the past few years, using mobile and apps to use bank services has grown in popularity, each day there are more than five million mobile log-ons – a number four times greater than five years ago. However, as the choices available to customers become more varied, the data reveals that digital channels are not replacing branches but supplementing them. Overall, engagement is on the up, and the majority of customers are demonstrating multi-channel behaviour, demanding different transactions and experiences from the different channels they use. For instance, while the proportion of customers using mobile banking apps will reach 71% by 2024, the numbers of total branch users will only gradually decline to 55%, from 65% 3 years ago.

The latest land grab within the traditional banking heartland from disruptor banks will come in the form of highly-prized mobile-only and digital first savings accounts. This trend shows no signs of slowing down either, with predictions showing that by 2024, more than 75% of new savings accounts are expected to come from online channels. Mimicking the growth of digital current accounts, there is a very noticeable second wave of digital adoption now occurring in groups over 50, as this generation becomes more comfortable with using technology for their savings and the industry continues to make it easier for consumers to research and compare products.

The “The Growth of Digital Banking 2019” report splits the population into the CACI’s Fresco segments built by combining its data on the UK’s population and Ipsos’ Financial Research Survey. It also draws on data by online intelligence platform Hitwise.

According to the report, peer-to-peer (P2P) lending is attracting new audiences to the savings market. In the first three months of 2019, there were around 16,000 web searches for the term “peer-to-peer lending”. The wealthiest Fresco segment, or “High-Income Professionals”, were two and a half times more likely than the average consumer to search for this term. Yet, 36% of these searches also came from the four youngest segments, those with a lower likelihood to have significant savings today but who are worth a collective £66 billion in terms of current savings account value. While only 49% of those “Starting Out” hold a savings account today - compared to 83% of “Asset Rich Greys” - these younger, digitally engaged individuals are tempted by the higher returns without being deterred by the risks involved.

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. In order to win over these younger savers, a digital proposition should be simple to set up and use in-app, and not require long-term or significant commitment.”