UK consumers are leading the charge on digital financial services adoption amid rising demand for more innovation and convenience in payments and banking, according to a study from Marqeta (NASDAQ: MQ), the global modern card issuing platform powering some of today’s most innovative embedded finance solutions. The 2024 State of Payments Report released today - surveying 4,000 consumers across UK, US and Australia, including over 1,000 in the UK - reveals that the UK is ahead of the US in digital financial services adoption with 80% of UK respondents reporting using contactless payments in the past week, almost double the number reported in the US (46%).

The report, the fifth annual Marqeta survey of consumers about their purchase preferences, reveals that UK consumers are growing more comfortable with a cashless society with 50% of UK respondents citing they’re feeling positive about this shift and 50% have also decreased their cash spending in the past year, compared to 31% of US respondents. UK consumers have also embraced the transition to digital wallets, with almost three-quarters (74%) of those surveyed confirming that they automatically add a new card to their mobile wallet, 40% surveyed reporting using a mobile wallet in the last week, and over two-thirds (68%) now feeling confident enough to leave their physical wallets at home, demonstrating the societal shift to increased reliance on digital payments.

Demand grows for faster pay

The study also finds that in the UK, existing payment structures are lagging behind the growing consumer demand for instant, digital payments. Despite 88% of UK respondents agreeing that getting paid earlier would improve their financial peace of mind, the majority (82%) still only have access to owed funds at the end of the month. Providing earlier access to wage programs like Accelerated Wage Access (AWA) could help UK workers that are struggling to keep up with the rising cost of living, including the 36% of UK respondents that reported using credit between paychecks and the 76% that cited they often live paycheck-to-paycheck.

“Competition is rife in payments, and there is pressure on payment and financial providers to innovate at the speed demanded by consumers, which means business need to offer people more convenient ways to make payments and access their wages,” said Marcin Glogowski, SVP, Managing Director Europe and UK CEO at Marqeta. “While traditional banks still have a hold on the UK market, consumers are experimenting with new payment and banking options alongside their traditional banks, and they're very open to exploring embedded finance offerings from non-financial services companies. This is opening up a world of opportunity for brands that can keep up with the changing preferences and consumer desires around how they want to pay and be paid.”

Banking slower to evolve, but change is underway

Within banking, UK consumers have been slower to adapt to a completely digital offering compared to the trendsetting pace of digital payments adoption, with over half (53%) of UK respondents reporting they’ve been a customer of the same bank for a decade or more. However, 20% of UK respondents confirmed they would consider shifting completely to a digital only bank, and 39% would consider using a non-financial provider. UK consumers value trust above all else when selecting a non-financial services provider, with over half (52%) of consumers citing trust in a brand as a reason for selecting it. As embedded finance becomes more widely adopted, and alternative providers more established, it's likely that digital options outside of traditional banks will be more strongly embraced.