Higher Interest Rates Rank as Top Reason to Open Digital-Only Bank Account

Higher interest rates have become the leading reason for UK consumers to open a digital-only bank account, with 15% of adults citing this factor, according to Finder.

Finder highlighted that the savings landscape is constantly shifting, but analysis from its latest report revealed that digital-only banks now tend to offer higher interest rates

Finder’s analysis of instant access saving rates found that, on average, digital-only banks offer interest rates more than twice as high as those of the UK’s ‘big four’ high street banks.

The largest four traditional banks provide an average rate of 1.52% AER on their primary instant access savings accounts. In contrast, four major digital banking providers offer an average rate of 3.35% AER, giving savers over double the returns on their savings.

While the top reason for opening a digital-only bank account was better interest rates, this was closely followed by the ability to transfer money more easily (14.7%) and convenience (13%).

Other common motivations for turning to digital-only banking included free transactions abroad (12%), a preference for digital-only banking apps (10%) and recommendations from friends and family (9%).

The report also revealed a significant rise in the use of digital-only bank accounts, as 40% of UK adults now hold such an account. This marks a sharp increase from 36% at the start of 2023 and 24% at the start of 2024.

Additionally, 17% of Brits plan to open a digital-only bank account, including 7% aiming to do so within the next year and 10% planning to open one further in the future.