Starling and Monzo eclipse UK high street banks

Starling, Monzo eclipse UK high street banks
Canary Wharf’s retail giants are being overtaken by challenger banks like Starling. Photo: Hannah McKay/Reuters

The dominance of traditional retail banks is wavering as digital challenger banks outperform in customer satisfaction, a new survey revealed.

Starling Bank, Monzo and Triodos led consumer group Which?’s customer score table, with the trio of challenger banks being ranked highly for their customer service and mobile apps.

Digital challenger bank Starling secured 5 stars for both customer service and mobile app, securing an overall 85%.

Starling Bank has opened over 2.7 million accounts to date, including 475,000 accounts for UK SMEs and has an £8.4bn deposit base after growing in 2021. Its lending is up from £1.9bn to £3.1bn.

Monzo was close behind in second place with 83%, also securing five stars for both categories.

Triodos got five stars for customer service but its app was rated as 3-star, leaving it in third place with a score of 83%.

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First Direct (82%), Revolut (78%) and Metro Bank (MTRO.L) (77%) also proved to be popular with customers.

At the bottom of the customer satisfaction table were the traditional retail banks, ranking poorly for service in branches, and receiving mediocre scores across all other categories.

Languishing at the very bottom of the list was the Royal Bank of Scotland (RBS), with an overall customer score of 56%. HSBC (HSBA.L) (57%) and TSB (59%) made up the bottom three.

RBS has been one of the three lowest-ranked banks for customer score every year since 2014.

Other high street banks also underperformed in customer satisfaction. Barclays scored 65%, securing only two stars when it came to service in branch. Santander got 66% and three stars out of five on its mobile app.

Lloyds Bank (LLOY.L), at number 13 on the list with a score of 66%, was awarded three stars for its handling of complaints but it did get four stars in the online banking category.

Halifax and NatWest (NWG.L) were in the middle of the list, both with an overall customer score of 67%.

Jenny Ross, Which? money editor, said: “While many current account holders stick with their banks over many years, we found leading challenger banks are ahead of the traditional high street names in terms of customer satisfaction.

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“Our research shows a clear gap between the best and worst providers and this should encourage customers unhappy with their service to switch banks, as it’s never been easier.”

Four in 10 current account holders have been with the same bank for more than 20 years.

“With the cost of living soaring, it’s vital to get the most out of your current account. Switching can bring great incentives such as cash bonuses, accounts paying interest on your balance and even cashback on your purchases,” Ross said.

Most customers cited online banking facilities (47%), positive past experiences (34%) and mobile banking facilities (32%) as what they liked most about their current accounts.

Online banking is still seen a risk for some, with one in seven (13%) current account holders stating they never use it and 5% using it less than once a month.

Of those who never or rarely use mobile banking, half (49%) said it is because they prefer to use online banking via a computer or tablet, around four in 10 (43%) do not feel the need to use it and three in 10 (31%) think it poses too much of a security risk.

Accessibility is also an issue, as one in five (18%) of those who never use mobile banking or use it less often than once a month lack the confidence to use mobile banking technology and 10% have phones that are not suitable for apps.

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