More than half of all UK consumers are zoned out from bank accounts they no longer use.
In particular, UK consumers are frequently opening new bank accounts with digital challengers without closing existing accounts with established banks.
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As a result, traditional measurements and definitions of ‘dormant accounts’ and ‘switching accounts’ need addressing.
In all, around 61 million UK bank accounts can be regarded as zoned out, according to research commissioned by Crealogix.
Around 57% of respondents admitted to having at least one account they have not accessed in the last three months.
GenZ and millennial consumers ‘zoned out’
Moreover, one in four Gen-Zs and millennials say they had two or more accounts that are currently not in use.
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By GlobalDataConsumers are opening new accounts with “challenger banks” because of the features and perks that come with them. Around 46% of UK consumers agree they would be more likely to try out a new bank account if it provided personalised features based on preferences and lifestyle.
This jumps to over 70% among Gen-Zs.
This has led to one in four millennials and Gen-Zs adopting digital challenger banks, such as Monzo, Revolut or Starling.
The research discovers the most desired mobile features are:
- The ability to immediately freeze and unfreeze cards that have been lost or stolen. Almost half of Gen-Zs state this feature would encourage them to open a new account;
- A further 40% state that having a visual summary of spending is desirable;
- A third want a prediction of whether they were on course to run out of money before their next payday, and
- Instant PIN changes. The ability to split the bill between friends and the ability to trade cryptocurrency are also attractive features to Gen-Zs.
Consumers zoned out: traditional banks losing touch
According to Crealogix, traditional banks are losing out to challengers as they are not in touch with what consumers want. The report highlights that less than one in 10 consumers recall being asked anything about their lifestyle or purchasing preferences over the past year.
Moreover, the study finds that over half of consumers would be happy to pay for features and perks tailored to their lifestyle and habits. Two thirds of Gen-Zs would consider paying for a premium account. Such features include cash back on shopping, free worldwide travel insurance, and loyalty points or air miles.
Jo Howes, Commercial Director at Crealogix, comments: “The fact that nearly 61 million bank accounts remain open but unused shows an interesting and gradual shift from our traditional banking brand relationships and loyalty. This is hard to measure using current metrics.
“Traditional definitions of ‘dormant accounts’ & ‘switching’ need addressing”
While many of these accounts will not be considered dormant using the traditional definition, it does not mean they should be ignored. Their customers are very gradually leaving.
“And they are leaving because it is easy to open new accounts and there is no risk involved in opening a new account without “switching”. Banks look at switching statistics to measure success, but this is the wrong measurement.
“Banking providers are really missing a trick by not tuning in to what consumers want from their banks. Engagement is directly driven by understanding what features and services customers are looking for.
“We are seeing greater adoption of challengers and neobanks because they are putting the consumer first. They are offering convenience and services to make their lives easier.”
