Wednesday 9th December 2020. London UK.Fast-growing Fintech app Plum is today releasing new data that shows how even among its tech-savvy customer base, traditional banks are still preferred over neobanks. It also reveals surprising insights into the profile of neobank customers, including their typical gender, income and appetite for investments.
This new analysis comes from a sample of 450,000 connected Plum customers who have linked their bank accounts to Plum via Open Banking, allowing the app’s smart saving algorithm to analyse their income and outgoings and put aside personalised amounts for them*. As the primary account linked to Plum is usually the customer’s main account where they receive their income, this gives Plum a unique overview into which banks are the most popular choice for day-to-day use.
91% of Plum customers are linking traditional, high street banks** to Plum despite the boom of digital-only neobanks like Monzo, Revolut and Starling in the last decade. This would suggest these challenger banks still have a way to go before becoming the trusted banking partner for the majority. Of the 91% that link a traditional bank account to Plum, just 2% have linked a neobank to Plum as their second account. Meanwhile, from the 9% that have linked a neobank first, 22% also have a traditional bank linked to Plum, suggesting nearly a quarter of neobank customers like to have the back-up of a traditional account as well.
While the youngest age group on Plum (18-24) has a somewhat stronger preference for neobanks with 13%, the dominant age group for Plum customers (24-34) is lower at 9.1%. The 55+ cohort shows the least interest in neobanks, with 95% linking traditional banks to Plum. The most popular neobank overall for Plum customers is Monzo, and the most linked traditional bank is NatWest.
Analysis into the banks linked to Plum also showed the approaches of different genders towards their primary bank account. Of the 9% Plum customers that did link a neobank, only 34% identified as female, while 51% identified as male. Meanwhile for the customers that linked traditional banks, the majority (53%) were female against 37% male. This would indicate that overall, traditional banks are generally preferred as a primary account over neobanks among women in particular, when taking into account that the user base of Plum overall is mainly female (60%).
Victor Trokoudes, CEO and co-founder of Plum, comments: “There’s a lingering lack of trust in neobanks that still remains among our customers. The majority of them are millennial-aged and are clearly comfortable with Fintechs as they are letting Plum put their savings on autopilot. Yet they are not flocking to the neobanks in the way you might expect. Women in particular haven’t been won over as it looks like they are choosing to stick with traditional banks. One issue is that you’re tied to opening a bank account with the neobank before you can do anything. This is a big commitment, and requires a large amount of customer trust. Inevitably, becoming more bank-like to win that trust means the focus is on being an efficient bank rather than on making things more efficient and maximising customer money. ”
Where traditional high street banks have tended to keep their current accounts free of charge and make money from lending and other services, the neobanks, particularly Monzo and Revolut, have chosen to launch premium subscriptions offering extra services for a monthly fee. However, Plum data shows that only a small percentage are opting to subscribe. From all the customers that have Revolut as the primary account, only 27% are paying for a subscription to Revolut Premium or Metal (priced at £6.99 p/m and £12.99 p/m respectively). Meanwhile, just 9.8% of Monzo customers on Plum are subscribed to the neobank’s recently launched Monzo Premium offering, though this number is likely to grow as the offering becomes more well-known.
However, Plum analysis shows that in general, neobank customers are more likely to be using Plum’s investment platform rather than simply setting money aside with Plum. 26.6% of Monzo customers and 25% of Starling customers are investors with Plum. The number of Revolut customers who use Plum’s investment platform is a little lower (20%), potentially due to the fact that Revolut offers its own investment product. Meanwhile, customers of high street banks tend to prefer just using Plum’s saving features, like Interest Pockets, perhaps due to a general appetite for low-risk savings with FSCS protection, and a better rate than their primary bank account offers.
Mr Trokoudes adds, “It’s worth noting that the digital offerings of many of the traditional street banks have improved a lot over the last few years. In turbulent times, people may prefer the safety of a household name, especially if they’ve now got an app that looks and feels a bit like that of a neobank. Still, traditional banks are old-school in other ways and they're more likely to overcharge you or sell you a loan than grow your savings effectively. That's why so many people are turning to apps like Plum to help take care of their finances in an intelligent, automated way alongside their regular bank account. You can have the best of both worlds with your trusted bank and an Open Banking-enabled app like Plum.”
*All data is Plum internal data unless otherwise specified.
**Neobanks are defined as banks that operate exclusively online without traditional branches. Neobanks that link to Plum are Monzo, Revolut and Starling. ‘Traditional’ banks that link to Plum in the UK are Barclays, Danske Bank, First Direct, Halifax, HSBC, Lloyds, M&S, Nationwide, Natwest, RBS, Santander, Bank of Scotland, Tesco, TSB.
Plum is the smartest app for managing money. Founded in 2016 by Victor Trokoudes (ex-TransferWise) and Alex Michael (ex-TicTail), Plum’s mission is to banish financial instability and make everyone better off over their lifetime. The Plum app acts like a brain by automating the parts of personal finance that people find difficult or don’t have time for. It sets aside what each person can afford, finds better deals on everyday bills, offers useful spending insights and provides a simple platform for easy-access investments. The growing Fintech, with over 1 million users in its community, has raised $19.3 million in total since being founded and has expanded massively beyond its origins as a messenger bot, with an iOS and Android app launched in 2019. Plum has now grown to include a unique investment platform of stocks and ETFs, budgeting analytics, and interest on savings. With its headquarter in London and with an office in Athens, the Plum team is expanding rapidly.
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