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Insights and Expertise

Digital lessons The UK digital banking model

from across the UK neobanks—fully digital banks that operate without
physical branches—have seen remarkable growth in a
relatively short timeframe. Their share of primary banking
Pond: Reimagining relationships has grown from just 1 percent in 2019 to 6
percent in 2025 (see https://rfi.global/a-tale-of-two-cities-the-
rise-and-future-of-neobanks-in-the-uk-and-us/).
U.S. banking through This growth reflects how well these digital-first

institutions are meeting the evolving needs of mobile and
the UK model tech-savvy consumers. Features like instant transaction
notifications, FX rate locking and real-time spending
insights have helped these platforms carve out a distinct
advantage, particularly among younger users who expect
seamless, app-based financial services (see https://www.
paymentscardsandmobile.com/uk-neobanks-to-outpace-
legacy-banks-by-2025/).

The digital-only model not only supports this demand
for immediacy and control but also removes many of the
frictions associated with legacy banking systems.

Importantly, the UK's relatively unified regulatory
framework appears to have accelerated the pace of
innovation. With a single regulator overseeing financial
services, neobanks and incumbents alike have been able
to experiment with open banking APIs, faster payment
solutions and enhanced data-sharing models. This
coordinated approach has provided a stable environment
for bold digital modernization.

By Mark Van Horn U.S. banking challenges and gaps
Giesecke+Devrient In contrast, U.S. banks navigate a landscape with multiple
regulatory authorities—ranging from the OCC to the
he UK's digital banking sector today is viewed CFPB and numerous state-level agencies. This federal
as a global leader for customer-centric innova- and state oversight, while designed to protect consumers
tion and streamlined digital services. In 2025, and ensure financial stability, can sometimes introduce
T nearly 40 percent of UK adults now have a complexities in standardizing new technologies and
digital-only bank account, nearly triple the figure from digital service delivery across different markets.
just four years earlier (see https://www.finder.com/uk/bank-
ing/digital-banking-statistics). This shift reflects not only the Furthermore, legacy infrastructure remains a significant
growing trust in digital banking platforms but also the consideration for many U.S. banks. More than 60 percent
UK's strategic investment in customer experience, open of U.S. banks identify outdated core systems as a primary
banking and agile financial ecosystems. barrier to digital modernization (see https://ibsintelligence.
com/ibsi-news/core-banking-crisis-55-of-banks-cite-legacy-
For U.S. banks, the road to digital modernization can, at systems-as-top-barrier-to-transformation/).
times, appear more intricate. Several factors contribute to
this unique landscape, including a multifaceted regulatory These aging systems, often built on older technologies,
environment, the prevalence of legacy infrastructure, and can sometimes create silos of customer data, potentially
a diverse set of customer expectations shaped by both limiting personalization efforts and hindering the seamless
long-standing traditional banking relationships and the delivery of real-time insights. This technological inertia
rapid advancements offered by fintech disruptors. could slow innovation and make it more challenging to
adapt to rapidly changing consumer expectations.
These elements collectively present a distinct set of
considerations for American financial institutions. Yet As a result of these factors, many U.S. consumers continue
there are valuable insights to be gained from the UK's to turn to third-party fintech apps to access the kinds of
model, insights that can help American banks refine their capabilities often readily available through UK digital
offerings, enhance customer engagement and build a more banks. Only about 55 percent of U.S. banking customers
robust digital foundation.
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