Internet banking leaves online savings behind

Internet banking leaves online savings behind

Take-up of internet banking and online savings has doubled since 2008, according to the Office for National Statistics (ONS).

The ONS report pointed to key factors behind the trends in online banking, notably the rise in popularity of the internet in general and an increasing number of high street banks closures.

Changes in banking habits are reflected by the fact that just 35 per cent of customers banked online in 2008, compared with 69 per cent in 2018.

The report highlighted the role easier access to the internet over the past 20 years has played in relation to banking behaviour.

For example, just 9 per cent of households in Great Britain had online access in 1998, compared with 65 per cent in 2008 and 90 per cent now.

Hargreaves Lansdown responded to the finding by releasing research showing how much savers could make over five years if they placed £10,000 with an online bank or building society compared to a branch account.

The results revealed a saver would earn around £530 less if they saved offline with Nationwide Building Society (paying 1 per cent) rather than online with the Bank of London and the Middle East (paying 1.75 per cent).

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Internet banking is booming.

"Almost seven in 10 people have relinquished the increasingly fruitless search for a branch nearby with sensible opening hours, in favour of instant online access whenever they are – at any time of day.

“However, for most people online banking is just about keeping an eye on their current account, which means there’s a real risk that millions are missing out on a massive potential boost to their savings - because the best rates are often only available online.”

Joshua Gerstler, IFA and partner with The Orchard Practice, said: “The benefits of online banking are clear, being able to make payments and transfers on the go with an app make life easier. It’s different with savings as there is far less interaction.

“There’s no point in checking your savings account balance every day only to find you’ve earned another penny in interest.

"Rather, advisers should simply encourage clients to move their money if it’s not working hard enough at a particular bank.”