A YEAR after the launch of open banking, which allows banks to share customer data with permission, nine per cent of Scots already have accounts with digital-only banks.

That proportion is expected to double this year, with price-comparison site Finder predicting that over a quarter of Scots will hold an account with an online bank by 2023.

Of those who have gone digital, 37% the things they most value about it is the convenience while 31% cite better rates, 26% made the change to access free transactions abroad and 23% like real-time spending notifications.

Scotland has seen a stronger take up of digital accounts than many UK areas, although it is still well behind both London and Northern Ireland. Altogether, the research suggests that half of all Britons could have at least one digital account within five years.

Among the big challengers the hipster-friendly Monzo, which secured a banking licence in April 2017, now has one million customers and adds around 100,000 a month - the equivalent one in seven of all new account openings.

Also breaking through the one-million mark last year was Money Dashboard, the Edinburgh-based personal budgeting app that launched a year ago this week.

Its chief executive Steve Tigar said: “We are entering an era where people want to do more than simply arrange payments and withdrawals, they want to manage their budgets, save up for important life events and stay out of the debt trap.”

But last year saw only 15,000 people switch their main current account, and most of that was accounted for by the problems at TSB.

For old-tech Scots who haven’t joined the digital trend, 55% are happy with their existing bank, 47% like the personal contact of going into a branch, 27% doubt they would get better rates online and 23% do not want the hassle of switching.

Notably, at Monzo, only one in four converts actually use it as their primary account, with the remainder have a foot in both camps.

Meanwhile, high street banks are catching up fast in launching new apps and digital services. The mobile apps of traditional players HSBC and Barclays allow customers to see all their current, savings and mortgage accounts in one place, using open banking to link to other providers. Nationwide and RBS both plan to upgrade their mobile apps this year on the back of open banking connections.

Bank apps already have features such as ‘balance after bills’, spending alerts, and ‘rounding-up’ transfers to encourage saving.

Santander last month snapped up the Albert tax and book-keeping app, RBS has taken a stake in digital current account Loot as it plots the launch of its own standalone bank Bo, and FirstDirect is poised to launch its digital arm Artha as a personal finance manager.

Gianluca Corradi at consultancy Simon-Kucher said: “After an initial period of panic, even large institutions are now taking a positive view on open banking, thinking about new ways to boost the current business.”

Clydesdale Bank owner CYBG, which already has its digital offshoot B, is trialling another innovation in the shape of B Works in Manchester, a space featuring a social media studio and free-to-use coffee bar that it said will “remove the stigma around traditional finance”.

Despite all the changes, it appears that bricks and mortar and personal contact are still valued by even the digital generation. Just 5% of millennials use challenger brands for their daily banking, according to a survey just published by Instinctif Partners, while 34% said they would refuse to use a financial services company if it did not have a physical branch.

The digital Starling Bank has become the first mobile bank to partner with the Post Office, allowing Starling current and business account customers to deposit and withdraw cash on the ground through the Post Office’s 11,500 branches nationwide.

Nick Woods, head of financial services at Instinctif Partners, said: “Challenger brands should not assume they will easily attract millennial customers just because they have a unique or digitally driven proposition, and must work hard to build trust and credibility with a consumer still reluctant to move away from traditional high-street providers.

“Conversely, high street or well-established financial services brands will need to adopt a more agile approach to keep up with the technological arms race.”

The next innovation could be ‘15-minute mortgages’ - Molo has launched in the buy-to-let market and hopes to move into retail loans during 2019.