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Late adopters: digital banking may double their risk of being defrauded

Key findings

  • Younger consumers were more likely to report being defrauded;
  • Digital banking  users were about twice as likely to report being defrauded as those not using them, even after allowing for their younger age;
  • In a sample of almost 7,250 users of digital banking services, 2.3 per cent reported having misdirected a payment, compared with none of those not using them.


The coronavirus crisis may bring about a step change in the rate of adoption of online banking. Online and mobile services bring significant benefits, but they can also bring new risks of harm. This article summarises some characteristics of those digitally-connected consumers in the UK who choose not to bank online, and then highlights two potential risks to them in adopting digital banking services: being defrauded and misdirecting payments.

Take-up of digital banking

The consumers most likely to adopt online banking might be those who are already using the internet for other activities, but not yet to manage their finances. In 2019, 87 per cent of all adults used the internet daily or almost every day, according to ONS data, while our surveys indicate that about 7 per cent of these, equivalent to more than three million adults, chose not to use digital banking services to manage their main current accounts.

In every age group, the proportion of social grade C2DE respondents who are online but not using digital banking is greater than that for ABC1 respondents. The proportion tends to increase fairly steadily with age.

Note: Social grade is based on occupation as per the widely used National Readership Survey (NRS) classification, where ABC1 includes managerial, supervisory, administrative and professional occupations and C2DE includes skilled and unskilled manual workers and the unemployed.

Effect on reported fraud

Survey respondents were asked whether, in the past year, they had been a victim of fraud. The two respondent characteristics that best explained the probability of reporting fraud were age and the use of digital banking. To visualise the effect of digital banking use, after allowing for the fact that users tend to be younger than non-users, a regression model was fitted and used to estimate the probabilities of being defrauded at a range of respondent ages.

Respondent social grade was found not to have a significant association with reporting fraud.

The model, of course, shows an association between using digital banking services and reporting fraud, but not that the one is necessarily the cause of the other. It is, however, also of interest that in 2019 about 12 per cent of service users reported being unable to access their digital banking services on at least one occasion, due to technical problems with the banks’ systems; in 2018 (the year of an ill-fated systems upgrade at the TSB) the figure was about 18 per cent. IT problems multiply opportunities for fraud.

Effect on misdirected payments

The surveys also asked whether, in the past year, each respondent had made a payment into the wrong account by accident - a “misdirected payment”. Of almost 7,250 digital banking service users, 2.3 per cent had done so, whilst (perhaps unsurprisingly) of over 500 non-users, not a single one of them had. Misdirected payments are clearly a risk introduced by the adoption of digital banking systems, and it remains to be seen what effect the recent implementation of confirmation of payee systems will have on their incidence.


These findings have implications for supporting consumers who are already online, but choose only now to take up digital banking. The knowledge and attitudes needed to guard against fraud and payment errors may need to be fostered in addition to general digital literacy.

Contact us

If you have any questions or would like to find out more about the methodology used, please email us at consumerinsight@which.co.uk 

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