Determinants of Digital-Only Bank Adoption in the UK

Advancements in financial technology have introduced a structural shift in the banking sector, presenting the emergence of digital-only banks as innovative virtual platforms delivering 24/7 banking services through mobile applications. By challenging the conventional branch-based model, these banks have expanded financial accessibility and inclusion while reshaping consumer banking habits. Their reliance on emerging technologies introduces systemic vulnerabilities, making the shift towards digital-only banks one that must be understood and carefully monitored to safeguard industry stability while promoting inclusive, sustainable financial sector growth that supports wider economic development. This study examines the factors influencing the adoption of digital-only banks in the UK through the development and testing of a novel conceptual framework grounded in the Unified Theory of Acceptance and Use of Technology 2 (UTAUT2). The model is extended to incorporate emerging fintech-related financial consumption variables such as trust, perceived risk, security, financial incentives, cryptocurrency, micro-investing, and environmental sustainability, alongside established traditional adoption drivers. Demographic moderators of age, gender, and income are also assessed for their influence on consumers adoption decisions. Cross-sectional data from 391 respondents was collected through an online survey and analysed using partial least squares structural equation modelling (PLS-SEM). The results reveal that performance expectancy, security, trust, social influence, hedonic motivation, environmental concerns, and micro-investing opportunities have a significant positive influence in consumer adoption intentions. Effort expectancy, cryptocurrency and digital assets, financial incentives and marketing promotions, and financial self-efficacy were not significant predictors. Demographic variables showed no significance in their moderating influence on adoption behaviour. The results of this study underscore the importance of practical utility, security, and sustainability in consumer decision-making, while highlighting the limited role of effort expectancy and demographic factors. The Importance-Performance Matrix Analysis (IPMA) revealed that performance expectancy is the most influential factor in determining user's intention to adopt digital-only banking. This research contributes to the growing discourse on digital-only bank adoption by integrating emerging technology consumption contextual factors with established theory, offering actionable insights for developers, managers and regulators to monitor and advance the financial sector’s transition to a digital, inclusive and sustainability driven future.