The best app-only bank in the UK
With the world of Fintech on the rise, app-only banks are increasing in popularity and more people are making the switch than ever before. In fact, figures from the Current Account Switching Service (CASS) covering July - September 2019 showed the app-only banks Monzo and Starling Bank, collectively acquiring over 20,000 customers and losing significantly lower amounts than their high street competitors. For more information on the switching figures you can read our article, 'Revealed- the best bank accounts to switch to'.
What is an app-only bank?
An app-only bank allows you to digitally manage your bank account without the need to visit bank branches and fill out hefty paperwork. You simply manage everything in your mobile app and can securely set up an account with a few personal details and proof of identity via photo or video.
Is my money safe with an app-only bank?
As with High Street banks if the banking app you download is a fully licensed bank you will be protected by the Financial Services Compensation Scheme (FSCS). This ensures that if the bank goes bust your money is protected up to £85,000.
Some app-only banks are yet to receive their banking license but still offer some protection under the Financial Conduct Authority (FCA). This means your money is protected because it is stored by a registered bank, however, if the registered bank goes bust it is unlikely you will get your money back.
To see the protection each bank offers, take a look at our app-only bank comparison table.
The app-only banks
Atom bank - best for savings, loans and mortgages
- Specialise in savings accounts, mortgages and business loans
- Do not offer current accounts
- Open an account in under 10 minutes
- Competitive savings rates
- Minimum account deposit of £50
- Maximum savings balance of £100,000
- You have 7 days after opening to deposit the minimum amount
- 24/7 customer support
- UK residents only
Monzo - best for budgeting
- Can be used with Apple pay, Samsung pay, Google pay
- Set spending budgets
- Clear and easy summary of spending
- Instant notifications
- Accepted worldwide
- Up to 1.55% interest on savings
- £1,000 optional overdraft
- Savings pots
- Round up spare change when spending to a savings pot
- Set up direct debits and standing orders
- Split bills easily
- Avoid unnecessary fees when spending abroad
- Withdraw cash abroad with no fees (monthly limit of £200, 3% charge thereafter)
- Freeze card if lost or stolen
Monese - best for overseas student/non-UK resident
- Essentially a pre-paid card with the functionality of a debit card
- No UK address required
- Available to everyone in the European Economic Area (EEA)
- Send money abroad
- Specialises in current accounts
- Not a registered bank
- 6 free ATM withdrawals a month
- Lock your card in-app if lost or stolen
- Accepted worldwide
- Instabalance feature gives real-time insight into the available balance
- Track spending habits
Revolut - best for holidays
- Built-in budgeting
- Round up your spending to the nearest pound and the money is automatically put towards saving goals
- Instant spending notifications
- Spend money abroad with no fees (0.5% fee for anything above £5,000)
- Withdraw cash abroad fee-free (monthly limit of £200 applies, 2% fee above that)
- Travel Insurance for as little as £1 a day
- Transfer money across the globe
- Recurring payment facility
- Freeze and unfreeze the card in the event it is lost or stolen
- Control card features such as contactless and online payments
- 3 different account types
Starling Bank- best for overdrafts/loans
- Voted Best British Bank and current account 2019
- Personal, Joint and business accounts
- Allows multiple savings goals all in one place
- Real-time updates to track daily spending quickly
- Get notifications from payment related activity
- Gain spending insights on your spending activity
- Rounds up your spending to the nearest pound and the money is automatically put into a savings pot
- Fee-free spending when travelling abroad including cash withdrawals
- Lock your card in-app if lost or stolen
- Contactable 24/7
- Restrictions for problem spending such as gambling
- Split the bill feature
- Send money abroad
- Apple Pay, Google pay, Samsung pay, Fitbit pay, Garmin pay
App-only bank comparison table
|App-only bank||Is my money protected?||Accounts||Fee-free spending abroad||Free cash withdrawals||Saving Interest rates||Key Features|
application is completed through the app
Joint accounts (both have to be a Monzo current account holder)
Pre-paid debit card
no UK address required
|0.5% AER on balances up to £2,000
0.25% on balances above £2,000 up to £85,000.
Marketplace offers other financial products
access to insurance without the need to sign up to another account
Pros and Cons of an app-only bank
- No paperwork required to open an account
- No bank branches required to deposit money
- Manage everything from your phone
- Lower fees
- Fee-free spending abroad
- Easier to budget and control spending with a spending breakdown
- 24/7 support
- Ability to lock card the moment you realise it is lost or stolen
- Automatically save with roundup spending
- Need a smartphone to use
- Reliant on an internet connection
- Difficult to pay in cash or deposit cheques
- Basic services - only some app-only banks offer overdrafts or loans so still need a high street bank for extra services
App-only banks vs traditional high street banks
With more app-only banks emerging on the market it is becoming popular to bank on the go from your phone. But how do they compare to the traditional high street bank?
App-only banks are more focused on the customer and scrap a lot of mark up fees that High Street banks add on. Spending abroad with an app-only bank is a 'no-brainer' as you get charged based upon the interbank exchange rate with no markup fees.
Being able to get real-time notifications on your bank account allows you to see how much money you have available to spend, rather than having to wait a few days for the payment to leave your account. Instant notifications also allow you to track your spending. Most of the app-only banks also offer spending insights with graphs to highlight how much you have spent on eating out or shopping, for example. App-only banks also encourage budgeting and automatic saving; rounding up spare change when purchasing soon adds up.
However, because they are still relatively new to the market app-only banks are open to teething issues. As we saw with Monzo on 30th May 2019, when it experienced issues with bank transfers. App-only banks also make it difficult to deposit money into your account and pay in cheques. To pay a cheque into your account you have to send it via post and it will take 5-7 days to deposit into your account. Starling bank allows you to visit a Post Office branch to be able to deposit cash. You can also deposit cash into a Monzo account at any shop that displays a PayPoint logo but Monzo will charge you £1 to deposit cash.
High street banks also have branches you can visit, but we have seen a lot of bank branch closures in recent years because customers are not using them. Therefore, this proves there is little need to visit a bank at its branch anymore.
Should you switch to an app-only bank?
App-only banks bringing technology into the finance world is making banking more exciting and will certainly encourage high street banks to reconsider their approach to banking. Personally, I am not convinced about switching wholly to an app-only bank account just yet. I like to use them for their budgeting features and savings pots but alongside my other high street bank accounts. I think in the next few years as app-only banks grow and begin to offer more to consumers they will be more appealing and I would make the switch.
In short, yes. I would switch to an app-only bank, but only alongside my high street bank...for now.
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