Introduction to Digital Banks
Lately, it seems like more and more folks in the UK are all about online banking. And honestly, who can blame them? It’s just so darn convenient and flexible. It’s like having your personal bank right at your fingertips.
Thanks to smartphones and fast internet, online banking is becoming increasingly popular. It offers convenient access to your finances anytime, anywhere, along with benefits like 24/7 account access, fast transactions, and strong security for your electronic records. It’s a win-win!
But of course, not all digital banks are created equally, and some are better than others. Therefore, I’ve curated a list of my favourite UK-based online banks.
UK Top Digital Banks at a Glance
Platform
Facts
Pros & Cons
Monzo
7.5 million clients
Fully Licensed Bank
- Account Opening
- Free & Paid Plans
- Overdrafts & Loans
- Investments
- Cash Deposits
- Multi-currency
Starling Bank
4 million clients
Fully Licensed Bank
- Saving Spaces
- Loans & Overdrafts
- International Payments
- Only UK Residents
- Slow Support
35+ million clients
e-Money Institution.
- Multi-currency
- Investments
- Premium plans
- Customer Service
- Web Interface
16+ million clients
e-Money Institution
- Transparent Fees
- Exchange Rate
- Multi-currency
- Limited Investments
- Customer Service
2+ million clients
e-Money Institution
- Joint Accounts
- Insurance Perks
- Currency Limitations
- No investments
Advantages & Disadvantages of Online Banks
- Account Opening: The truth is, opening an account with an online bank is incredibly easy nowadays. Personally, I’ve found that Revolut and Wise have the simplest processes.
- Always open: When you go digital, you don’t have to worry about sticking to the bank’s schedule, the bank will always be open for you.
- Support: Personally, I think online banking has way better customer service. You can even reach customer service agents, even on the weekends.
- No fees: Online banks usually don’t charge fees for opening, maintenance, or basic operations like transfers, even within Europe.
- Improved interest rate: Not only do they waive fees, but they also provide more favourable interest rates on savings accounts compared to traditional banks.
- Easy of use: They take great care of their phone applications and websites, operating their system is typically simple.
- No offices: Frequently, the internet-based bank you select may not have physical locations, or your account type may not permit you to visit their branches without incurring additional charges.
- Limited Transactions: Online banks provide various services, but there may be limitations, such as fees for issuing checks in some accounts.
- ATMs: Many of the banks that operate exclusively online (e.g., Revolut or Wise) do not have their own ATMs, although most allow you to use ATMs from other entities without fees.
- Online: Obviously, you will need to have an internet connection to use their app or website.
Top Online Banking Options in the UK
Monzo
Monzo is a popular digital bank in the UK (7.5 million clients), known for its user-friendly app and innovative features. It offers various financial services, including current accounts, savings pots, and budgeting tools.
- Open account: The account setup process is designed to be effortless and efficient, ensuring a seamless experience for users.
- Budgeting: Monzo offers comprehensive budgeting features that allow you to effortlessly track your expenses and gain insights into your spending habits.
- Free & Paid: Monzo is totally free to use, no annual fees. But if you’re looking for more features, they’ve got a few paid plans with perks like virtual cards and better interest rates.
- Money Pots: You can easily set aside money for different goals, helping you develop good saving habits and stay organized with your finances.
- Overdrafts & Loans: If you’re eligible, you can totally get overdrafts and loans with this online UK bank, this isn’t always the case with similar services.
- Virtual card: It’s actually quite surprising that virtual cards are only offered to paid users. Most digital banks provide free virtual cards for everyone to use.
- Investment Options: Monzo has recently introduced an investment section, but they currently only offer three investment funds from BlackRock. Other platforms offer much more.
- Offices and ATMs: Monzo does not have its ATMs or offices, which means that you are limited to resolving any issues you may have online.
- Cash Deposits: If you don’t have one of the Monzo paid plans, there will be a fee for adding cash to your account.
- Multi-currency: Monzo isn’t as proficient in handling other currencies compared to providers like Wise or Revolut.
Who Should Use Monzo?
Monzo is exclusively available to UK residents who are looking for a hassle-free banking experience, and they are comfortable managing their banking online. I think it’s particularly interesting for those that need to access overdrafts or personal loans.
Starling Bank
Starling Bank, a leading digital bank in the UK, prides itself on its user-centric platform and innovative financial solutions. With over 4 million customer accounts and hundreds of employees, Starling Bank offers a comprehensive suite of services, including personal, business, and joint current accounts, as well as savings tools.
- Saving Spaces: Starling offers flexible “Saving Spaces” that allow users to set money aside for different saving goals. For example, you can create a separate space for your holiday fund.
- Split Costs: Starling offers great options for splitting costs among multiple people. For example, let’s say you’re going out for dinner and you want to effortlessly split the bill with two friends.
- Fees: Starling won’t charge you a monthly fee for your account,
- Loans & Overdrafts: Starling offers loans and overdrafts to both individual clients and businesses.
- International Payments: Starling doesn’t charge a fee when you spend or withdraw money outside of the UK.
- Cheque Deposits: Starling allows digital cheque deposits through their app, but the process can be cumbersome. Moreover, there is a £1,000 limit for cheque deposits using the app.
- Slow Support: Users have reported longer wait times when contacting customer service for digital banks like Wise. This can be frustrating for users who need immediate assistance.
- Third-Party Offers: Starling’s financial marketplace offers products from multiple partners, but assessing partner quality and identifying conflicts of interest can be challenging.
- Only UK Residents: Starling is only available to residents of the UK, so expats living abroad may encounter difficulties in opening an account with them.
Who Should Use Starling Bank?
If you live in the UK and want a flexible and effective online banking experience, consider Starling Bank. They have good options for saving and managing your budget, also a good service for travelling and international payments. Starling also offers specialized accounts and features for small business owners and freelancers.
Revolut
Revolut is not just a traditional bank; it represents a revolution in the financial industry. With a customer base of over 35+ million individuals spanning across 50+ nations, this fintech giant based in London has been reshaping the landscape of finance since its establishment in 2015, alongside other firms.
Revolut acquired a European banking license in 2018, providing insured deposit accounts and complying with financial regulations for added security. However, in the UK, they function as an Electronic Money Institution and do not offer lending or overdraft services.
- Multi-currency: Revolut provides currency exchange services with access to multiple currency accounts, but only offers local bank details for GBP and EUR.
- Investments: Invest in fractional shares of 2,000+ global companies, cryptocurrencies, and commodities through our platform.
- Premium plans: Paid plans provide extra benefits such as personal insurance, partner subscriptions, and higher APY for premium members.
- Ease of use: Revolut’s app is well-designed and offers features like savings spaces and flexible card management.
- Revolut <18: Grant your children the ability to use money through a card that you can supervise and manage from your Revolut app.
- Customer Service: Some users report challenges in swiftly accessing customer support, which could be troublesome during urgent financial matters. Personally, at times I find it difficult to contact someone.
- Limited Services: Unlike competitors like Monzo or Starling, it lacks certain banking services such as overdrafts.
- Exclusive Benefits: Revolut offers its most attractive features and services, such as cashback rewards and higher Annual Percentage Yields (APY), exclusively to its subscribing members.
- Web Interface: Revolut’s system lacks a variety of options when accessed on a computer. As someone who primarily uses a laptop, I find this to be quite frustrating.
Revolut Screenshots:
Who Should Use Revolut?
Revolut is a popular digital bank that offers various services for tech-savvy users. It is suitable for those who don’t require overdrafts and need an affordable account for international payments or while travelling. They also have a VIP-like account option for those interested, although it is expensive (€45 a month).
Wise
In 2011, two Estonians in London founded Wise to solve frequent euro-pound exchanges. Today, Wise has 16+ million users and 5,000+ employees across 17 countries, showcasing a remarkable digital bank.
Wise operates under the authorization of the Financial Conduct Authority in the UK, ensuring customer protection and compliance with financial regulations. Be aware that Wise is an e-money institution and not a fully licensed bank, this not overdrafts and loans.
- Transparent Fees: Wise gives me the impression to be one of the most transparent digital bank when it comes to fees.
- Exchange Rate: Users benefit from the real, mid-market exchange rate for all transactions, avoiding the markups that traditional banks often apply.
- Multi-currency Account: The Wise account allows users to hold, manage, and spend money in over 40+ currencies, making it ideal for travellers, expats, and international businesses.
- Fees: Wise keeps it simple, no monthly fees for your account and no paid plans in sight, a stark contrast to Revolut.
- Speedy Transfers: Wise transfers are often faster than traditional bank transfers, with many transactions completed within one business day.
- No Cash Deposits: Wise does not accept cash or cheque deposits, limiting its use to electronic transactions only.
- Limited Investment Features: Unlike some digital banks, Wise focuses on currency exchange and transfers without offering investment products or savings interest.
- Customer Service Availability: I did have issues that needed a lot of time to be resolved with Wise.
Wise Screenshots:
Who Should Use Wise?
Wise shines with its transparent and efficient handling of multiple currencies, making it a solid pick for global dealings. While it skimps on traditional banking perks like investments and savings interest, it’s key to match its offerings with your needs. Don’t forget to verify the most current details and fees with Wise.
Monese
Since launching in 2015, Monese has grown to 2+ million users, offering digital banking for EU and UK residents. With a free plan and premium options for perks like accident insurance and purchase protection, it’s a versatile choice for modern banking.
- User-Friendly: Monese has an intuitive interface, designed to streamline your banking experience. However, others like Wise, seem to me, to have a more round interface.
- Joint Accounts: Team up on your finances with a Monese joint account. Each user gets their own card, making shared money management a breeze.
- Free Plan: Monese does come with a free plan for those willing to spend ‘nada’. Heads-up: watch out for extra fees on transfers and international card usage.
- Insurance Perks: Opt for a paid Monese plan to unlock a suite of protections, from sickness and accident insurance to purchase safety, exclusive to UK users. Expand your banking benefits with peace of mind.
- Extra Charges: The Basic package includes several fees like inactivity, card delivery, digital debit cards, and cash deposits.
- Currency Limitations: Monese caters to 19 different currencies and offers local banking information exclusively for those living in the EU, UK, and Romania.
- No investments: In contrast to its counterparts, Monese does not provide the opportunity for users to invest in stocks, ETFs, or comparable financial products.
Monese Screenshots:
Who Should Use Monese?
Monese suits those needing a simple, straightforward banking alternative in the UK, especially for basic transactions and international transfers. However, for more features or better rates, alternatives like Revolut, Monzo, or Wise may offer enhanced value.
Who Should Open an Online Bank Account?
Check out these profiles that can benefit from online banking. Keep in mind that this list isn’t exhaustive, so even if you don’t fit into one of these categories, you can still enjoy the perks of having a digital bank account.
- Multicurrency accounts offered by online banks are perfect for frequent travelers and digital nomads.
- Tech-savvy individuals who prefer online banking can benefit from the advanced features offered by online banks: user-friendly apps, secure online transactions, and innovative financial tools. Your age doesn’t matter!
- Younger individuals who are always on the go can benefit from online banks, as they can easily open accounts, track spending, set savings goals, and manage finances efficiently.
- Individuals seeking to save money and earn higher interest rates can benefit from online banks, which provide competitive rates on savings accounts and investment options for various risk profiles.
- Privacy-conscious individuals can benefit from online banks that prioritize security with features like two-factor authentication, encryption, and fraud monitoring for peace of mind when managing finances online.
- Busy professionals can benefit from the convenience of online banking, allowing them to access their accounts, make transactions, and pay bills at their convenience.
- Online banks provide business accounts with lower fees and tailored online services for small businesses, including invoicing, expense tracking, and integration with accounting software.
Digital Banking in the UK - Parting Thoughts
In summary, online banking offers a myriad of benefits for various profiles, including frequent travellers, digital nomads, small business owners and tech-savvy individuals. Of course, the only requirement is that you are comfortable using a computer and your smartphone.
There are also different types of digital banks and some are best for some things (e.g. like Revolut for investing and Atom Bank for mortgages and business loans). So be sure you’ll find one that fits your needs.
Feel free to drop a comment if you have any questions or feedback about digital banks. Your input matters to us!