Library blogThe 5 Best Digital Banks in the UK

The 5 Best Digital Banks in the UK

The internet has slowly revolutionized the way we all manage our money every day, so we decided to look at 5 of the big players in digital banking in the United Kingdom.

Patrick Johnson

March 18, 2021

Blog Post

Finserv

Analysis

Newly established digital banks have swept the world in recent years. These so-called ‘neo banks’ and ‘challenger banks’ appear to have permanently disrupted a market that many considered to be constant.

Many of these digital banks are headquartered in the UK and there are many options available now to those who want something different from the norm. It just goes to show that the UK’s financial technology (fintech) sector is bright-eyed, bushy-tailed and determined to strive ahead.

The teams at Veriff have been keeping a close eye on the digital banks in the UK as our services are used by many fintech companies across the world. Our identity verification processes allow these banks to get their customers onboard quickly and ensure their services are as secure as possible.

In this blog we’ll be looking at the 5 Best Digital Banks in the UK and how they are viewed by their customers.

Traditional vs digital banks

While the UK banking industry is still dominated by the “big four” banks (Royal Bank of Scotland/NatWest, Barclays, HSBC and Lloyds), the digital banks of the UK are certainly giving them a run for their money. Innovative technology and a new way of approaching banking has allowed them to make their mark in the industry.

While many of the traditional banks seem to be following the mantra of “if you can’t beat ‘em join ‘em”, the challenger and neo banks are more agile and more able to easily capitalise on fresh technology. They are not weighed down by years-old traditions, clunky IT systems and historical ‘ways of doing things’ and thus can respond to the needs of their customers quickly and seamlessly.

Exemplifying this is the range of shiny new features that digital banks offer as opposed to the sometimes-limited services of high street banks. These include:

Competitive rates on foreign exchanges
No-fee payments and withdrawals abroad
Real-time spending notifications on your phone
The facility to freeze and unfreeze bank cards via apps
Spending reports
Specific saving pots
Spending limits for certain purchases
In-app signup and approval within minutes
24/7 customer support
Bill splitting
Future spending projections
Robust identity verification procedures

Should I switch from a traditional bank to a digital-only bank?

This seems to be the million-dollar question for a lot of people at the moment. Many users find themselves sticking with the traditional banks for savings accounts (as their interest rates can be marginally higher), credit cards and overdrafts, but employ the services of digital banks for more everyday spending and daily budgeting.

The good thing is that, although technically ‘rivals’, the two types of banks do work alongside each other effortlessly so this approach works quite well.

In terms of security, the majority of digital banks are FSCS protected which means that your money up to £85,000 is protected in case your bank goes under. If they’re not themselves backed by the FSCS then chances are that they are working with and thus safeguarded by one of the traditional banks.

When choosing your shortlist of the best digital banks it is important to consider the following criteria:

The services their offer
Online reviews
Stand-out features

Veriff’s shortlist of the 5 Best Digital Banks in the UK

We have compiled this shortlist based on online reviews, number of users and services offered, so here they are (in no particular order):

Starling Bank

The UK ‘darling of the banking world’.

Starling Bank has been crowned ‘Best British Bank’ and ‘Best Current Account’ provider at the British Bank Awards in 2018, 2019 and 2020.

Reviews:

Trustpilot: 4.5/5 rating of ‘Excellent’ from 17,429 reviews (at time of writing)
App Store: 4.9/5 rating from 167,340 reviews (at time of writing)
Google Play: 4.8/5 rating from 41,929 reviews (at time of writing)

Number of users: 1.8 million

Services offered:

A variety of accounts – personal, joint, Euro and business
Interest on current accounts
Overdrafts
Mobile cheque deposits: Starling Bank were the first to offer customers the chance to deposit cheques of up to £500 using their smartphones
Savings goals
Loan facilities
Desktop features
Partnership with the Post Office for cash deposits and withdrawals
Ability to sync account with third party services
No charges for spending or withdrawals abroad
Regulated and authorised by the FCA and FSCS up to £85,000

Monzo

Started as a prepaid Mastercard offering but achieved banking licence in April 2017.

LinkedIn named Monzo as the most sought-after startup in the UK, and YouGov named the bank as the UK’s most recommended brand in 2019.

Reviews:

Trustpilot: 4.5/5 rating of ‘Excellent’ from 11,475 reviews (at time of writing)
App Store: 4.9/5 rating from 14,201 reviews (at time of writing)
Google Play: 4.8/5 rating from 34,912 reviews (at time of writing)

Number of users: 3.9 million

Services offered:

A variety of accounts – personal, joint, and business
Interest on saving ‘pots’
Overdrafts
Personal loan facilities
Ability to get your salary or student loan paid 24 hours early
Cash deposits through Paypoint
Energy switching
No charges for spending when abroad
Regulated and authorised by the FCA and FSCS up to £85,000

Atom Bank

Was the first digital-only bank to get a banking licence while being entirely a mobile application.

The bank is leading the way in using facial and voice identity verification and they were previously crowned the ‘Best Online lender’ at the What Mortgage? Awards

Reviews:

Trustpilot: 4.6/5 rating of ‘Excellent’ from 4,315 reviews (at time of writing)
App Store: 4.7/5 rating from 12,583 reviews (at time of writing)
Google Play: 4.4/5 rating from 2,555 reviews (at time of writing)

Number of users: 65,000

Services offered:

Savings accounts - it has various fixed saver accounts
Higher interest than many competitors
A choice of fixed rate mortgages
Business loans
Robust biometric identity verification procedures
Regulated and authorised by the FCA and FSCS up to £85,000

Monese

Founded in 2015 by Estonian entrepreneur Norris Koppel and known for its ability to allow users to sign-up for an account without proof of an address.

Monese is available in 31countries in Europe and is a favourite of foreign nationals, expats, freelancers and digital nomads.

Reviews:

Trustpilot: 4/5 rating of ‘Great’ from 17,203 reviews (at time of writing)
App Store: 4.8/5 rating from 34,873 reviews (at time of writing)
Google Play: 4.6/5 rating from 52,419 reviews (at time of writing)

Number of users: More than 2 million

Services offered:

Current accounts in both GBP and EUR
Different benefits on different subscription packages
Up-to-the-minute budgeting and spending notifications
Business accounts
Ability to deposit and withdraw cash through both Post Office and Paypoint
Free spending and cash withdrawals while abroad
Partnership with travel rewards scheme Avios
Regulated by FCA

Revolut

The first British digital-only bank to achieve ‘unicorn’ status (privately held start-up company with a valuation of more than $1bn) and founded in 2015 by Nikolay Storonsky and Vlad Yatsenko.

In early 2020, Revolut was named as the UK’s most valuable fintech company and has more users than any other UK Digital Bank.

Reviews: