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 18th, 2021
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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.
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:
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:
We have compiled this shortlist based on online reviews, number of users and services offered, so here they are (in no particular order):
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.
Number of users: 1.8 million
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.
Number of users: 3.9 million
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
Number of users: 65,000
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.
Number of users: More than 2 million
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.
Number of users: More than 12 million
Take a look at our blog about the 7 Best Digital Banks in Europe, to learn more about digital banking in mainland Europe.
We run through seven of the digital banks making waves across the continent, along with asking what you should look for in a digital bank before making the switch (if you haven't already)!
We take a look into digital banks - the different types, what they can offer to consumers, the advantages they bring and their overall safety
Rebellion is an exciting Spanish fintech, offering banking services to the digital generation. They've been partnered with Veriff for IDV since 2019, and we asked all about their experiences of our partnership so far.