Online-only banks are starting to revolutionise the way we manage our money. If you are glued to your phone and find visiting your local high street bank a bit out of date, you may be interested in joining a growing number of people who use these online-only banks.
Online-only banks often have trendy names, slick websites and apps and promise that transparency for their customers is at the heart of their business. But what services do they offer, how are they rated and how easy are they to contact?
We’ve looked at six major online-only banks: Atom, Fidor, Monzo, Revolut, Starling and Tandem. They are all authorised by the Financial Conduct Authority, however not all are regulated by the Prudential Regulatory Authority (PRA). The PRA is the organisation that issues a licence to banks. We’ll tell you which ones protect your savings up to £85,000 via the Financial Services Compensation Scheme (FSCS), and which don’t.
Atom, Monzo and Starling banks also support the initiatives of the Women in Finance Charter.
This is what we found:
App based Atom Bank was the first online-only bank to be granted a banking licence in 2015. It is authorised by the PRA and your money is also protected by the FSCS.
It currently offers two products: fixed rate savings and residential mortgages, available through a panel of selected independent mortgage advisers. You can find a list of brokers on its website.
Atom Bank plans to launch a current account, but this has been delayed until at least 2018.
To open an account, you simply download the app, which is available on most Apple and Android smartphones and tablets. You can access your account on more than one device.
It uses face and voice recognition and says it will be introducing fingerprint recognition in the near future to log-in to the app. Anyone who joins Atom Bank can personalise their account by having their own logo and choosing their own colour scheme.
Atom Bank says its app uses cryptographic technology to ensure that your data is protected when you access it. In addition, all personal data held is fully encrypted.
Trustpilot rating: 9 out of 10
App store rating: 2.6 out of 5
Google Play rating: 2.8 out of 5
Customer support: 24/7 customer support in the app or via the phone, email or Twitter.
Fidor is a German bank founded in 2009. It is not regulated by the PRA but by German regulators. This means that your money is not covered by the FSCS, but by the German private commercial banks statutory compensation scheme. It protects up to €100,000 of savings per person.
Fidor Bank offers a range of products such as a current account, savings bonds, a fully managed investment portfolio (with Nutmeg) and crowdfunding opportunities (with Seedrs).
Its Smart current account is free and you won’t be credit checked. You earn 0.3% or up to 0.5% with its ‘Interest For Likes’ campaign – the more likes Fidor UK receives on Facebook, the higher the interest rate on the account. You can transfer money to countries in the EEA for £2.49 (up to £25,000).
You can apply for an account by using its video identification process, which you can access via an app on your phone or tablet, or via a web camera on your computer. You can only open an account with a valid passport. A driving licence is not accepted.
You will automatically receive a Debit Mastercard Digital and if you want a physical debit card you can order it free online separately. It’s free to replace your card if it’s lost or stolen.
SAVVY TIP: Cash machine withdrawals in the UK and worldwide are free for the first three withdrawals per month, then £1 for each withdrawal thereafter (1.5% foreign exchange fees apply if you get your account debited in the local currency). It also has a 3% fee on lottery transactions.
Fidor Bank has a Balance Checker app for iOS where you can see an up-to-date overview of your balance and transaction history and get notifications of your incoming and outgoing payments.
It has SSL encryption, firewall updates, and a validation code system and phone verification.
Trustpilot rating: Not available
App store rating: 1.4 out of 5
Google Play rating: 4.2 out of 5
Customer support: You can contact Fidor bank via the phone, email and Twitter Monday to Friday 8am – 6pm.
Monzo Bank launched in 2015 by the start-up entrepreneur Tom Blomfield. It raised money by crowdfunding – the first round raised £1m in 96 seconds, making it the fastest crowdfunding raise in history, the second round raised £71 million.
It is authorised and regulated by the PRA and your money is also protected by the FSCS (Financial Services Compensation Scheme).
Monzo Bank offers a current account and a prepaid debit card.
SAVVY TIP: Prepaid cards are not protected by the FSCS and Monzo Bank say it is shutting its prepaid card down in early April 2018.
The app is available on iOS and Android, but you will have to join a waiting list for a week before you can open your account.
Like high street banks, you have an account number, sort code and a (bright pink!) Mastercard debit card. You can also set up direct debits, standing orders and send money to any other UK bank account within seconds.
It has an optional overdraft and charges 50p for every day your account is overdrawn by more than £20, though it has a £20 free buffer so won’t charge you for only going a few pounds over. It sends you notifications if upcoming payments will take you into your overdraft, and lets you know as soon as you enter it. It won’t charge you more than £15.50 a month.
Monzo Bank lets you set targets for your spending each month and you will receive notifications if you’re spending too quickly. You receive a notification the moment you use your card and, if you lose you card, you can freeze it in one tap.
You won’t receive any interest on your money. Monzo Bank doesn’t charge fees for using the card – UK payments, cash withdrawals and payments abroad are all free, with no added fees.
SAVVY TIP: If you’re withdrawing cash abroad, you can withdraw up to £200 per month free, after which you’ll be charged a 3% fee. You can still make payments in shops, restaurants and online free though, even when you are abroad.
You can top up your card using Apple Pay, but it doesn’t support adding your Monzo card to your Apple Wallet yet. It does support Google Pay.
Trustpilot rating: 7.2 out of 10
App store rating: 3.9 out of 5
Google Play rating: 4.2 out of 5
Customer support: 24/7 customer support through the app or via email or on the phone.
Revolut was launched in 2015 by Vlad Yatsenko and Nikolay Storonsky. Your money is not currently protected by the FSCS.
It offers a range of products including personal and business accounts, cryptocurrency (buy, hold and exchange) and personal loans. It also offers mobile phone and travel insurance.
It has a standard (£0/month) and premium (£6.99/month) current account. To get an account you input your mobile telephone number on its website and it will send you a message with a link to download the app. Or you can download the app directly on Apple or Android.
Like high street bank accounts, you will be issued with a Mastercard debit card.
SAVVY TIP: if you have a standard account it costs £5 – or if you ask for Global Express Delivery, £12 – to get your card delivered. It’s the same if you need to replace your card. Delivery is free if you have a premium account.
Revolut offers free bank transfers in 25 currencies, and with premium, you also get free overseas medical insurance.
With a standard account, you can withdraw £200 free from cash machines per month – with premium you can withdraw £400 free. Anything over these limits is charged at 2% of the value of the withdrawal.
It has a number of security settings that can be applied to your card and that you can choose between. These include: location security (using your phone’s GPS location to determine if your card has been compromised) and disabling magstripe card payments, contactless payments, cash machine withdrawals and e-commerce transactions.
Trustpilot rating: 7.8 out of 10
App store rating: 4.9 out of 5
Google Play rating: 4.7 out of 5
Customer support: You can contact Revolut via in-app support Monday to Friday 6am – 10pm, and Saturday and Sunday 12pm-6pm. Premium users can contact it anytime. If you need to block your card, you can do so in the app anytime, or call the automated phoneline.
Starling Bank is a mobile-only bank account founded by former Allied Irish Banks COO, Anne Boden in 2014. It is authorised and regulated by the PRA and your money is protected by the FSCS up to a limit of £85,000.
It is free to have a Starling Bank current account and, like high street banks, you still have a sort code, account number and will be issued with a contactless Mastercard debit card which you can use all over the world with no charges. You can pay people instantly with faster payments, and set up direct debits and standing orders. You won’t be charged for withdrawing money from cash machines.
SAVVY TIP: You can make up to six withdrawals per day, with a daily limit of £300.
You’ll receive interest of 0.5% AER on balances up to £2,000 and 0.25% on balances above £2,000, up to £85,000.
You can see what you spend straight away, and get real-time notifications about what’s coming in and out of your account. You can also save for goals and track your spending habits.
Starling Bank also offers overdrafts, which are approved to a certain limit from the moment you open your account. It has no unarranged overdraft charges and you only pay interest for the amount you borrow, which is charged at 15% EAR. The monthly maximum overdraft charge is £2.
The app is available on iOS and Android and it supports Apple Pay and Google Pay. It also uses advanced data encryption and storing technologies that ensure your personal information and transactions are sent and stored securely.
The Starling Marketplace is a list of approved third-party money-related apps and services covering pensions, savings, travel insurance, mortgage brokers and more. Starling generates affiliate revenue from these partnerships if you take out any of them, but you’re always told this when you buy.
Trustpilot rating: 7.4 out of 10
App store rating: 4.6 out of 5 stars
Google Play rating: 4.2 out of 5
Customer support: It has 24/7 in-app customer support.
Tandem Bank was founded by Ricky Knox, Matt Cooper (co-founder of Capital One) and Michael Kent and received its banking licence in 2015. It is authorised and regulated by the PRA and your money is protected up to a limit of £85,000 by the FSCS. It acquired Harrods Bank in January 2018 and took over all its services.
Tandem Bank currently offers new customers a cashback credit card and an app which shows how much you spend each month. Its fixed term saver account is “coming soon”.
You can get 0.5% cashback on all purchases over £1 worldwide with its Mastercard credit card. There are no additional fees on transactions abroad and nothing added on top of the MasterCard exchange rate. The interest rate is 18.9% APR and if you withdraw cash in the UK it also charges a fee of 2.5%, with a minimum charge of £2.50. There are no fees for withdrawing cash abroad. The card doesn’t offer balance transfers and there is a £12 fee if you make a late payment, or your payment fails.
The savings app automatically shows you how much you spend each month and will alert you if it notices your bills increase or a payment comes in. Tandem Bank says it can help reduce your energy bills by switching your provider via its app.
It uses bank grade security and always encrypts your data.
Trustpilot rating: Not available
App store rating: 3.4 out of 5
Google Play rating: 3.1 out of 5
Customer support: If your card is lost or stolen, you can contact Tandem Bank 24/7. Otherwise, it is available via email or on the phone from 8am-6pm, except Bank Holidays.
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