The best digital banks in the UK — and what they have to offer

Online banks have seen vast growth in recent years with many turning towards them as an alternative to more traditional high street banks. Digital current account providers in the UK have some incredibly handy features on offer; from no FX or ATM fees for travellers to easy access to cryptocurrencies for traders. There’s a number to choose from in the UK, but how can you decide? 

Capital on Tap has looked into challenger digital banks to create an index and share essential information to help you decide which bank account is best for you. 

Challenger banks are considered to be small to medium banks that compete with larger high street operations. Focused on digital technology, they allow you to manage your finances through smartphone apps, offering a wide range of products and services and often better interest rates compared to their high street alternatives. With their digital-first approach and excellent customer service, challenger banks are also much faster and efficient when trying to solve any issues.  

This study looks into interest rates, transaction limits and fees that you should be aware of as well as highlighting any extra features that may sway you from choosing one challenger bank over the other. 

Below you will find detailed information regarding each bank in the study:

The Top UK Digital Current Account Banks 

With 12 million users, Revolut is by far the most popular UK digital bank. Having over three times as many registered users as Monzo, the second most popular bank, it’s clear to see who individuals are turning to.

For many, interest rates are an essential consideration point when deciding on a bank. Unsurprisingly, for some of the more popular digital banks, interest rates sit between 0% and 1%, most noticeably Starling at 0.05%. However, Monese offers a 2.2% interest rate when banking with them - a figure that could turn a few heads. 

A core reason UK consumers choose digital banks is due to their low overseas transaction and withdrawal costs. Monese, Revolut and Starling do not have overseas withdrawal fees, with Monzo having 3%. Alongside this, oversea transactions are another key element to digital banking. Cashplus, Monese and Starling offer free overseas transactions - a highly desirable bonus when banking with them. Per transaction, Monzo charges £3.75, whilst Revolut charges 0.4% of the transaction fee. 

Another attractive feature of challenger banks is their ease of setup. Built for Mars created a study looking at the UX of banking, showing how quickly you can set up a digital bank account compared to more traditional high street ones. The study found that for Monzo and Startling, it takes just two days to have an active account. Comparing this with Nationwide and HSBC which takes 22 and 36 days, respectively, it’s clear to see the value these banks provide. Further to the study, Built for Mars looked at the number of clicks you had to make in order to set up an account. It found that you need just 24 to set up an account with Revolut v.s. the 99 of HSBC. 

Digital Banks by Reviews

When comparing companies, looking at reviews is often a deciding factor, especially if one stands out from the others. We looked at reviews on the App Store, Google Play, and Trust Pilot to compare how existing customers feel about their bank.

Starling was rated the highest on the App Store with a 4.9* rating from more than 100,000 reviews. Monzo was rated the least highest with a 4.5* rating. 

Once again, Starling leads the way with the highest ratings on Google Play with 4.8* from more than 28,000 reviews. Cashplus is the lowest rated with 4.0* from more than 7,300 reviews. 

On Trustpilot, Monzo receives the best reviews, with 80% of 7,400 people reviewing the bank as ‘Excellent’. Revolut ranks second on Trustpilot with 78% of 70,000 people rating the bank as ‘Excellent’. Cashplus ranks bottom out of all the banks on Trustpilot, with just 45% of 4,500 reviewers rating it as ‘Excellent’. 

Digital Banks in Detail

Cashplus

Founded in 2005 with £7.4 million funding, Cashplus launched the UK’s first general-purpose prepaid card. Offering business current accounts, personal current accounts, business credit cards and personal credit cards, Cashplus attracts a wide audience. At £150 withdrawal limits per day, it has the lowest of all banks, which is something to consider when signing up. 

The Cashplus app gets 4.4 out of 5 stars in the app store, as well as a 4.0-star rating on Google Play. 

The free plan will give you:

• Free bank transfers

• Free oversea transaction costs

• Contactless Mastercard

• Payment alerts

• Post Office brand services

• The basic monthly plan is free.

Revolut

Revolut is the choice for you if you have no specific need in a bank account, but do enjoy nifty features and a wide range of options to make your account yours. With a Revolut account, you have a handy expense tracker, option to create vaults and it allows you to invest in gold, cryptocurrencies, and stocks. On top of that, the app offers complete Apple and Google Pay integration, discounts with lots of online shops, and no hidden fees. Accounts are available in 28 currencies.

Their premium service, which will give you a fancy metal MasterCard, allows you to send and receive money across the globe without a fee as well as doubling the amount of fee-free foreign ATM withdrawals to £400. On top of that premium members will have access to various insurances, airport lounge passes, the ability to set up virtual cards, and receive cashback for delayed flights as well as some online purchases.

If that wasn’t enough to convince you of Revolut’s excellent service yet, their app scores a 4.8 in the App Store along with a 78% rating on Trustpilot. 

The free plan will give you:

• Apple and Google Pay integration

• Trading options available (stocks, crypto, gold)

• Monthly withdrawal limit of £5.500

• 0.4% fee for oversea transactions

• Offers 28 currencies

• The basic monthly plan is free.

Monzo

The top-selling point for banking with Monzo is its ability to have your salary or student loan paid a day in advance, which can help a lot with planning ahead for any bigger expenses.

With a  staggering 4 million users, Monzo is one of the most popular digital banks in the UK. The company has recently launched a premium version of their services which will give you access to various types of insurances, a high-interest rate of 1.50% as well as the ability to link any other UK bank accounts you may have. Their premium plan also gives you the option to set up virtual cards and keep track of your credit score.

The Monzo app gets 4.5 out of 5 stars in the app store, as well as an excellent rating of 80% on Trustpilot.

The free plan will give you:

• Apple and Google Pay integration

• 1.00% interest rate

• Monthly spending limit of £10.000

• Daily withdrawal limit of £300

• 3% fee for oversea transactions

• Only available in GBP

• The basic monthly plan is free.

Monese

Founded in 2015, Monese took just one year for it to win ‘Best Challenger Bank’ at the European Fintech Awards. When setting up an account, Monese will only ask for your ID, so no need to to find those utility bills or proofs of address. When you open an account you will also receive a contactless Mastercard prepaid debit card, to use online, in-store and at ATMs worldwide. Monese also has a built-in budgeting tool which allows you to stay on track of your spending each month. Alongside this, you have saving pots so you can round up any spending to go towards your savings, ready to use for a rainy day.

The plan will give you:

• Apple and Google Pay integration

• 2.2% interest rate

• Contactless debit card

• Daily withdrawal limit of £200

• £2,000 free foreign currency spend

• The basic monthly plan is free.

Starling Bank

Starling Bank, a UK challenger bank with currently 1.5 million users, won awards for both Best British Bank and Best Current Account in 2020. What makes them stand out is the insight they give you into your spending, the ability to split bills, earn interest at a rate of 0.5% and manage your overdraft. An extra perk they’ve got is to keep your ties with the Eurozone warm despite Brexit happening. They allow you to hold, send and spend in euros for free within your Starling account.

With a score of 4.9 in the app store, Starling scores highest. They further establish their excellence with a rating of 77% on Trustpilot. 

The plan will give you:

• Apple and Google Pay integration

• 0.5% interest rate

• Monthly spending limit of £10.000

• Daily withdrawal limit of £300

• Fee-free transactions and ATM withdrawals oversea

• Available in GBP and Euro

The basic monthly plan is free.Sources:

https://www.atombank.co.uk/

https://monzo.com/

https://monese.com/gb/en

https://transferwise.com/

https://www.revolut.com/

https://www.starlingbank.com/

https://www.komododigital.co.uk/insights/top-5-digital-banking-apps-in-the-uk

https://builtformars.com/banks/opening/