UK Digital Banks

What is digital banking

The UK has seen a rise in challenger banks over recent years that are digital-only. These digital banks offer banking facilities via apps available to download on mobile and tablet, with no physical branches like traditional banks. The service digital banks offer on their apps means that physical branches are not necessary. Several of the UK’s digital banks offer top-rated customer service online and automated processes and updates that help you keep your finances in check. Although many still prefer to visit physical bank branches, digital banks’ benefits to help customers feel more in control of their finances are tempting millions from their existing traditional bank accounts. In fact, over two-thirds of banking customers plan to switch to digital banking in the future entirely.

What are the benefits of digital banking

The apps created by digital banks act as a one-stop hub for your finances, designed to provide greater visibility across your accounts and help you save, budget, and plan. They do this by providing real-time spending updates, regular spending reports, categorizing spending into bills, food, rent, etc. to help customers understand where they could cut down or when there is an opportunity to save. Many of the UK’s digital banks also offer bill-splitting, saving accounts, and instant PIN-changing, aiming to make banking as simple as possible.

One of the challenger banks’ big attractions to many UK customers is that lots of them offer commission-free spending overseas and instant freeze and unfreeze options for optimal security, making managing finances while traveling much more accessible. Unlike traditional banks, digital banks aren’t held back by age-old infrastructures that will take years to update, meaning digital banks are rolling out new features all the time to help customers stay on top of their finances.

Summary of the UK's digital banks

When it comes to the UK’s digital banks, including MonzoRevolutStarlingCurve, and Atom, offer 24/7 in-app support, which is leaps and bounds above the call-center support provided by most traditional banks. But what other features do UK digital banks offer that traditional banks don’t, and what should you look for when choosing the right digital bank for you?

Real-time spending notifications have become a standard for challenger banks in the UK. Finally, traditional banks are taking a leaf out of their book and beginning to offer real-time spending notifications too. These notifications help customers stay on top of their finances and stay up to date on where their money is going. Most digital banks also make it a top priority to help their customers make the most of their money, with Monzo being the trailblazer in introducing savings pots or jars. Other digital banks have subsequently introduced their versions of, such as Revolut and Starling.

Finding the digital bank that is right for you will largely depend on your personal finance needs and goals. You may want to check the bank’s licenses and guarantees, whether they are FSCS protected, whether there are any hidden fees, and whether you can set up direct debits and standing orders.

How safe is digital banking

One of the expectations for many joining a bank is that the bank is FCA-approved (by the Financial Conduct Authority), and the FSCS protects customer deposits of up to £85,000. This is the case with many digital banks, which are full-banks like MonzoStarling BankTandem bank; however, it is certainly something to check beforehand as some banks are FCA-approved but yet to receive FSCS protection.

When it comes to the security of your digital bank account, digital banks have proven that they lead the innovation of hi-tech ways to protect customer accounts. The digital banks make it easy to sign up to their services within minutes through their apps, however, they also use rigorous methods of authenticating user identities, such as fingerprint scanning, facial recognition, and voice recognition, and they will continue to adopt the latest security technology in the future.

What features do UK digital banks have that traditional banks don't

  •  In-app signup and approval within minutes
  • 24/7 customer support through the app
  • Savings pots and jars that help you divide up your funds
  • Bill splitting
  • Future spending projections and safe-to-spend advice
  • No-fee payments and withdrawals abroad

We can also expect digital banks always to be working on including the latest innovations in fintech to their service. This may involve updates that allow users to get an even closer look at their spending, more ways to save without thinking about it, and even loyalty schemes to reward users’ spending. Many of the UK’s largest digital banks are also making strides to expand their service to become an even closer competitor to traditional banks, encouraging more customers to switch their main current account to them in the future.