App based banks have been gaining in popularity in recent months as people start to catch on about the advantages they can provide over traditional banks. App based banks are, as the name suggests, banks built purely for access on mobile through an app.
What Are The Best UK App Based Banks?
The number of UK app based banks is growing and while there are a number of providers who provide you with an app and a card you can load money onto (Revolut being one of the most popular), there are currently only a handful who provide what you might call a traditional banking service – i.e. a current account, savings account, the ability to set up direct debit and standing order payments, have your salary paid in, earn interest.
I’ve provided my thoughts on four of the main app based banking providers below, but for those who want to cut to the chase my favourite (having had accounts with all of them) is Starling Bank. Despite sharing a number of similarities with the other top app based banks there are a few things that make Starling stand out for me.
- Free Business Banking: If you have a Starling personal current account you can open a Business current account. It’s completely fee free if your business has less than 10 employees – making it ideal for sole traders, freelances and small business owners. You also get a separate business banking card and you can view both your personal and business accounts within the app.
- Clean Design: There’s nothing majorly wrong with the features, interface and design of the other apps. Monzo for example does a really excellent job of helping you budget and keep track of spending. However Starling has all the features the other app based banks have and more. It’s also a much tidier interface and just feels more professional. Some of the others just feel a bit ‘Studenty’.
- Ease of Access: While I’m fully on board with moving away from the traditional high street bank and having everything I need at my fingertips, there are still times when there is a need for certain aspects of a high street bank. Those rare occasions when you either need to withdraw or deposit cold hard cash. Or god forbid someone from the dark ages sends you a cheque! Thankfully Starling also have this covered: you can deposit and withdraw cash at over 11,500 Post Office branches nationwide. If you have a cheque you simply write your account number on the back of it and pop it in the post.
- Earn Interest: OK so it’s only 0.5% on balances up to £2,000 and 0.25% from £2,000 to £85,000 but it’s better than nothing. Also any funds which you move from your current account into ‘Spaces’ (basically savings pots) also counts towards your total in credit balance and earns interest accordingly.
- Lighting Fast Support: Any queries I’ve had have been responded to almost instantly, regardless of time of the day or night. The others still had very reasonable response times however I have found Starling to be the quickest.
Are App Based Banks Better Than Traditional Banks?
Well I guess that’s down to individual preference really. If you have a particular need for access to a bricks and mortar high street bank for whatever reason then now is obviously not the time to make the switch. However for me, having suffered years of absolutely woeful mobile banking experiences from various high street providers, there is no contest. App based banking is the way forward.
One of the key differences between app based and traditional banks or building societies is the notification abilities. Yes you can sign up to text alerts from many of the high street banks however it’s nowhere near as quick, detailed or user friendly as the notifications from app based banks. Whenever you use your card to make a payment, be that online or in person you get an alert straight to your phone. You can then click the notification and it opens your banking app and you can log straight in. You get reminders for payments coming up. You get a notification as soon as someone pays money into your account.
These notifications provide added security and help to ensure you are never caught short.
Speaking of security another feature many of the app based banks offer is the ability to freeze your account at the click of a button. Let me paint you a picture; you are relaxing on a well deserved holiday overseas when you dig out your wallet to pay for a drink. Only to realise your card is missing! Don’t panic. Simply log into the app and freeze payments. If your card turns up later you simple unfreeze the account and are free to use it again.
Budgeting and savings are another area that app based banks have really nailed. I mentioned previously about Starlings ‘Spaces’. Monzo has the same but calls them ‘Pots’. Essentially these are individual savings accounts without the hassle of actually opening a separate savings account. You can set up as many as you want (you might want a ‘Holiday’ savings pot for example and a ‘Emergency Fund’) and choose to set up recurring payments, or just add funds as and when you can. You can also round up spending an add the change to one of these pots which is an excellent feature. So if you spend £3.10 on lunch it will round up to £4.00 and add that 90p to your chosen ‘space’ or ‘pot’. Starling goes a step further with this and allows you to x10 your rounding up! As you might guess this basically takes your change amount and will times it by 10 (or 2 or 5, there’s various options). So in the example above instead of 90p going into your savings it will be £9.00.
Providing you are confident of having enough in your account to sustain this is can really speed up your savings efforts. You can also turn it on and off at any point.
Best App Based Banks 2019
Starling: My all round favourite for everyday banking, impressive features, support and the fee free business account.
Monzo: Solid choice for everyday use also and ideal for those needing a little extra help budgeting.
Loot: Good option for students looking for a simple card to use for basic everyday transactions.
Atom: Specialising in savings accounts with very competitive rates. Also offers mortgages and business loans.
If you have any experience with app based banks I’d love to hear what you think. You can let me know using the comments box below.