According to Finder.com, 14 million Britons have already opened accounts in digital banks, and another 6 million are planning to do so by the end of the year. Why do people turn to digital banks? Convenience, better service terms, and the ability to use them for various purposes are the three main reasons that the owners of such accounts name.
For example, you can use your digital bank account to book cheap car hire in Leeds for your next trip to the UK. While some car hire companies don’t yet allow it, some do officially accept digital cards. It’s very convenient not only to hire a car, but also to book a hotel, or pay at a restaurant on your journey. The digital card is impossible to lose, which is its huge advantage.
However, only 12% of Britons have completely transferred their financial transactions to a digital bank. Most of them keep their accounts in a regular bank. They mark the opportunity to discuss matters in person with an employee at the bank among the benefits.
But technology doesn’t stand still, and today you can use the services of one of four digital banks (neobanks), including Revolut, Monzo, Starling Bank, and Atom. If you decide to either completely transfer your finances to neobank, or create an additional account, first decide how you plan to use it.
Let’s take a look at the features that the top four digital banks offer and how you can benefit from them.
Most digital banks have the option to open a free account with running costs alerts and free domestic transfers. However, some of the benefits are specific to certain banks. For example, Revolut and Starling Bank charge the interest rate on the basic current account balance – 0.1% and 0.05%, respectively. In addition, Revolut offers discounts at partner companies, free withdrawals of up to $100 at ATMs per month, free exchange of up to $ 1,000 per month for 28 currencies, and access to two cryptocurrencies.
In turn, Starling Bank allows you to deposit checks by using a camera and also add unlimited cash to your account. As for Monzo, this digital bank makes it possible to withdraw up to £250 per month from UK ATMs.
If you are willing to pay for a monthly service, then you can get access to some extra bonuses. Monzo credits you 1% on the account balance and provides discounts from partner companies. Revolut offers a cash withdrawal limit increase of up to $1,200 and free money transfers abroad.
Recently, Revolut has been offering UK users a 0.15% daily interest on deposits in the Savings Vault. You can withdraw money from such an account at any time. In paid digital accounts, the percentage rises to 0.4% on savings in pounds and 0.65% in US dollars. In addition, the bank offers a bonus of up to 4.5% for spending on the Revolut card.
Monzo also allows you to open a savings account where you can deposit funds in the usual way, and round off the change from expenses. An account with instant access offers 0.1% on a deposit, while a fixed-term account provides from 0.15% for three months to 0.7% for a year. Digital bank Atom offers 0.35% on instant deposits and from 0.15% to 1.4% on fixed-term accounts.
Three out of four digital banks allow you to open child accounts. Monzo and Starling Bank offer accounts for 16-17-years-old teenagers, while Revolut is for 12-17-years-old ones. Considering that Generation Z representatives are the most active users of neobanks in the UK, it becomes clear why digital bank providers try to attract teenagers to their customer base as early as possible.
For those who travel a lot, a digital bank can be a good assistant in managing expenses during a trip. Foreign currency transactions have become a kind of entry point into the British market for startups such as Monzo and Revolut. At the same time, Starling Bank allows you to open a free Euro currency account that you can use when traveling in Europe.
Among the benefits of Monzo for travelers is the no-fee use of the card abroad and the ability to withdraw from £200 to £600 at local ATMs. In addition, the premium version offers travel insurance and a discount on airport lounge access.
Revolut originally appeared as a multicurrency account, and therefore also offers the use of the card without commission abroad. The bank’s premium accounts have features such as international health insurance, global card delivery, and free access to airport lounges. In addition, Revolut recently launched the Revolut Stays feature for hotel reservations.
Loans and overdrafts
Monzo allows you to go into overdrafts of up to £1,000 for 1-30 days and provides loans up to £15,000. Interest rates for each client are individual. Starling Bank also supports overdrafts, but provides loans to businesses only.
Atom differs in that it’s the only one offering a mortgage loan. This is a useful feature considering the price hike in the UK property market over the past year.
Summing it up, digital banks have already become worthy competitors to traditional banks in the UK. Appealing to an audience that prefers instant messengers and other applications to personal communication, neobanks support working with cryptocurrencies, free use of a card and cash withdrawals abroad, and other convenient features that ordinary banks sometimes lack. However, digital banking offers often focus on a specific niche. So, it’s worth analyzing whether this niche suits your particular tasks when choosing one of them.