The best digital only banks and mobile banking apps

A digital-only bank offers all its banking services online and through apps on mobiles.  Account support is provided through in-app and online chat with some digital banks also offering call centre support. Digital-only banks do not have physical branches.

As long as your digital-only bank has a UK banking licence and displays the Financial Services Compensation Scheme logo any deposits, including savings accounts and funds held in current accounts, should be covered up to £85,000 in the event the bank goes bust.

Digital banking apps or mobile banking apps as they can also be called, allow you to conduct your everyday needs for banking, borrowing and saving. They are accessed on a mobile device and allow you to see your account balances, make payments, transfer funds and apply for new financial products. Some digital banking apps also include features such as spending analysis and budgeting tools and automated updates on your transactions as they occur in real time.

Regulated banks and their digital apps will all do everything possible to make their apps secure. This includes familiar features such as security passwords and pins, but also newer technologies such as facial, speech and fingerprint recognition. This is captured during the set-up of your digital app using your mobile’s camera – simply put you are taking a selfie. If your mobile has Touch ID or Fingerprint scan, then this can also be used to securely verify you against the banking data held on your mobile.  You will also be asked to take picture of your photo ID.

A lot of digital banking apps will notify you almost immediately after you have made a payment. This means you can quickly spot a fraudulent transaction.

If you forget your pin and passcode then it is likely you can reset these by taking a new video of yourself. This is analysed immediately to your original set-up video to confirm your identity.

And, exactly like a traditional bank, using your common sense is essential, so don’t share your passcodes or leave these written down and be careful people do not see your login information. You can read more in our guide Seven rules to keep online banking safe.

The digital-only banks offer either a 24/7 call centre or in-app chat to help you in case you have difficulties with your account.

In the early 2010s the explosion of digital tech combined with the launch of the Financial Conduct Authority’s New Bank Start-Up Unit in 2013 made good ground for the launch of new digital only banks. In 2018 further regulation called PSD2 was introduced with the aim of increasing competition through more finance and banking apps. Furthermore, demand for digital only banks is increasing as more millennials seek mobile friendly financial products.

Digital banking is the way of conducting your banking needs such as payments, standing orders and reviewing your balances online or on your mobile. Nearly all banks now provide a way to manage your accounts digitally.

Your banking provider should provide you with information to sign up for online banking – this may come in the post or be provided as part of their online banking app. Be careful not to respond to emails you receive inviting you to sign up to online banking as these may be phishing for your personal details.

1. Traditional banks provide a face to face service in their branches while digital-only banks use call centres and online chat functions
2. Digital-only banking apps usually come with real time notifications of spending while traditional banks provide this information as part of your statement
3. Digital-only banking apps provide additional features such as bill splitting, savings pots and future spending reports, traditional banks are catching up but these features are not always guaranteed