The Best Digital Only Banks and Mobile Banking App

Digital-only banking

Digital banking allows you to conduct all banking needs such as payments, standing orders and reviewing balances online or on your mobile. Nearly all banks now provide a way to manage your accounts digitally, and there’s a growing number of purely digital-only banks that are shaking up the banking sector.

These digital-only banks operate purely online, with all their banking services and customer support provided via mobile app. Some digital banks offer call centre support as well, but none have physical branches. You’ll be able to do everything from applying for an account to managing your payments directly on your mobile, and as long as your digital-only bank has a UK banking licence and displays the Financial Services Compensation Scheme (FSCS) logo, any deposits should be covered up to £85,000 in the event the bank goes bust.

The table below highlights some of the best banking apps and digital banks available, any one of which could be ideal for your everyday banking needs.

Banking apps

It isn’t just digital-only banks that offer online functionality. The vast majority of – if not all – mainstream banks now have their own mobile banking app, allowing you to conduct your everyday banking, borrowing and savings needs wherever you are.

These apps are accessed on a mobile device and allow you to see your account balances, make payments, transfer funds and apply for new financial products all in one place. Some banks with the best mobile apps also include features such as spending analysis, budgeting tools, automatic saving and real-time updates on your transactions, and others even let you pay in cheques.

Then there are third-party apps that can connect to your current and savings accounts to give you a complete overview of your finances. Some have tools that can help you reduce your bills and there are others that specifically focus on your savings; read our guide on the best savings apps to see where might be best to start.

Are banking apps safe?

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, often asking you to take a selfie or record a video to confirm your identity. 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 a picture of your photo ID.

Many of the best mobile 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 about how to safely bank online in our guide: six tips to keep online banking safe.

How is my money protected?

As well as security on the app itself, you’ll probably be wondering about the safety of your money, particularly if you’re banking with a digital-only provider which isn’t well-known. Like all mainstream banks, digital-only banks that are licensed will fall under the umbrella of the FSCS, ensuring that up to £85,000 of your money is shielded should the bank go bust.

Those that don’t have FSCS protection will either partner with a provider that does, or they should be covered by Financial Conduct Authority (FCA) rules, which stipulate that your money will be stored separately with a regulated bank. This is essentially ringfencing your funds to keep them safe.

What can an app-based bank be used for?

App-based banks have such high-level functionality that you can use them for just about any regular banking need. For example, you’ll typically be able to:

• View your balance and transaction history
• Make payments
• Transfer money between accounts
• Save automatically and/or set up savings pots
• Pay bills
• Apply for new products (such as loans or savings accounts) with the provider
• Set up Direct Debits, regular payments or standing orders
• Access your card information and freeze it if it’s lost or stolen

The only thing you won’t be able to do is pay in cash or cheques in person, although even this can depend on which bank you use – Monzo, for example, has partnered with the Post Office to offer cash deposit facilities, offering in-branch functionality with an app-only bank.

What happens if I need help with my digital banking app?

The best digital banks will typically offer either a 24/7 call centre or in-app chat to help you in case you have difficulties with your account, so you won’t be left alone. Having this kind of contact is vital if you need to report fraud or any suspicious transactions, the only difference is that you won’t be able to seek help face-to-face.

How to choose the best mobile banking app

Choosing the best banking app all comes down to your own personal requirements. For example, are you looking for a new current account for your everyday banking, and want to try a fully digital bank? Or are you perhaps looking for a third-party app that can connect your different accounts to streamline your finances?  

Whatever you’re looking for, there are a few things you’ll need to consider, including:

• Functionality and ease of use
• Type of features offered
• Financial protection (is it a regulated bank with FSCS protection, or an app that’s following FCA rules?)
• Customer satisfaction

Much like when choosing any other financial product, the key is to compare the options thoroughly.