April 10, 2024
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Over the past few years, Britons have been showered with new financial companies. These financial technology companies and challenger banks want to replace established banks and the old guard. They aim to make financial dealings more convenient, mobile, hassle-free, and cost-efficient. For example, customers can open accounts using smartphone apps instead of visiting branches. Moreover, unlike traditional banks, their products and services are designed to accommodate new types of workers, including freelancers, remote workers, digital nomads, and global citizens.
Three challenger banks that should be on your radar are Revolut, Monzo, and Starling Bank. Wise, a money transfer and financial services company, should also be on your radar. Let’s review and compare their products, services, and plans in this post.
How to Choose a Mobile Banking App/Company
Choosing the best mobile banking app depends on your needs, financial goals, and budget. Understanding those aspects will make selecting the right partner and company easier.
Assess your needs first. Before evaluating financial apps, consider your requirements. For example, you want flight insurance because you travel a lot. You request payments often and want to use a customizable link to make the process more efficient.
Understand your financial goals. For everyday financial transactions, mobile-first banks are excellent. However, suppose you want to start investing or seek a tax-exempt account. Most challenger banks don’t offer robust investing platforms. Moreover, tax-free accounts are rare. Thus, you might have to look around or stick with the status quo to achieve your goals.
Consider your budget. While free accounts/plans are standard with neobanks, users must pay to access more features and benefits. It’s the classic freemium model that thousands of tech companies use. They offer free plans to convert users to premium accounts later. Secondly, monthly plan/subscription fees can add up to over a hundred euros, pounds, or dollars annually. However, paying monthly fees might not be financially prudent or practical for some people’s budget/saving objectives or debt obligations.
Standard Features
Fintechs and neobanks will continue to add products, services, and features to compete with their rivals and traditional banks. What one company doesn’t have today will likely offer in a few months to a year. Therefore, you needn’t worry about missing out on the long term. Challenger bank apps typically have these features:
- Virtual and physical bank cards
- Instant push notifications on all transactions
- Analytics and categorization of expenses
- Multiple accounts for saving and budgeting goals (not the same as an interest-bearing savings account)
- No foreign exchange fees when spending abroad
- Free money transfers to other users
- Make recurring payments
- Download and print account activity
- Connectivity to third-party apps, for example, Apple Pay and Google Pay
- Card lock/unlock at your discretion. For instance, if your card gets lost or stolen
U.K. Challenger Bank Apps
Monzo Overview
Monzo is building a new kind of bank that lives on your smartphone and is made for your lifestyle. It’s for individuals who want to get things done with a click and don’t need branches or checks. Its products/services include:
- Credit score tracker
- Current account
- Expense management
- Individual Savings Account (ISA)
- Insurance
- Interest-bearing account
- Money transfers
- Open banking
- Overdraft
- Perks and discounts
- Personal loan
- Joint account
- Teen account
- Business account
Unique features:
- Send money to any U.K. bank for free.
- Round up payments and save the difference automatically.
- Monitor changes in your credit score.
- Withdraw up to £600 every 30 days for free (a fee may apply to higher withdrawal amounts).
- Get paid a day early by confirming your salary.
- Divide and allocate your paycheck into different accounts automatically.
- Get phone and travel insurance.
- Add your other bank accounts and credit cards to Monzo to get a complete view of your financial dealings.
Revolut Overview
Revolut is on a mission to provide one app for all things money. It has developed a platform allowing users to transfer, exchange, and spend money with a multi-currency card that is accepted everywhere. Revolut operates as a bank in some European countries.
- Budgeting and analytics
- Cryptocurrency account
- Currency exchange
- Current account
- Expense management
- Insurance
- International bank account details
- Interest-bearing account
- Investment account
- Money transfers
- Multi-currency account
- Online payment
- Open banking
- Perks, discounts, and cashback
- Personal loans
- Purchase protection
- Salary advance
- Teen account
- Business account
Unique features (depending on the card/plan):
- Earn interest on your money with Savings Vaults.
- Round up payments and save the difference automatically.
- Round up prices and donate the difference to charities.
- Withdraw up to £800 each month for free (a fee may apply to higher withdrawal amounts).
- Split and settle expenses with your family and friends with “Group Bills.”
- Trade stocks commission-free.
- Buy, sell, and hold cryptocurrencies, including Bitcoin, Litecoin, Ethereum, Bitcoin Cash, and Ripple.
- Buy and sell gold.
- Get 0.1 percent cashback within Europe and 1 percent outside Europe on all card payments.
- Get delayed baggage and flight insurance.
- Get pet insurance.
- Get coverage for damage or theft of a rental vehicle, with a limit of £/2000.
- Get exclusive partner perks.
- Gain access to 1,000+ airport lounges worldwide with LoungeKey.
- Use a concierge service to help manage your lifestyle.
Starling Bank Overview
Starling Bank is a mobile-only bank offering personal, joint, and teen accounts. Its app helps people take the stress out of money by visualizing and managing their finances in real time.
- Current account
- Expense management
- Insurance
- Interest-bearing account
- Money transfers
- Multi-currency account
- Overdraft
- Personal loan
- Joint account
- Teen account
- Child account (6 to 16 years old)
- Business account
Unique features:
- Round up payments and save the difference automatically.
- Pay no fees on ATM withdrawals abroad for any currency.
- Spending insights to manage your money better.
- Get paid back quickly or split the bill with “settle up.”
- Deposit and withdraw cash at local post offices.
- Deposit cheques of £500 or less from your mobile phone.
- Access other financial services in the Starling marketplace.
- Get a debit card for your child to help manage pocket money.
Wise Overview
Wise is on a mission to make a positive, irreversible change in finance. Built by and for people who live global lives, Wise makes sending money abroad fair, accessible, and up to eight times cheaper than traditional banks and money transfer companies.
- Budgeting and analytics
- Currency exchange
- Expense management
- International bank account details
- Investment account
- Money transfers
- Multi-currency account
- Online payment
- Business account
Unique features:
- Get mid-market/real-time foreign exchange rates.
- Get local bank details for ten countries like the United Kingdom, the United States, and Canada.
- Schedule and track transfers.
- Send large amounts of money of up to 1 million dollars.
- Work anywhere and link your account to Amazon, PayPal, and more to receive payments.
- Hold cash, bonds, or stocks using iShares ETFs managed by BlackRock.
Products and Services
Current and Multi-Currency Accounts
A current (checking) account is a bank account that allows you to conduct everyday financial activities, such as deposits, withdrawals, bill payments, and recurring payments. A current account typically doesn’t earn interest but may receive it if it maintains a minimum amount set by the bank, such as £25,000.
All four companies offer GBP current accounts. Revolut, Starling Bank, and Wise also have free EUR IBAN accounts.
Savings Account
A savings account is a bank account where you can store money you don’t need immediately but have easy access. It typically earns a modest interest rate.
Monzo, Revolut, and Starling Bank provide in-app savings mechanisms and interest-bearing accounts. Monzo customers can open tax-free savings, joint, and teen accounts, and Starling customers can get joint and teen accounts.
Overdraft
Monzo and Starling Bank have overdraft protection, but Revolut doesn’t.
International Money Transfer
Monzo partners with Wise to process money transfers at mid-market rates and low fees. Revolut also converts money at mid-market rates. Revolut customers can send money for free, but fees may apply depending on currencies, amounts, and timing. Revolut is one of two U.K. companies that offer free money transfers. The other is TransferGo. Starling Bank does money transfers, but its rates are not as reasonable as Revolut or Wise.
Investing
An investment account allows an individual to buy, hold, and sell financial securities like stocks.
Revolut offers commission-free stock, commodity, and cryptocurrency trading. Wise allows you to invest in cash, bonds, or stocks with ETFs. Monzo and Starling do not support investment activities.
Insurance
Travel insurance might cover medical bills, lost valuables, and unforeseen expenses. Contents insurance pays for damage to, or loss of, an individual’s possessions. Mobile phone insurance takes care of damage or loss.
Monzo, Revolut, and Starling Bank offer insurance products.
Personal Loans
A personal loan is a type of unsecured loan. You typically don’t need to pledge any security or collateral to get the loan. Instead, the lender provides funds to use at your discretion but charges a fixed or variable interest rate on the entire amount of money used.
Starling Bank and Monzo offer personal loans. Revolut offers loans, but not in the U.K.
Revenue Models
Since challenger banks differ from traditional ones, you might wonder how Monzo, Revolut, Starling, and Wise make money.
Monzo earns money from overdrafts, personal loans, and withdrawal fees. It shares revenues or collects fees through third-party product and service arrangements, such as offering money transfer services through Wise. Click here for Monzo’s fees.
Revolut makes money through plan subscription fees and insurance premiums. It shares revenues or collects fees through third-party product and service arrangements; for example, customers can earn cash rewards through purchases at select partners (Revolut Perks). It charges fees on money transfers and withdrawals above its fair usage limits. Weekend transactions and currency conversion fees may apply. It makes money from replacement cards and delivery fees. Click here for Revolut’s fees.
Starling Bank makes money from interest on overdrafts, personal loans, and account balances. It charges fees for money transfers and additional current accounts. It charges for replacement cards and certifying account documents. Click here for Starling’s fees.
Wise earns money by charging fixed and variable fees for transfers, conversions, investments, excess holdings, and incoming USD wire payments. Its prepaid debit card generates interchange revenue, and an ATM charge on monthly withdrawals exceeds a predefined amount. Wise generates income as a third-party money transfer solution for financial companies such as bunq and N26. For business accounts, it charges for batch payments and accounts in multiple currencies. Click here for Wise’s fees.
Comparison
| Monzo | Revolut | Starling | Wise | |
| GBP account | ✔ | ✔ | ✔ | ✔ |
| EUR account | ✔ | ✔ | ✔ | |
| Savings account | ✔ | ✔ | ✔ | |
| Borrowing | ✔ | ✔ | ||
| Overdraft | ✔ | ✔ | ||
| Money transfers | ✔ | ✔ | ✔ | ✔ |
| Insurance | ✔ | ✔ | ✔ | |
| Investing | ✔ | ✔ | ||
| Cryptos | ✔ | |||
| Joint account | ✔ | ✔ | ✔ | |
| Teen account | ✔ | ✔ | ✔ | |
| Monthly fee | Free to £15/mo. | Free to £45/mo. | Free | Free |
Which to Choose
- Best for sending money: Wise and Revolut
- Best for holding multiple currencies: Wise
- Best for saving: Monzo
- Best for personal loans: Starling Bank
- Best overdraft: Monzo
- Best for investing: Revolut
- Best for insurance: Monzo and Revolut
- Best for global citizens: Wise and Revolut
- Best perks: Revolut
- Best card design: Monzo and Revolut
Recommendation
Challenger banks aren’t reinventing the wheel, but they’re improving and simplifying how wheels turn. They offer similar products to traditional banks but focus on expediency through mobile platforms. Secondly, they provide products and services for customers who manage global personal and business activities. Finally, they go the extra mile to offer unique features, perks, and discounts through B2B partnerships.
Wise, Monzo, Starling Bank, and Revolut are making waves in the U.K. They are raising the bar on efficiency, costs, convenience, transparency, services, and customer support. Those value propositions make them viable candidates for your financial goals and activities.
Revolut offers the broadest range of financial products and services for British customers. However, its app can be somewhat confusing and lacks simplicity. Therefore, all four companies are excellent contenders for your money.
