Digital Banking - Which bank is right for you?
Digital banking is on the rise and reshaping the way we think about our money and how we manage it. If you are unsure what digital banking is or perhaps you are interested in a digital bank account but want to know more information about the options available, then we have you covered with our guide to digital banking.
What is digital banking?
In a nutshell, digital banking is when you access or manage your bank account through a digital format, such as mobile banking or internet banking.
Digital banks aim to help you manage your money by providing customers with budgeting tools, easy to view transaction history, and notifications to your mobile phone so you can keep track of your account balances and account activity.
How is digital banking different from traditional banking?
The main difference is that a digital bank has no branches or face-to-face customer support; you manage everything digitally, including opening an account.
Digital banking customers receive the same features and benefits as a traditional bank account, including:
- A debit card
- Account number and sort code
- Direct debits and standing orders
- Transfer money
- Pay bills
Digital banking providers have developed innovative apps to help you manage your finances that often make them more favourable than some outdated apps and online banking services offered by traditional banks. Digital banking apps typically feature:
- Spending analytics
- Budgeting tools
- Instant transfers to friends and family
- Notifications sent to your phone whenever you use your card or receive a payment
- Automatic categories so you can see how much you are spending on certain things, such as groceries or transport.
One of the good things about digital banks is that they often have a range of accounts to choose from. Free accounts are available plus premium accounts with a monthly fee that typically has additional features and benefits such as travel insurance, rewards, and exclusive debit card designs.
Digital banks are well known for having low, or zero fees for using your account in the UK and abroad, including using ATMs to withdraw cash, shopping in store and online, and sending and receiving payments.
Is digital banking right for me?
It’s a tricky question to answer, as it comes down to personal preference. A digital bank can do everything a traditional bank can do, but you often get more features and benefits.
The main question you should ask yourself is, are you comfortable having a bank account that you manage on your phone? If the answer to that is yes, and you don’t tend to visit bank branches, then a digital bank is well worth looking into.
There is a reason digital banking is becoming hugely popular, and that reason mostly comes down to the fact that people are fed up with their outdated high-street bank, unfair bank charges, and poor customer service.
Is digital banking safe?
Yes, absolutely. The Financial Conduct Authority regulates every digital bank and, depending on which provider you choose, the Financial Services Compensation Scheme protects your money, so should the bank go into administration, it will keep your money safe and sound.
Digital banking providers also issue their debit cards through Visa or MasterCard, which adds extra security when using your card in-store or online.
Digital banking providers
There is a good selection of digital banking providers to choose from, with options for those looking for a premium account, those needing a free account, and options for people with poor credit. There is even an account available for anyone without a permanent UK address - something which you can’t do with a traditional bank account.
Revolut is one of the most popular prepaid debit cards in the world. You can set a monthly budget and receive notifications about your spending and budgets.More info
With a Monese bank account, you have access to in-app budgeting tools, simplified bank transfers, and instant notifications on your mobile phone.More info
Monzo is one of the most popular digital banks in the UK. You can set an overall budget, and Monzo will alert you when you have nearly reached your limit.More info
Starling Bank is an award winning digital bank which summarises your spending behaviour and gives you the ability to create budgets to help you manage your money.More info
Digital banking reviews
Customers rate digital banks far better than traditional banks, and many digital banking providers have received awards for the accounts and services they provide.
On the review site Trustpilot, the highest score for a traditional bank was 1.9 / 5 which was awarded to Tesco Bank. Whereas the lowest-rated digital bank was rated 3.9 / 5, showing that even the lowest-rated digital bank offers a better service than the highest-rated traditional bank.
The best digital banking provider
Most digital banks focus on providing customers with an account they can use to help them manage their money better. As a result, you end up with multiple digital banks all offering very similar services.
You can check out information on each provider using the links above. Alternatively, you can check out our guide to the best current accounts, which covers digital banks and traditional bank accounts.
We also looked at Revolut and Monzo to decide which of them is the best digital banking provider.
Monzo Vs Revolut - Which account is best for you?Read more
Digital banking apps
Every digital bank has a free mobile app that you use to manage your accounts and view your account information. A few digital banks have online and mobile options. However, the vast majority just provide mobile banking.
Features vary depending on which bank you open an account with. However, all digital banking apps have the following banking features:
- Check your account balance
- Monitor your spending and budgets
- View your transactions
- Send money
- Transfer funds between accounts
- Pay your bills
- Manage your savings account
To keep your account safe and secure, digital banks secure their mobile banking apps with log on details and passwords. Customers with compatible devices can also use Touch ID or Face ID in replacement of a user ID and password to log into their account.
Open a digital banking account
If you have done your research and are ready to open a new account with a digital bank, then check out the details below to get started.
Cost: Free - £12.99 / month
Trustpilot Score: 4.5 / 5
Available for: iPhone, Android.
Cost: Free - £14.95 / month
Trustpilot Score: 4.4 / 5
Available for: iPhone, Android.
The products reviewed in this article represent only a small selection of the options available to you. Selectra always recommends that you carry out your own research and seek legal advice if necessary before making any decisions.
We receive a commission for some of the products and or services mentioned within this website. Our website is free to use, and the commission we receive does not affect our opinion or the information we provide. All of our content and opinions are non-biased.