We all need to have a bank account. But, increasingly, there is a lot of choice – specifically between traditional vs digital banks. And it seems that the digital banks offer a lot that the traditional banks just can’t these days.
Digital banks are often also referred to as challenger banks, or mobile banks. And yes that’s because they’re available through online apps, and are challenging the status quo. Not just a clever name.
If you’re not up to speed with what digital banks offer, and why they’re causing the traditional high street banks all sorts of headaches, we’re gonna explain.
What is a digital bank?
Like most things these days, banking services are increasingly online. And when you consider that you don’t need to go into a bank to deposit a cheque, withdraw money or – well – anything else really, traditional banks start to look more redundant.
So digital banks offer pretty much all the benefits of traditional banks, but also a whole lot more.
The best known digital banks are Monzo, Starling, Revolut and N26. These challengers offer customers more than just a place to put their money. Increasingly they also offer perks, useful services and other cool features that the traditional banks are playing catch up with…
What do digital banks offer vs traditional banks?
While a traditional bank offers a high street presence and a number of traditional banking tools, such as loans, mortgages and insurance, digital banks are taking it a step further.
Increasingly digital banks offer additional features such as:
- Easy setting up joint accounts or shared ‘vaults’ where you can share money
- Fee free international bank transfers
- Low cost international spending – or access to global currencies such as US Dollars or Euros from within your account
- The option to invest in assets such as stocks and shares or crypto within your banking app
- Instant overdrafts and loans
- Travel insurance available with one click
- Cashback or discounts at popular online and high street stores
Digital banks are also primarily app focused, meaning that they are extremely user friendly and responsive through their mobile apps. Something that the traditional banks apps are only just starting to catch up with now.
In fact, digital banks offer the same if not more vs traditional banks, only without the high street presence.
Having said that, when did you last walk into your high street bank?
As we are increasingly cashless, and with things like cheques now payable into your account via an app, the need for physical branches is decreasing more than ever.
Which are the best digital banks?
There are a lot of digital banks to choose from, but some of the most popular in the UK include:
Revolut – One of the original challenger banks, often thought of as a travel focused bank seeing as you can have multiple currency accounts within the app. However, Revolut are one of the most full featured digital challenger banks and have become one of the biggest banks in the UK. There’s a reason for that – with cashback on purchases, in-app investing in stocks and crypto and much more. Check out Revolut here.
Monzo – With their coral pink cards, Monzo are one of the darlings of the hipster crowd. But theres a reason for that. Their user friendly app is one of the best, and they offer a range of great features including easy transfers, bill splitting and other nifty features.
Starling – Although Starling is a business focused digital bank, they also offer personal accounts which have some fabulous usability. For example you can have different currency accounts, Euro and US Dollar. Their user design is very clean and easy to use, and although they don’t offer as many bells and whistles as Revolut or Monzo, Starling is a good option for those looking for a simple to use and sensible challenger bank.
The final word
The high street banks have been seeing people leaving and heading to the digital banking world, and there is a reason for this. Ease of use and access now means online first, and accessing our money means being able to transfer it easily.
In the battle of digital banks vs traditional banks, the challengers definitely have the upper hand.