Digital banking

Read digital banking reviews

We review every digital bank, app and challenger. Our reviews are regularly updated to cover new features and releases.

05:19

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What is digital banking?

Digital banking is a way to control your money, usually through a smartphone app or web app. It allows you to log into your account anywhere with Internet access, giving you constant visibility of your money and helping you understand the best way to manage it.

Why should I use app-based banking?

There are several advantages to app-based banking:

• Banking access in your pocket
• Many companies offer 24/7 access to banking support
• Instant spending notifications
• Many banking apps offer ways to automatically save money

Another major benefit of app-based banking is the degree to which it has opened up the competition. New Open Banking rules have enabled third-party apps to innovate, drawing on the infrastructure of traditional banks.

Things to know about app-based banking

Here are a few things that you may not know about using your mobile as your main point of contact with your bank:

• Some apps require credit checks

  If you’re planning to apply for an overdraft on a banking app, you will be subject to a credit check. Even if you’re not applying for an overdraft, most banking apps require some form of ID to prove that you are who you say you are.

• Your money may not be protected the same way it is with high street banks

  Deposits held in a high street bank account are protected by the Financial Services Compensation Scheme (FSCS) up to £85,000 per person. But not all app-based banking providers offer this protection. Make sure you know what level of protection your new app-based bank is offering you, just in case anything goes wrong.

• App-based banking doesn't always afford the same rewards as traditional banks

  If you’re looking to change banks, switching to an app-based bank is not necessarily the most rewarding. Although there are plenty of functionality rewards (24/7 access, automatic savings, etc) the financial rewards, such as a new customer cash incentive, may be greater at a traditional high street bank.

• If you forget your PIN or lose your card, most app-based banks won't panic

  A benefit of an app-based bank is having full access to your account at all times. Lots of app-based banks allow you to temporarily freeze your card if you misplace it and then unfreeze it again when it’s found – this is a lot less hassle than applying for a replacement card. If you forget your PIN, banking apps also tend to have access to a PIN reminder after you complete a couple of security questions.

• Some banking apps link to your pre-existing bank accounts and simply show you ways to spend better

  Not all app-based banks are banks in the traditional sense. Some banking apps work alongside your pre-existing accounts to gather all your spending data in one place, offer you insights into the way you spend your money and suggest ways for financial improvements.

Digital banks vs high street banks: Whose customers are more likely to recommend their current account provider to friends/family?

Different types of app-based banking

App-based banking is different from traditional banking in many ways. Unlike traditional banking, app-based banking covers a much wider definition of “banking”.

• Current account apps

  As part of the app-based banking innovations, a clear class of banking app has emerged: the challenger bank. Challenger banks are new, fledgling banks that are aiming to take on the big, traditional high street banks and change the way we save and spend money. Challenger banks such as Starling and Monzo are similar to traditional banks in that they offer the full current account experience but with all the added benefits of an app-based bank.

• Apps that help you save

  One of the most common reasons for people switching away from traditional banks and towards app-based banking is how easy app-based banking makes it for people to save money. Several providers such as Plum and Chip offer automatic savings for customers. Plum’s clever computer program looks at your spending habits and income and identifies how much you can reasonably save each month and then helps you set up a direct debit to your Plum savings account for this same amount.

• Prepaid card apps

  Another way to use app-based banking to help you save is through the use of prepaid cards. Cards with providers such as Pockit, Zempler and Tuxedo allow you to load specific amounts of money on to your card and even segregate this money into “pots” to spend on different things. This way you don’t have access to too much money all at once and are less likely to fall for those expensive “impulse buys”.

• Investment apps

  Another popular way to use app-based banking is saving through investments. Apps such as Moneybox allow you to make weekly or one-off deposits to three risk-assessed categories of investments. Several of the app-based banks also allow you to sign up to a “round-ups” feature where your account rounds up your purchases to the nearest pound and uses the change you would have received as an investment.

• Traditional banking apps

  App-based banking doesn’t only apply to challenger banks or money-saving banking apps; it’s becoming increasingly possible to bank on your smartphone with traditional banks such as Barclays and Natwest, which now offer highly-rated mobile apps where you can control your money.

Written by

Matthew Boyle

Publisher

Matthew Boyle is a banking and mortgages publisher at Finder. He has a 7-year history of publishing helpful guides to assist consumers in making better decisions. In his spare time, you will find him walking in the Norfolk countryside admiring the local wildlife. See full bio

Matthew's expertise

Matthew has written 261 Finder guides across topics including:

• Helping first-time buyers apply for a mortgage
• Comparing bank accounts and highlighting useful features
• Publishing easy-to-understand guides