There are some serious Fintech companies competing to be the best UK online banks right now. They are driving some of the most innovative changes in the banking marketplace, with awesome apps and features.
New Fintech companies are challenging the original Challenger Banks that changed the banking experience for Millennials (and many others), by bringing the banking experience online.These digital banks score much higher in terms of customer satisfaction than the traditional branch based banks. A trend that will be continued by some of the new kids on the block.
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The Best UK Online Banks Will Be Decided By Millennials & GenZ
The reason there is so much competition and innovation right now is because people are realising that digital banking experience is a critical factor in a booming industry.Genz already have a spending power of over $140 and they are only aged between 7 – 22 at the time of writing this article! Those that don’t will get left behind.
Nearly a quarter of British adults (23%), and almost half (46%) of Gen Z have opened an account with a digital-only bank, and these numbers are expected to grow rapidly.
If you are a Millenial like myself, you will have found yourself using a traditional bank such as HSBC or Santanter alongside a new digital bank such as Monzo.However, GenZ and future generations are more likely to directly adopt new digital-only banks at the first point. Many Fintech firms are striving to be one of the best UK online banks, toppling the old money institutions. As a result the likes of Wise and Revolut have reached multi-billion pound valuations.
The Disconnected Money Management System
It is often an tedious extra step to apply for and connect your current account with a savings account (even if it’s with the same bank). You have to fill out a lengthy application; often recompleting your details with the bank already has your information.
You then have to wait forever in ‘working days’ for it to be opened. Lastly you then have to set up a direct debit from one account for the other. The reasoning behind this lack of innovation is probably based on the myth that those in our generation are frivolous impulse spenders addicted to buying expensive avocados. However, there are some awesome savings facts coming out about Millennials and GenZ, for example:
- Younger generations are more determined to start saving – 50% of millennials are creating future emergency funds vs 23% of over 55s.
- Seven out of 10 young adults are regularly saving almost £174 a month on average.
- A third of GenZ have over £1,000 in savings (compared to the 10% of UK adults who reportedly have no savings at all)
If you are reading this article, then it’s likely you are a keen saver or at least interested in saving money. So you’re probably looking for a new solution.
Key Investing Trends In 2021
It is also clear that our generation is super-keen on investing, with more than $3.5tn in new cash has moved into ETFs over the past 10 years. It’s also clear that there has been a shift in emphasis towards ESG funds, with sustainable funds reaching record highs in 2020 with over $51 billion in new investments, more than double the previous record set in 2019.
There is definitely increased engagement in investing and through either cause of effect the likes of Robinhood, Trading 212 etc., have filled the gap in the investment space. However, these focus on trading rather than responsible investment strategy and traditional banks still maintain the giant wall (similar to the one in game of thrones) between your current account, savings and investments. The building of this bridge is something I covered in my last article when I covered some of the things that companies such as ikigai, Revolut and Wise are doing.
The Best UK Online Banks Of The Future
The rise of new fintech companies is challenging this, making it easier and more accessible for Millennials and Genz to build wealth. There is massive potential for growth in the retail banking industry due to the rapid improvement of Fintech.
As a result we see new digital banks picking up the torch from the likes of Starling Bank, Monzo, First Direct and Metro Bank. So who are these new startups that could be the modern face of money management?
#1 Tandem | The Good Green Bank
Tandem is a digital challenger bank that provides banking and money management services. It’s an app based service, with a range of money management features. However, you can also save more than just your money with Tandem; with Tandem you can actually support a healthier planet.
By saving into a ‘Green Instant Saver’ at 0.40% AER, you’ll be supporting our green lending initiatives and helping to make UK homes more sustainable and environmentally friendly.
There are lots of other great features with Tandem. For example Tandem examines your day-to-day spending, bills and standing orders to advise users on their spending.
It also has an ‘Autosavings’ account that boasts many features. The ‘Round Ups’ feature rounds up card payments to the nearest pound and saves the difference.
It also offers customised savings features, with machine learning technology predicting how much a user can afford to save. As well as these money management services, Tandem also offers credit cards and fixed savings accounts. These include:
- 1.07 % One year Fixed Saver
- 1.31 % Two year Fixed Saver
- 1.42 % Three year Fixed Saver
Your savings will be growing with your interest rate of 0.40% AER and are protected up to £85,000 by the FSCS.
#2 Pockit | The simple, easy banking alternative
What I love about these new banks is the accessibility and pace at which people can take control and start managing their money. With Pockit, you can open an account in 3 minutes online or in-app and get your contactless prepaid Mastercard® in 2 working days. Pockit is now trusted by over 550,000, who are earning up to 40% cashback from high street retailers.
What I love about these new banks is the accessibility and pace at which people can take control and start managing their money. With Pockit, you can open an account in 3 minutes online or in-app and get your contactless prepaid Mastercard® in 2 working days. Pockit is now trusted by over 550,000, who are earning up to 40% cashback from high street retailers. Some of the best features of these digital banks is that you can:
- Check your balance in real time
- Get instant notifications
- Find transactions within a few taps and lock your account instantly if your card gets lost or stolen (helping you to avoid lengthy phone calls and time on hold with a traditional bank)
- Build a better credit score by adding LOQBOX to your Pockit account for free.
Pockit is also working in partnership with Wise to allow you to send 32 currencies to 55 countries. At a rate which could save you up to £69 vs leading providers, in a much faster and more efficient way.
#3 Revolut | One app, all things Money
Revolutis another great option as it’s a banking tool with detailed analytics features. Revolut analytics is a unique feature that allows you see all your expenses from different accounts in one place. It aggregates your spending and committed spending (scheduled payments and bills) from all your Revolut.With the Analytics feature you will be able to:
- See an overview of your finances and track current spending breakdown on a daily, weekly, monthly or yearly level.
- Set budgets and keep track of your spending.
- Compare your monthly, weekly or yearly spending to previous periods.
- Understand exactly which categories you’re spending in, the amount you spend with specific merchants and the places you spend in at a given period.
- Create a custom category and assign specific transactions to it.
With Revolut you can add transactions to specific categories. Send and receive money in 30+ currencies with no hidden fees. Plus, transfers are always instant and free between Revolut friends, no matter where they are. This list of features seems endless. For example, you can also send payment links or flash QR codes, and tell friends to “Revolut me!” – even when they’re not on Revolut. No awkward conversations; just send a fun gif with your reminder. From restaurant tabs to rent, split bills with anyone, even if they’re not on Revolut.
Savings Plans With Revolut
With Revolut you can also get up to 0.65% annual interest paid daily. You can then upgrade to one of their paid plans to give your savings a boost, as well as other plan perks. All of which allows you to stash your cash (in vaults) without the fear of commitment or fees, just interest.
You can then choose one-off transfers to fund as you go, or make it effortless with scheduled deposits and spare change roundups. Deposits in your Savings Vaults are protected by the FSCS up to £85,000 and deposited with Revolut’s trusted partner bank.
Download the Revolut app to get saving now!
#4 Monese | Open & manage your mobile money account online
Monese is another online bank that prioritises speed and accessibility; within minus you should be able to start managing your spending and saving. You can download their app on either Google Playand Apple Store.
You can therefore enjoy on-the-spot accounts, instant top-ups and real-time spending notifications. Additionally you can link your Google Pay, Apple Pay, Paypal or Avios accounts.
Most importantly you can receive your salary payments directly into your digital money account by sharing your account details with your employer.
Monese has also designed the app to help you track your money visually, categorise your spending and set up weekly or monthly budgets.
I love these analysis functions, because I think they are a core component of improving how we manage and save our money. In my mind, this is a core component of what it will take to be one of the best UK online banks in the modern day. You can also easily save money in a fast or recurring way and Monese have partnered with Raisin to ensure you earn interest on your savings.
Spend Like A Local With Monese
Interestingly, Monese has also followed a Wise style strategy by allowing you to open money accounts in multiple currencies to spend abroad like a local. With this you can transfer money for free when sending between Monese accounts, no matter the country or currency.
However, like Revolut there are also account tiers starting with Simple (FREE), which includes a free multi-currency account with fees for some top-ups and transfers. You can aslo upgrade to Classic for £5.95 which allows higher top-up and transfer limits at reduced rates. A fixed monthly fee and a free contactless card.
There is also Premium (£14.95/month) which offers completely unlimited withdrawals and foreign currency spending, and no fees on top-ups or transfers.
#5 Atom Bank | The bank that works for you
Atom is one to keep an eye on for the future as for now I don’t believe this is a comprehensive enough service, especially when compared to the 4 UK online banks above.
As for now, it only has savings accounts, a digital mortgage broker service and business loans.
However, Atom is potentially a great place for saving money as they offer 1.40% AER fixed term savings. However, that’s if you lock your money up for 5 years and the likes of Tandem currently offer you 1.12% with a 1 year fixed account.
There are options to tie your money up from as little as 6 months (0.15% AER), although a year would get you 0.4% interest. The latter may be a good balance. They also have an instant saver at 0.35% AER/Gross.
However, Atom does seem to prioritise being competitive with their rates, so as they grow potentially they could be one of the better savings accounts providers out there.
The Fintech Banking Revolution
There are some very strong competitors of regular high street bankings emerging from the rise of Fintech. The above represent some of the best future UK online banks. Making money management faster, easier and tailored to tech savvy ideals of the future. With enhanced visibility and analysis of our money we can make better decisions and build stronger money habits.
These new digital banks have cottoned onto the fact that effective money management is all about our personal psychology. All of the features built into their apps take this positive money psychology approach, as I said earlier I have never seen a bank gamify saving money as Yolt are doing.
There are also other more investment focused apps as discussed in my previous article, that can help you move from spending > saving > investing, more or less seamlessly.
The Global Era Of Financial Mobility
Lastly, they get that Millenials and Genz love to travel, work, spend and receive money around the globe. As a result, maintaining money in multi-currency accounts or being able to spend cashless money in another country is essential.
Like I said, most high-street banks are simply disconnected from the way that our generations interact with technology. Therefore, they simply don’t have many of these awesome features and cross-currency transactions are simply too expensive. They also completely miss the fact that we are all keen on saving money and building a positive financial future. Hopefully, the new era of digital banks can continue to change all that.
Why You Can’t Just Rely On Fintech To Save Money
Whilst many Fintech startups are helping you to manage your money via technology. These important psychological aspects are still up to you! Although apps and fintech can make it easier for you to save time, money and stress, you still need to understand the underlying mechanisms of saving money.
Once you understand these, saving money will become effortless and you will save significantly greater amounts of money than before. Once combined with Fintech, you will be a money saving machine. Therefore you should check out some of my most popular articles to help you build a positive approach to money and make building wealth effortlessly:
- How To Save Money Each Month: What To Do Every Pay Day
- 3 Epic Ways To Stop Penny Pinching And Save Thousands
- 12 Actions In Your 20s That Will Give You Better Money Habits For Life
- 3 Money Mistakes You Are Making And How To Stop
- Most People Can’t Save Money Because Of This Common Misconception
- How To Stop Spending Money: 4 Money Habits To Boost Your Savings
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