A quick round-up of some challenger banks
I really ought to get out more, but sadly Covid cases here in the UK are rising again and a little more caution is needed. In the meantime, after finding myself interacting with a few banks on a Saturday morning I decided to share something that is ever in abundance: my opinion!
It started back in the days when we used to travel abroad. I always resented the gradually rising foreign exchange fees which had crept up to around 3% (knock off 0.01% in the favourite shopkeepers trick that unfortunately does work). So when colleagues started to flash bright orangey-pink Monzo cards with the offer of foreign exchange at cost price (the MasterCard rate), I jumped in. A stolen wallet in Mexico City and a fraud incident at the start of the pandemic have only prompted me to diversify even more.
So here they are, ranked from favourite to least favourite.
Note: this is not an exhaustive feature comparison, I am just highlighting some that stand out.
Revolut
I don’t love this bank, but for someone who demands the highest protection from fraudulent transactions it’s unbeatable.
Why I like Revolut
First off, I have a couple of physical cards and apparently the app will let me order more. When I travel (only in my dreams for now), I can have one in my wallet and one in the hotel safe.
For online shopping, they provide virtual cards. I managed to amass quite a few so that I can use them for repeat purchases. Organisations such as Deliveroo get their own card; it costs £4.99 per card but I get to set a monthly limit on each card. If Deliveroo gets hacked, I’ll know who was responsible and my loss will be limited. Spotify and Netflix share a card, and with predictable monthly outgoings the limit can be extremely low.
And then there’s the unique feature that I failed to find anywhere else in the UK: virtual disposable cards. Use it and it self-destructs immediately, never to be seen or accepted again. The card is deceased, it is no more. It is a dead parrot. In theory, I could post a screen grab right here showing the last card number, expiry date and CV2 number and wake up the next morning none the poorer — but then I’d be like one of those idiots posing in the back seat of a Tesla with its glorified cruise control engaged. It wouldn’t end well.
Also, Revolut lets you hold balances in many currencies, which I would totally use if I didn’t already have that feature (see Wise below).
What Revolut could do better
The app is borderline annoying at times, it comes across more like a marketplace than a tool to safely manage money. I don’t want to trade cryptocurrencies. Fortunately they stay just about the right side of “uninstall me now” annoyance.
Also bear in mind it’s not a current account, so no joint accounts and no spare card in another person’s name. Given its security features most of my spending goes through Revolut so it would be nice if I could share it with my wife, even if they don’t go full current account.
In summary
I would highly recommend everyone gets a Revolut account as a companion to their existing current account. It’s easy to top up, perfect for travel and safe for online transactions.
Starling
The relationship got off to a rocky start a few years back. I didn’t realise it was a current account and making a footprint on my credit file until it was too late, and got stuck in a frustrating situation where I couldn’t review the terms and conditions without completing the sign-up process.
Why I like Starling
After hearing high praise about this bank from a friend, I decided to give it another try and the experience has been great.
Firstly, the bank is very approachable. I have been able to contact them with concerns and feedback before and after opening the account, and received a refreshingly personal reply free of the “we can’t do that” (translation: “we’ve designed a rigid process and don’t give a toss”) that bigger banks are known for.
Secondly, the user interface and login process is well designed. Everything just works. It’s easy to find your way around and just looks, well, friendly. They have proper web banking, with a login process that manages to be both convenient and secure (like pretty much all banks these days, it’s tied to your phone).
The Spaces feature allows for dividing money into pots, which are separate from the main account and won’t be touched by fraudulent card transactions. It’s easy to top them up manually or set up regular top-ups. This replaces a horrible arrangement I’d built up with Barclays where each savings account was just that, a separate account with its own sort code and account number, resulting in me finding all kinds of bugs in their systems that prevented standing orders from working. A refreshing change.
Starling is also the only challenger bank to offer a joint current account. No, Monzo doesn’t offer a joint account, it offers a package of three current accounts (two solo, one joint). You can’t just have a joint account.
What Starling could do better
Card protection features are limited. Sorry, but even Barclays has more card controls at this point. A reasonable first step would be multiple virtual cards with a monthly spending limit on each. I wouldn’t ditch Revolut entirely without the full disposable offering, but Starling would definitely get much more use.
Locking the card — the toggle is the wrong way around. My brain is receiving contradictory signals, with a toggle bar showing “off” but the text “card Locked” displayed next to it. Look people, if the feature is “lock” then the toggle “on” position means the card is locked. You need to swap either the toggle or the wording, for example keeping the toggle this way around you could say “Activated”. When toggled “on”, the card is activated, when “off”, the card is deactivated. Or keep the lock wording but make it so toggling “on” activates the lock. In an otherwise polished app, this stands out like a glaring beacon of wrongness. It also caused me a lot of embarrassment in a garden centre, with a queue of people behind me while I frantically activated and used my Revolut card to pay.
Interest on Spaces is negligible like all instant access savings at the moment. If the market savings rates increase and Starling doesn’t follow suit, the Spaces will have limited value because I’ll have to keep scooping the money up and plonking it elsewhere. At that point, a Marcus account and a Google Sheet (for allocation) would work better.
In summary
If I wasn’t so paranoid about fraud, I would make this my main account. As it stands, I use it mostly for the Spaces feature for now (but have to store bigger funds elsewhere). If you bank with one of the “traditional” banks, you should consider switching. It isn’t exciting, but it works well. And who — even me — wants an exciting bank account?
Wise
[disclosure: since writing this blog post, in February 2023 I joined Wise as an employee]
Years ago I realised just how awful Western Union is to use — in fact, their dreadful UX pushed me away faster than their high fees — and I discovered TransferWise. Now just “Wise” (I wonder how much they paid for the domain), this is one of the challenger banks that seems to get less attention but actually delivers a good product and service.
Why I like Wise
This was the first bank that made it easy to send money abroad, and I still use it regularly for this purpose. The fees are small and reasonable, with no tricks or cross-subsidising. Just a good UX and clear communication.
At some point they launched a card too, it’s bright green with a small bite taken out of it, giving me another easy way to spend abroad without suffering the hideous fees (honestly, I think the challenger banks wouldn’t have got established anything like as easily had the traditional banks not earned the universal hatred of every customer who ever goes on holiday — i.e. most of them).
It’s easy to set up a balance in any currency — so easy in fact that you can do it wherever you’re travelling, and just close the balance afterwards. I counted well over 45 currencies just now. This allows you to purchase money in advance if the exchange rate is favourable. As I’m clueless in matters of currency speculation, I just buy half when I book the holiday and half when I travel. It smoothes things out somewhat. Wise even offers individual account numbers of a handful of currencies, allowing you to receive payments from someone in that country/regions. This includes EUR and USD.
When you use the card, it defaults to the currency of the destination, so Euros in Spain and so on. It’s quite clever actually: once while connecting in Dubai I didn’t have enough money in one balance alone, resulting in my lunch being paid for in UAE Dirham taken from a combination of British pounds and Thai Baht.
Wise has had web based banking forever, which is great for doing banking when sitting at a desk. Although this is less of a unique feature now amongst the challengers.
I should also mention that Wise has “Jars” (Monzo pots or Starling Spaces), although I haven’t tried this.
What Wise could do better
Not much actually.
I said the UX was good; although it does feel a little less slick than Starling.
I’m pleased to see they offer virtual cards now. I had trouble finding information about this on their website, but I have been able to create (and freeze) a virtual Visa card without paying a fee. It’s a good start but they need to offer monthly spending limits to reach parity with Revolut, and ideally the big bazooka of virtual cards — the disposable variety.
Like Revolut it’s not a current account and there are no joint accounts. Sharing is caring, and the first bank to offer Revolut-like control on a joint account (current or prepaid) will jump to the top of my list.
In summary
I’ve been using Wise (née TransferWise) for nearly six, trouble-free years. If you have friends and family abroad or travel a lot, you should sign up. Even if you don’t, it’s now a very capable prepaid card for everyday spending.
Monzo
This is where it all started, at times feeling almost like a social network. It has become the de facto choice for work birthdays and leaving gifts, and we even used to split bills with it back in the days of eating out.
Why I like Monzo
Good will should not be quickly forgotten, so I want to thank Monzo for their support after my wallet was stolen in Mexico City a few years back. Fortunately I’d already done the sensible thing and left some cards and most of the cash in the hotel safe, so the loss was small, but it was shocking anyway. I asked Monzo support for a replacement card, so as to have one waiting for me on my return, but they offered to send it to me in Mexico. For free! I was only there a few days so didn’t take up the offer, but it was much appreciated.
I’m not sure Barclays with their 2.99% transaction charge, or Lloyds (who I ditched years ago for introducing an even more egregious fee structure) would have looked after customers abroad any better.
Monzo should be thanked for starting the whole challenger bank movement (even if the likes of Wise started sooner for overseas transfers) and ditching the rip-off fees.
Like Starling, Monzo offers savings pots which makes it incredibly easy to manage money for different use cases (car, travel, train tickets etc.)
What Monzo could do better
This is a longer list than it ought to be. It seems that Monzo is trailing the competition in features, despite having a busy looking app.
The elephant in the room is web banking. As someone with reduced vision, I still like to do most work on the big screen and use the phone for occasional tasks. I’ve given up hope of Monzo ever offering banking in a web browser, above and beyond their emergency account access page with limited features. For now at least, Monzo is the least accessible bank.
Virtual cards are only available for customers paying £60/year (3 month contract), which isn’t going to happen in my case because Monzo has too many shortcomings. As far as I can tell they don’t offer virtual disposable cards even then. Monthly spending limits (something a basic Revolut account offers) are among the many features asked for in Monzo’s community but apparently not yet delivered.
Honestly, I much prefer the Revolut model. If I want a virtual card, I pay £4.99 one-off. I shouldn’t have to rent the things! Packages tend to result in cross-subsidisation, where customers who don’t use the features are funding those who do. True, most challenger banks offer packages, but security features should be accessible to all and more aligned with cost or other limitations.
Joint Monzo accounts are available but frustrating. While I sit here like a sad loner writing a blog about bank accounts, my wife is enjoying the garden outside. Like almost all human beings, she isn’t someone who wants to have several current accounts (yes, I have asked her). Unfortunately Monzo doesn’t let you create only a joint account, you each need sole accounts too. So, asking her to get a joint Monzo current account with me on top of our main current account amounts to asking her to get two Monzo accounts. And if she wanted two more current accounts, why would she want them to be with the same bank? Maybe she would, maybe not, but it’s nice to have a choice in such matters and Monzo doesn’t offer it.
So, we have a joint Starling account instead, and Monzo is used mostly for receiving compensation from companies that violate privacy regulations, and sending money to work colleagues for birthdays and leaving gifts. Oddly enough, these sources of income and outgoings roughly match.
I’m also fighting a losing battle to stop the Monzo app from making an almighty great crashing sound whenever money is paid into the account. I do want notifications, I don’t want to be startled by them. Unfortunately this has descended into a farce of Barclays-style officiousness, with Monzo telling me to change the settings in Android, me telling Monzo that my version of Android has no such setting, and Monzo impatiently closing the chat. We’re on iteration two now, I have pointed out that the PTSD-inducing effect is not a feature of Android but a deliberate and malicious act of their app designers and it is within their power to reverse this travesty. Based on their response to community feedback, I don’t feel hopeful.
In summary
For all its flaws, Monzo is still better than most traditional banks. Yet they are in danger of themselves becoming the stale old establishment in relation to other challengers offering slicker design, virtual cards for all and web banking.
Other challenger banks
Although it seems like I have an account with all of them, I have missed a couple. This doesn’t include N26, which had a transparent debit card but pulled out of the UK market after Brexit.
I suspect last time I checked they lacked web banking, because I can see no other obvious reason not to try this bank. They offer joint accounts, pots and virtual cards. One to watch.
I’m not sure what this bank is about, as they don’t seem to offer payment cards. They do offer savings with a good interest rate along with mortgages, but I can’t find any evidence of a web offering. Savings on a tiny phone screen is annoying, but using that for mortgages is just silly. They also have Trustpilot slapped all over their website, which makes me instantly wary.
Which one bank should you use?
This round-up only includes the challenger banks, but I should mention that my main current account is with First Direct (good service, joint accounts, ability to freeze debit card; but no virtual cards and security is more annoying than secure). Keeping the salary, mortgage and other bills separate from spending adds a bit of security. All the prepaid or secondary current accounts can be topped up with smaller amounts.
That said, not everyone is nerdy enough to maintain so many bank accounts, so here’s my one recommendation for each situation:
If you want simplicity, go with Starling. If you need powerful controls, you need Revolut. If you send money abroad, use Wise. As for Monzo, if you already have it then you may as well stick with it, otherwise I’d go with Starling.
