There’s never been a better time to look for a new current account, especially with all of the variety offered from challenger banks who have continued to make an impact on the retail banking sector in 2022.
The following UK challenger banks are included in this review:
In April 2019, a survey by Which? cited Monzo Bank as having the best customer satisfaction score ahead of First Direct and Nationwide. Furthermore, BACS have published the latest current account switch service statistics (covering the period 1st January to the 31st March 2019), revealing that both Monzo and Starling are now included in fourth and fifth place in terms of switching performance.
We’ve put together a short review of the current challenger banks on offer to UK customers, allowing you to make an informed decision if you were thinking of making the switch. We also briefly explore the popularity of challenger banks and why they are such a good option for UK customers.
This article will be updated regularly to keep up with any new developments for each challenger bank.
Compare challenger banks
What is a challenger bank?
A challenger bank refers to a newly created digital-only banking establishment in the UK, as an alternative to traditional high-street banks. You will often hear them being referred to as app-based banks or neo-banks in some instances. They are normally categorised by the following:
- Primarily offer current accounts or business accounts
- Banking is all app-based
- No high street branches
- Support available online
- Often allows for free transactions while abroad
- Usually offer a convenient savings option
They are often much smaller than well-established high-street banks, but are becoming increasingly popular with customers who wish to switch to a more dynamic and easy-to use bank. Read up on the advantages of app-based banks here.
Why should I choose a challenger bank?
So why are challenger banks so popular? Their digital-only format certainly appeals to the generation of smartphone-equipped, tech-savvy young people (otherwise known as millennials, Gen Y or another similar generational term).
But they do have a universal appeal in that they fit so comfortably into our lives. They are available on-the-go via a whole range of smart devices, they don’t have physical branches so there’s no need to go out of your way, and all support is available online or within the app. Challenger banks well and truly fit around us, not the other way around.
Part of that appeal is that they are a viable alternative to traditional high-street banks that customers may have had a poor experience with in the past. They are a breath of fresh air in the industry and offer something a little different, and even a little more fashionable given their strong branding and messaging.
Challenger bank review
If you’re thinking of making the switch to a challenger bank, it can be useful to get a glimpse of all the options on offer so you can make an informed decision.
Now that many challenger banks have increased in popularity compared to high-street banks, it’s also interesting to note which ones have the largest share of customers, and which ones are just getting started.
Revolut review
Offers 3 types of current account
Premium and Metal account available for a monthly fee
Save money easily with Vaults, including rounding up spare change
Free transactions abroad as standard
Ability to exchange to cryptocurrencies
Earn cashback on purchases with Metal card
Supports Google Pay and Apple Pay
Generate up to 5 virtual cards to pay for items online
Exchange up to 5 cryptocurrencies in-app
Unless you have a promotion a physical card costs £4.99
Card delivery takes up to 9 working days
Android tablets not supported for the app
Fees charged if you withdraw more than £200 in cash per month (limit differs for Premium and Metal)
Transfers can take 3-5 working days unless you have a Premium or Metal account
Launched back in 2015, Revolut is now one of the largest challenger banks in the market. In March 2019 they reported they had hit 4.5 million customers, with 1.6 million being UK-based.
They are one of the only challengers to allow customers to exchange money into cryptocurrencies and you can also earn cashback with any purchase made on their Metal card. Their version of a savings account comes in the form of Vaults, which can be set up straight from the app.
Starling Bank review
Offers a Personal or Joint current account
Euro and Teen accounts also available
Analyse your habits with Spending Insights
Use Goals to save money easily
Earn interest of up to 0.5% from your balance
Overdraft facility available
Personal loans available
Supports Google Pay and Apple Pay
Overdrafts come with a 15% equivalent annual rate
Additional 0.4% fee for sending payments overseas
If you lose your card abroad you could be charged £60
If you need to certify documents you will be charged £20
Having just recently celebrated their two-year anniversary, Starling is another challenger bank who are going from strength-to-strength in the UK. They have recently developed Marketplace, making it even easier for customers to access financial products from partner companies.
Despite not offering a premium current account, Starling still manage to offer an overdraft facility and even a personal loan option, being one of the only challenger banks to do so. They became known for offering a portrait-style, teal debit card, but customers have flocked to the bank for other features such as saving money via Goals and analysing their accounts through Spending Insights.
Monese review
Monese Simple is a free current account
Classic and Premium both have a monthly fee (£4.95 and £14.95 respectively)
Easy to apply as you don’t need proof of address or credit history
Free secondary account for GBP or EUR so you can spend in two different currencies
Instant transfers between Monese accounts
Supports Google Pay and Apple Pay
No proof of address required
Cash withdrawals above £200 per month incur a 2% charge (limit differs for Classic and Premium)
Foreign spending above £2,000 per month incur a 2% fee (limit differs for Classic and Premium)
Additional fee of up to 2% for international transfers or payments (Premium is free)
Can’t use the card for pay at the pump transactions
Monese prides itself on being the simple alternative to high-street banks, built for customers who would like an easy route into managing their money. They have one free current account and two premium accounts that charge a monthly fee.
This hassle-free approach to banking appeals particularly to those who have emigrated from another country to the UK, as Monese doesn’t require proof of address or a credit history, making it much easier to apply and be accepted.
Cashplus review
Offers two types of current account
Activeplus and Deluxe both charge a monthly fee
Ideal for those with a bad credit history
Get an extension on your account using the iDraft overdraft feature
Creditbuilder feature is a free add-on to improve your credit score over a 12-month period
No credit checks required on application
Manage your account online if you can’t access the app
Order a free currency card in Euros or Dollars
No free account options
Physical debit card costs £5.95
ATM withdrawals cost £2 in the UK and £3 abroad
Allowed up to 9 free transfers per month and a £0.99 fee thereafter
iDraft costs £20 to arrange then 75p per day, capped at £10 per month
Cashplus are a challenger who have entered both the personal banking and business banking sectors, allowing those with a bad credit score to still benefit from a secure bank account that suits them.
Both of their current account offerings have a monthly fee, but don’t require a credit check, making it much easier to apply and keeping your credit score intact. Through the Creditbuilder feature, you can also start to make improvements to your credit score over 12 months, with no risk to yourself.
Monzo Bank review
Offers 4 types of accounts
Premium account has bundles for you to choose from
Use ‘Pots’ to save money and earn up to 1.5% AER interest
Monzo will advance your salary payment by one day, meaning you get paid 24 hours early
Manage your money with notifications about your direct debits
Spending on your card abroad incurs no fees
Unlimited free ATM withdrawals
Supports Google Pay and Apple Pay
Overdraft facility available
Pay in cash using Paypoint
Pay in cheques through freepost delivery
Any cash withdrawals over £200 per month will have a 3% fee added
Daily cash withdrawal limit of £400 and monthly limit of £5,500
A Monzo overdraft costs 50p per day
Cheques can take up to 3 weeks to appear in your account
Cited as one of the most popular challengers in the UK (according to the BACS switching statistics), Monzo Bank is now used by more than 2 million people, since their launch in early 2015. They pride themselves on being transparent with customers and have an active community forum with 40k users.
They have recently launched a premium account option called Monzo Plus, which is in early development but has started with a monthly fee of £3. You can then add on extras such as travel insurance, with many more options in the pipeline.
Tandem review
Tandem app gives you easy ways to save
Autosavings rounds up loose change and puts it aside in a savings account
No need to open a new current account
Two types of Credit Card available
Three types of Fixed Savings accounts available
Available on App Store and Google Play Store
Ideal for those who want to start saving more money
Does not provide any current account options
Need a modern smartphone to use properly
Not ideal for those looking to switch banks
£12 late fee for credit cards
Withdrawing cash with credit cards has a minimum charge of £2.50
Rather than offering a current account as a main product, Tandem focus on being a companion to your existing current account, helping you work in tandem with your finances. All you need to do is download their free app and start saving.
Unlike other major challengers, Tandem concentrates on offering savings accounts and credit cards to customers, alongside their money management app. Use of the app creates a seamless transition between your existing current account and a savings pot, which rounds up to the nearest pound using Autosavings and puts the change into a pot for later use.
They are looking at implementing a full current account very soon, along with support for Apple Pay and Google Pay too.
Atom Bank review
Offers products for saving, buying and growing
Save money with a fixed saver account from 3 months to 5 years
One of the only challenger banks to offer mortgages
Business loans for Sole Traders, Partnerships, LLPs and Limited Companies
Free app to track ongoing payments or apply for new products
Competitive rates
Good app-based alternative to high street lenders
Available on App Store and Google Play store
Existing current account required
Doesn’t offer current accounts, personal loans or credit cards
Good credit score required for mortgages and business loans
No flexible savings pots available
Atom Bank have entered the challenger space by providing savings accounts, mortgages and business loans to customers, all available by applying online and managing through their app. Like Tandem, Atom Bank are a challenger that you can use alongside your existing current account to help with saving for the future.
Along with providing competitive rates for their fixed savers accounts, they are also the only challenger in our list to provide mortgages, meaning potential homeowners can find an alternative to high-street banks when looking for funding.
Which is the best challenger bank for me?
There are plenty of options for those thinking of switching their current account, including many challenger bank options too. Start browsing our choice of challenger banks and other current accounts using the link below.