Smartphone Banking: The Best App-Based Bank Accounts

Smartphone banking, digital banking, app-only banking – whatever you call them, accounts offered by new challenger banks such as Starling Bank and Monzo have become very popular in recent years due to the convenience they deliver as people’s lives evolve online.

Unlike traditional banks, digital banks do not have physical branches; indeed, while some have a website, functionality can be very limited. Instead, you deal with the bank exclusively through your mobile phone – even for things like paying by check, should you ever receive one again. And if you have to pay cash, you might be out of luck, although Monzo and Starling accept cash deposits.

So what is on offer?

The best app-based bank accounts


Monzo, launched in 2015, is one of the best app banks for budgeting. It offers real-time notifications every time you spend, and you can easily see summaries of your spending, set budget spending goals for any category, e.g. fuel, restaurants and groceries, and receive notifications if you exceed the limit. It offers a Mastercard debit card.

Monzo won the award for best UK bank this year.

  • Monzo does not charge any overseas spending fees, but ATM withdrawals are only free up to £200 every 30 days. A 3% charge will then apply.
  • It offers joint, business and personal accounts.
  • The Monzo Premium Account, a bundled account that includes features like mobile insurance and travel insurance, costs £15 per month and pays 1.5% AER.
  • The account comes with an optional overdraft of £2,000 and loans up to £25,000.
  • Monzo is FSCS protected which means customers get up to £85,000 of protection on their money if the bank fails.
  • Cash can be paid through any of the 28,000 PayPoint terminals in the UK, located in local shops.


based in the United States Hunt has become popular in the UK after debuting as a UK-only app bank earlier this year.

  • The bank offers 1% cashback on almost all expenses in your first year
  • You get 1.5% savings of up to £250,000 if you have Chase’s Easy Access Savings Account.
  • You can earn 5% AER variable interest on ’rounding up’ – customers can round up each card transaction to the nearest pound and place it in a separate savings jar which earns 5% interest.
  • Chase is protected by the FSCS.
  • There is no possibility to pay in cash.


Starling Bank has won the ‘Best UK Bank’ award for four consecutive years until 2021.

  • Professional, personal, joint accounts, in dollars and euros.
  • A child debit card linked to the parent’s account.
  • Free cash withdrawals abroad and no charge for spending abroad; transactions are converted at the Mastercard exchange rate.
  • AER of 0.05% on personal current account balances up to £85,000.
  • Allows you to send money abroad.
  • Gives you an overview of your spending activity.
  • It is protected by the FSCS.
  • Cash can be deposited at any post office.

Atom Bank

Atom Bank offers savings accounts and mortgages.

  • Atom Bank does not maintain a current account and cannot be used for day-to-day expenses.
  • Atom Bank fixed savings accounts pay up to 2.7% AER.
  • Open to UK residents only.
  • Atom Bank has a maximum savings limit of £200,000.
  • There is no minimum deposit required for instant saver, but fixed saver requires a minimum deposit of £50.
  • Protected by the FSCS


Monese is not a bank. Rather, it is an ‘electronic money’ institution, authorized and regulated by the Financial Conduct Authority.

When you keep money with an electronic money institution, it is “safeguarded” rather than protected by the FSCS. If banks, credit unions or building societies become insolvent, under FSCS rules you are protected up to £85,000. But as part of the safeguard, e-money institutions have to separate your money from theirs. If the company becomes insolvent, you get the difference between your money and the administration and liquidation costs the company faces. It can sometimes take longer to receive your money than it takes with a bank.

Monese is very student-friendly and is especially useful for international students.

  • You can open the card without having a UK address, credit history or income (factors that usually prevent international students from opening an account).
  • You can open a current account in the UK and the Eurozone for free, giving you the option of spending both Euros and Pounds.
  • It allows you to send money abroad.
  • You can get real-time insight into your financial activity.
  • However, it is not protected by the FSCS.


Revolution is a popular e-money institution to hold while vacationing abroad.

  • It allows you to spend money abroad without fees.
  • Crypto enthusiasts can also buy and trade cryptocurrencies on the app
  • It has tools to understand and interpret your spending habits
  • The account comes with a free debit card, although delivery charges apply.
  • But in terms of withdrawing money overseas, you can only withdraw £200 for free, or up to five withdrawals. After that, a 2% fee kicks in.
  • As Revolut is an electronic money institution, your money is not covered by the FSCS. But “deposits in your savings vaults are FSCS protected up to £85,000 and deposited with our trusted partner bank,” says Revolut.

Advantages and Disadvantages of Using App-Only Accounts


Many app-only banks are known for their excellent customer service, as the lack of physical branches means digital banks often focus heavily on online customer service. Most app-based bank accounts offer fee-free overseas transactions

Accounts can be opened in minutes and come with helpful budgeting tools and simple savings options. Most accounts break down your spending by type so you can see where your money is going each month, which is handy if you’re trying to set a budget and stick to it. Alerts each time you use your card also help you control your spending.

Several app-based banks also offer rounded savings services: each time you spend with your card, the amount is rounded up to the nearest pound and the difference is placed in a savings account.

Other benefits include the ability to set your own contactless spending limit. If you’re not comfortable with the standard £100 limit, you can change it in an instant. And if you lose your card, you can block it in the app.

The inconvenients

App-based banks typically offer fewer account types than high street banks or more established banks. You usually have the choice between a current account and a basic savings account.

Although Monzo and Starling use the current account switching service, they cannot offer any cash incentives to attract new customers.

Because there are no physical branches, customers cannot get face-to-face support if they want it; instead, you’ll need to be comfortable with online and, possibly, phone support.