What are challenger banks?
Challenger banks are smaller banks that provide their services through an app or website, so you can do all your banking digitally. They appeared after many people started to lose their faith in the traditional banking system. These new found digital-only establishments are challenging the way we bank, making it a simple, effective and efficient process.
At a glance
- You manage your account online and via an app
- They offer high levels of online security
- They take the stress out of travelling abroad
- They’re regulated by an array of governing and authoritative bodies
- They’re typically smaller than regular banks
- They tend to offer better saving rates and offer incentives to introduce new customers
- They help monitor your spending and saving in a user friendly way which encourages sensible spending
How do challenger banks work?
They work like a regular bank but without the high street presence. They’re purely (with the exception of Metro) based online and use specially designed apps to make your banking a seamless process. You can still pay cash and cheques into your account and talk to an adviser but it’s all done through either third party cash deposits or through cyber technology.
What are the pros & cons of challenger banks?
- Effective and efficient
- Keep track of instant spending
- Budget your spending
- Often have free transactions whilst abroad
- Switching is easy
- First class technology at your fingertips
- Some providers let you exchange cryptocurrencies
- You can’t go into a branch if you have a problem or question
- You’re only covered up to £85,000 if the bank were to fold – this is a larger issue for small business owners
- Not all providers have the ability to set up direct debits or standing orders
- You have to pay to deposit cash-this is normally set at £1 and can be done through a third party pay points
- Some limit the amount of cash you can withdraw per month
What do challenger banks offer?
Many challenger banks offer everything a traditional bank offers and more. With first class technology, budgeting systems and extras such as free spending abroad, it’s never been easier to bank and make your account work for you.
Why should I open an account with a challenger bank?
Challenger banks are a great alternative to banking for tech savvy people. Their digital-only, on-the-go format allows spending to be at your fingertips wherever you are. You have the ability to track, manage and budget your spending, a benefit that traditional banks don’t currently offer. They’re designed with you in mind and make it easier than ever for you to control your finances.