Smartphone banking: the best app-based bank accounts

Smartphone banking is convenient and, with features that help you budget and save, is becoming very popular. Saloni Sardana looks at the best app-based accounts available now.

Smartphone banking, digital banking, app-only banking – whatever you call them, accounts offered by newer challenger banks such as Starling Bank and Monzo have become very popular over recent years because of the convenience they provide as people’s lives shift online.

Unlike traditional banks, digital banks do not have physical branches; indeed, while some do have a website, functionality can be very limited. Instead, you deal with the bank exclusively via your mobile phone – even for things like paying in a cheque, should you ever get one again. And if you need to pay in cash, you may be out of luck, though both Monzo and Starling do accept cash deposits. 

So what’s on offer? 

The best app-based bank accounts 


Monzo, launched in 2015, is one of the best app-only banks for budgeting. It offers real-time notifications every time you spend, and you can easily see summaries of your spending, set budget spending targets for any category, for example fuel, dining out and groceries, and receive notifications should you breach the limit. It offers a Mastercard debit card.  

Monzo won the Best British Bank award this year.  

  • Monzo doesn’t charge any overseas spending fees, but ATM withdrawals are only free up to £200 every 30 days. A 3% charge applies after that. 
  • It offers joint, business and personal accounts.
  • The Monzo Premium account, a packaged account that includes features such as mobile insurance, and travel insurance, costs £15 a month and pays 1.5% AER.
  • The account comes with an optional £2,000 overdraft and loans up to £25,000.
  • Monzo is FSCS protected, meaning that customers get up to £85,000 worth of protection on their money should the bank go out of business.
  • Cash can be paid in via any of the 28,000 PayPoint terminals in the UK, located in local shops.


US-based Chase has become popular in the UK after making its debut as an app-only bank in the UK earlier this year.  

  • The bank offers 1% cashback on almost all spending in your first year
  • You get 1.5% on savings up to £250,000 if you have Chase’s easy-access savings account.
  • You can earn 5% AER variable interest on “round ups” – customers can round up each card transaction to the nearest pound and put it into a separate savings pot that pays 5% interest. 
  • Chase is FSCS protected. 
  • There is no facility for paying in cash.


Starling Bank won the “Best British bank” for four consecutive years until 2021. 

  • Business, personal, joint, dollar and euro accounts.
  • A debit card for children linked to the parent’s account. 
  • Free cash withdrawals abroad and no fees for overseas spending; 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 overall picture of your spending activity. 
  • It is FSCS protected. 
  • Cash can be deposited at any Post Office branch.

Atom Bank  

Atom Bank offers savings accounts and mortgages.  

  • Atom Bank does not operate a current account and can’t be used for daily spending. 
  • Atom Bank’s fixed saver accounts pay up to 2.7% AER. 
  • Only open to UK residents. 
  • Atom Bank has a maximum savings limit of £200,000. 
  • There is no minimum deposit required for the instant saver but the fixed saver requires a minimum deposit of £50. 
  • Protected by the FSCS


Monese is not a bank. Instead it is an “e-money” institution, licensed and regulated by the Financial Conduct Authority.  

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

Monese is very student friendly and is particularly helpful for overseas students.  

  • You can open the card without having a UK address, credit history or income (factors which typically prevent foreign students from opening an account).
  • You can open a UK and a eurozone current account free of charge, giving you the option of spending in both euros and pounds.
  • It allows you to send money abroad.
  • You can get real-time insight into your financial activity. 
  • It is however not protected by the FSCS.  


Revolut is a popular e-money institution to hold when holidaying abroad.  

  • It allows you to spend money abroad without any fees. 
  • Crypto enthusiasts can also buy and exchange cryptocurrency on the app 
  • It has tools to understand and interpret your spend habits
  • The account comes with a free debit card, although a delivery charge applies. 
  • But in terms of withdrawing money abroad, you only get to withdraw £200 free of charge, 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 protected by the FSCS up to £85,000 and deposited with our trusted partner bank,” says Revolut. 

Pros and cons of using app-only accounts 


Many app-only banks have gained recognition for having excellent customer service as the absence of physical branches means digital banks often focus heavily on online customer service.  Most app-based bank accounts offer fee-free transactions abroad 

Accounts can be opened in minutes and come with useful budgeting tools and simple savings options. Most accounts will break down your spending by type so you can see where your money goes each month, which is handy if you are trying to set up a budget and stick to it. Alerts whenever you use your card also help you keep on top of spending. 

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

Other benefits include the ability to set your own contactless spending limit., If you are uncomfortable 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.  


App-based banks usually have fewer account types on offer compared to larger high street banks or more established banks. You generally get the choice of a current account and a basic savings account.  

While Monzo and Starling do use the current account switching service, they may not offer any cash incentive to tempt new customers. 

As there are no physical branches, customers can’t get face-to-face support should they want to; rather, you will need to be comfortable with online and, possibly, telephone support. 


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