What are the dangers of switching to digital banks like Monzo and Starling Bank?

harryrhysdavies

Hi all,

I'm an avid user of digital banking apps like Starling Bank and Monzo. Personally, I just find them so much easier in terms of staying on top of my spending.

I've therefore been considering a switch from my Barclays current account to a Starling bank account (or Monzo when they finally release this feature).

However, before I do so, are there any cons or dangers to consider? My concern is that, should I look to take out a loan or mortgage at some point in the future, I would be losing my track record with Barclays. Is this something that I should be worrying about, or would it not matter? Is there anything else to consider?

Thanks for any help

surreysaver

Does Monzo provide a statement? I've been trying to work out how to download a pdf statement from them

SnowTiger

harryrhysdavies wrote: »

Hi all,

I'm an avid user of digital banking apps like Starling Bank and Monzo. Personally, I just find them so much easier in terms of staying on top of my spending.

I've therefore been considering a switch from my Barclays current account to a Starling bank account (or Monzo when they finally release this feature).

However, before I do so, are there any cons or dangers to consider? My concern is that, should I look to take out a loan or mortgage at some point in the future, I would be losing my track record with Barclays. Is this something that I should be worrying about, or would it not matter? Is there anything else to consider?

App-based banking only. Lose or break your phone and you lose access to your bank account. And if your phone is a few years old you might find upgrades to the apps will no longer work on it.

You can, of course, buy a new phone. However, you won't have access to your bank account until you do.

Monzo and (I think) Starling only offer 'online' debit cards. According to messages posted to these forums there are times when online-only cards cannot be used.

Monzo and Starling don't offer counter services. AFAIK you can't even access your account via Post Offices.

AFAIK Monzo doesn't offer direct debits and standing orders.

ETA: direct debits and standing orders are on the way for Monzo customers. Only a lucky 1,745 punters have them at the moment.

Many of these fintech banks use GPS for their back end services. GPS has had several technical issues, which has led to cards being rejected.

Some high street banks have also had issues, leaving customers without access to their funds. But having a branch network allows them to offer fists full of cash to punters who can make it to one.

It's prudent to have at least two bank accounts, one that offers a Visa card and another that offers a Mastercard.

Barclays offers a visa debit card and Startling and Monzo offer Mastercards.

If I were you I would keep my Barclays account and open an additional one with Starling or Monzo. If I had to chose one of the two I'd go with Starling, but you could open an account with both of them. I have.

Chapuys

I am a Monzo Current Account user (in the public alpha testing) right now. We need to be clear regarding Monzo. Monzo currently have 2 products.

1. Monzo Prepaid Card - the product most widely used (around 350,000 users).
2. Monzo Current Account - which is currently in public alpha (around 2,000 users).

Monzo Prepaid will be closed by the end of the year and people transferred (if they wish) to the Current Account but the prepaid account will be closed. Cleared that up first. Monzo Prepaid is not FSCS protected either as it is a prepaid card.

Monzo Current Accounts are a full current account. Monzo has a full banking license. They are individually protected like any bank account up to the £85,000 FSCS level. At launch the current account will have:

• Direct debits
• International money transfers
• FSCS protection
• 3D Secure
• Faster Payments
• BACS & Chaps
• Cashback
• Fee free foreign transactions
• Current accounts for under 18 year olds
• Top-ups by card
• Monzo.me
• Increased limits
• Account numbers & sort-codes
• No charges for declined payments or Direct Debits
• Instant transaction notifications
• Standing Orders
• Overdrafts
• WIll not use 3rd part card processing.

I can't see any drawbacks except if you lose your phone it would be hard to instantly access your account... although you would still have your card. However there is a customer service number you can easily ring like any bank. They are thinking about post office access (July open office) but its not currently on their plans. I would always have 2 current accounts anyway just in case. Edit: Oh they don't offer cheques.

surreysaver wrote: »

Does Monzo provide a statement? I've been trying to work out how to download a pdf statement from them

Here is what Monzo state:

Sam Watkin @ Monzo
[...] At the moment we recommend people use their top up bank for this kind of document, as Monzo isn't currently intended to be a primary bank account. But of course, when Monzo is your primary account we'll be providing them, because we want to do all the regular bank stuff, and then more

Monzo have been good at offering statements if you really needed one for mortgage applications with the prepaid account too.

Chapuys

SnowTiger wrote: »

App-based banking only. Lose or break your phone and you lose access to your bank account. And if your phone is a few years old you might find upgrades to the apps will no longer work on it.

You can, of course, buy a new phone. However, you won't have access to your bank account until you do.

Monzo and (I think) Starling only offer 'online' debit cards. According to messages posted to these forums there are times when online-only cards cannot be used.

Monzo and Starling don't offer counter services. AFAIK you can't even access your account via Post Offices.

AFAIK Monzo doesn't offer direct debits and standing orders.

Many of these fintech banks use GPS for their back end services. GPS has had several technical issues, which has led to cards being rejected.

Some high street banks have also had issues, leaving customers without access to their funds. But having a branch network allows them to offer fists full of cash to punters who can make it to one.

It's prudent to have at least two bank accounts, one that offers a Visa card and another that offers a Mastercard.

Barclays offers a visa debit card and Startling and Monzo offer Mastercards.

If I were you I would keep my Barclays account and open an additional one with Starling or Monzo. If I had to chose one of the two I'd go with Starling, but you could open an account with both of them. I have.

• Monzo are currently testing offline debit cards with their current account preview https://community.monzo.com/t/gotta-catch-em-all-the-monzo-current-account-preview-testing-challenge
• Yes the Monzo current account does offer direct debits and standing orders (the app look will be improved later in the beta).
  
• Monzo has its own card processing with the current accounts so it doesn't have to use 3rd party card processors like other fintechs (and Monzo's prepaid card) so shouldn't have as many outages anymore as others. https://monzo.com/blog/2017/03/05/outage/

GTSS9486

harryrhysdavies wrote: »

Hi all,
I've therefore been considering a switch from my Barclays current account to a Starling bank account (or Monzo when they finally release this feature).

By all means open an account with Starling and/or Monzo but I strongly recommend you keep your Barclays account open, and just use the new accounts for their standout features, eg overseas fee free transactions etc.

I have a Starling bank account which i opened a few months ago and is used as a secondary account - my main account is with FirstDirect. Major issues i have found with Starling bank:

* Their debit card is very hit & miss when trying to use overseas. When in New Zealand recently, it only worked 1 out of 5 times for purchases or cash withdrawals. Luckily i had my Halifax Clarify and Mbna Everyday Plus Amex cards as backup which worked without any issues.

* When setting up a payee through the app, payee reference details (eg credit card number) are NOT saved for future use. Probably not such an issue but for credit card or bill payments, its highly inconvenient having to enter long 16 digits numbers EVERY time.

System

Always worth keeping at least 2 current accounts.
Ideally with differing debit networks (but this isn't essential)

JuicyJesus

I'm a bit uncomfortable with the idea of being with a bank that doesn't have a "fallback" as such. If Nationwide's systems (or those of any other high street bank) go down and I can't use my card or Internet banking, they will at least have branches I can use to get cash from, or if I need a paper statement then they can send me one. With one of these banks there is no such fallback, and without it you're a bit screwed.

This is one of the things that has stopped me using Starling as anything other than a curiosity.

scoobydoothedog

If it is the app that helps you to keep track of spending, why not look at the B account from Yorkshire Bank/Clydesdale Bank. The app has all sorts of tools to help you with that and you have branches to fall back on (although not as many as the "big" banks - and not always in the right area so that's worth checking).