Challenger Banks - what am I missing?

MisterMotivated

18cc wrote: »

... plus they are more fun and their debit cards look cute

I have to wonder how relevant these aspects are when choosing a bank account.

DCFC79

EarthBoy wrote: »

Barclays have done this for ages now. Haven't you seen their TV adverts with the woman on the bus who can't remember where her card is?

I don't watch a lot of TV, yet I've seen that advert loads of times, -it always seemed to be on.

Ive seen it yes, forgot about it lol.

Wellard_Mann

I have no objection in principle to using an app only bank – though only as a back up to my high street arrangements. However, for me, I can’t see any advantage. The majority of my day to day spend is via Google Pay so the instant spend notifications would be of limited use. I only carry two ‘walkaround’ cards, both of which I can freeze if necessary. Foreign transactions are covered off by a fee free debit card (in the EU, which is far as I go nowadays) and two fee free credit cards.

I may open an app only account at some point out of general interest though; keeping up with technological developments makes me feel less old!

DCFC79

MisterMotivated wrote: »

A number of high street banks offer this.

Ok I know of Barclays but its not a feature in from RBS, you can easily report it as lost, stolen etc.
Halifax do it too.


Id obviously missed the memo from Halifax they had the option to do it.

sal_III

Their main advantage/competitiveness against "traditional" banks is the streamlined IT infrastructure. This allows them rapid deployment of new features and greatly reduces cost of operation. The lack of physical branches also reduces cost by a lot. These cost savings allow them to "pass on" some of these savings to customers in the form of interest rates on current account and no transaction fees and/or rip off exchange rates on transactions abroad.

I have worked in IT for 2 major UK banks, you wouldn't believe how much legacy systems they are still running at staggering cost.

Personally for me the reasons to switch to Starling were several:
- instant notifications of transactions and account balance changes (unlike traditional banks where sometimes it takes 1-2 days for the transaction to clear)
- unconditional Interest rates on the current account balance - no high street banks offers that, the likes of Santander 1-2-3 have a bunch of conditions attached.
- transaction categorization and spending insight, sure there are plenty of personal finance apps that offer the same, but why not get it at source.

pafpcg

sal_III wrote: »

...., you wouldn't believe how much legacy systems they are still running at staggering cost.

But have you thought how much it would cost if those legacy systems stopped running?

Takmon

sal_III wrote: »

Their main advantage/competitiveness against "traditional" banks is the streamlined IT infrastructure. This allows them rapid deployment of new features and greatly reduces cost of operation. The lack of physical branches also reduces cost by a lot. These cost savings allow them to "pass on" some of these savings to customers in the form of interest rates on current account and no transaction fees and/or rip off exchange rates on transactions abroad.

I have worked in IT for 2 major UK banks, you wouldn't believe how much legacy systems they are still running at staggering cost.

Yes i agree with that but the only real monetary benefit they offer is when you use it for foreign transactions. Starling should never be your main account from a money saving perspective.

sal_III wrote: »

Personally for me the reasons to switch to Starling were several:
- instant notifications of transactions and account balance changes (unlike traditional banks where sometimes it takes 1-2 days for the transaction to clear)
- unconditional Interest rates on the current account balance - no high street banks offers that, the likes of Santander 1-2-3 have a bunch of conditions attached.

Starling pays 0.5% interest on up to £2000 and 0.25% on up to £85,000.

TSB currently pays 3% on up to £1500 (it was 5%). So TSB is the clear winner here.

Santander and Natwest also pay cashback on your direct debits. So really if you have direct debits and money kept in Starling you are losing out financially.

sal_III wrote: »

- transaction categorization and spending insight, sure there are plenty of personal finance apps that offer the same, but why not get it at source.

Aminatidi

eDicky wrote: »

Only one? Perhaps you're overlooking the common wisdom of not restricting yourself to a single account and the chance of having no access to money in the event of IT failure or frozen account.

A Starling or Monzo account costs nothing and can be opened in minutes, card delivery in a couple of days, might be worth trying out for yourself...

Maybe I'm showing my age but is there any impact in terms of credit score or anything to even care about with opening an account?

Point taken about restricting myself, but to give an example as a counter to that, I'm really surprised these banks don't seem to allow "normal" browser access.

I recently went overseas and had to take a work phone as the roaming charges for my personal phone were literally horrific.

I was at least able to login to my normal bank account using my web browser.

sal_III

Takmon wrote: »

TSB currently pays 3% on up to £1500 (it was 5%). So TSB is the clear winner here.

I wouldn't touch TSB with a barge pole. Ditto NatWest/RBS too many epic IT failures in recent history.

I had bad experience with Santander, when I was trying to open a 1-2-3 account couple of years ago. The £5ish / month from cashback is just not worth the agro.

The interest rate on current account is just a nice touch and a bonus. the primary driver for using current account shouldn't be the interest rate. With the transition to cashless society the availability of service and customer support / speed of resolution are much more important factors. And in that field the new fintech banks are clear winner. At least in my view YMMV

Takmon

sal_III wrote: »

I wouldn't touch TSB with a barge pole. Ditto NatWest/RBS too many epic IT failures in recent history.

I opened an account with TSB just to get the 5% interest on £1500 of my savings. Not being able to access it for any period of time wouldn't bother me much.

I actually couldn't transfer some money for a few days and they gave me £175 for the trouble when i told them about the issue. So it was well worth me having an account with them.

sal_III wrote: »

I had bad experience with Santander, when I was trying to open a 1-2-3 account couple of years ago. The £5ish / month from cashback is just not worth the agro.

The interest rate on current account is just a nice touch and a bonus. the primary driver for using current account shouldn't be the interest rate. With the transition to cashless society the availability of service and customer support / speed of resolution are much more important factors. And in that field the new fintech banks are clear winner. At least in my view YMMV

I have current accounts with many different banks and the only reason i have most is to keep some money in there to get a good rate of interest. By spreading out my money across all these accounts i get a far higher interest rate on my savings than keeping it in any one standard account.

I also have an account for income, an account for bills (cashback) and an account for spending. I would never recommend using just one account i say take advantage of what each bank offers and combine it to get the highest return.