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The huge increase in the number of challenger banks available to UK customers has revolutionised the way people access and use banking services.
Going against the grain of traditional UK high street banks, these challenger banks are primarily based online although more and more branches are springing up in the UK and around the world.
Let’s take a closer look at what exactly challenger banks are, how they work and what you can do to find the perfect challenger bank for your financial circumstances.
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What Are Challenger Banks?
Challenger banks offer a brand new form of retail banking that has been launched in the UK with the aim of putting the cat amongst the pigeons of the big four banks – HSBC, Barclays, Lloyds and RBS.
They heavily focus on embracing new technology to create a safer, faster banking environment suited to the rigours of modern day finance. With such a large proportion of banking transactions now carried out online, this has paved the way for online only banking apps which has helped to significantly reduce the cost of creating a new bank from scratch.
Indeed, the banking license offered to Metro Bank in 2010 was the first to be issued outside of the big four banks for more than 100 years!
The main focus of challenger bank accounts is to open up banking to a wider customer base, trimming back the red tape and heavily reducing the hassle of setting up a traditional bank account.
This is great for those who have either struggled with regular banks in the past due to not having sufficient documentation, residency requirements or an acceptable credit score.
You’ll be able to deposit and withdraw funds using your card in exactly the same way as any other high street bank as well as managing your finances online, making instant payments and adding an overdraft facility (subject to status).
Quick FAQs About Challenger Banks
Am I Eligible For An Account With A Challenger Bank?
Yes, as long as you meet the basic UK legal criteria for opening a bank account in the UK. This basic eligibility criteria includes being a UK resident, having appropriate identification or documentation, and meeting the minimum age requirements for your chosen account.
Is It Safe To Use Challenger Banks?
Yes. Whilst it’s now easier than ever for a new bank to launch in the UK, they are still fully regulated and authorised by the same Financial Conduct Authority and Prudential Regulation Authority that govern the UK’s financial sector.
Are All Challenger Banks Online?
No. Although many of today’s challenger banks benefit from operating solely online, this isn’t a prerequisite of being a challenger bank. Metro Bank were one of the first to open on the high street and others are springing up across the country as this sector continues to thrive.
Is My Money Protected With A Challenger Bank?
Yes. Any bank that is regulated in the UK is protected by the Financial Services Compensation Scheme (FSCS). This protects your money up to £85,000 should your challenger bank ever fall into financial difficulty.
Top 3 Challenger Banks 2019
With new challenger banks coming to market all the time, it’s well worth keeping up to date with the latest accounts on offer. Here’s a run down of our top 3 challenger banks so far in 2019.
- Monese
Monese was actually created after the founder arrived in the UK and struggled to get a bank account to help him get started with his finances. They’re committed to offering simple, straightforward bank accounts with a variety of pricing structures (including no fee accounts!) to get you up and running.
| Pros | Cons |
| Debit and credit card facilities available | Limited number of features on free accounts |
| Transfer money without charge to Monese accounts around the world | You’ll need to pay a monthly fee to unlock common banking facilities such as higher withdrawal limits |
| Wide range of customer support options available |
- Monzo
Monzo continue to grow their product offering and have one of the most diverse portfolios of all the challenger banks. As a community based bank, they’re always listening to members who all have a say in how the bank is run.
| Pros | Cons |
| Clean, easy to use mobile app | Limited number of account types |
| Apply for credit and use your approved overdraft immediately | Online only service |
| One of the fastest growing challenger banks in the UK | |
| Apple Pay and Google Pay compatible |
- Revolut
Revolut’s commitment to customers is pretty simple – no hidden fees, no exploitative exchange rates and no lucrative charges for sending money abroad. They also offer a range of insurance products which are all accessible at the touch of a button from just £1 per day.
| Pros | Cons |
| Every banking facility available at the touch of a button | Limited number of account options |
| No hidden charges for foreign transfers | |
| Very competitively priced insurance products |
How To Apply For A Challenger Bank Account
So we’ve already taken a run through the top 3 challenger banks of 2019 so far, but how do you actually go about applying? Remember that challenger banks are designed with simplicity in mind so there really has never been a better time to start exploring these groundbreaking accounts.
It all starts by gathering together as much information as you can on the different challenger banks that are available. Fortunately, CreditRaters.com does the hard work for you by comparing some the UK’s leading challenger banks all under one roof.
Simply browse through the different features on offer along with the additional benefits that come with paid accounts to ensure you find a bank that meets your unique individual needs. It’s then over to you to complete your application through your browser or via the mobile app to get an instant online decision on your brand new account!
If accepted, any cards and PINs associated with the account will be sent to you straight away, although you’ll be free to use all of the other services on your account from outset.
Step into the future and find the perfect challenger bank to meet your spending habits with CreditRaters.com today.