Challenger banks, E-Money, Digital Banks are something you will no doubt have heard more about in recent times.
In fact one in ten people in the UK have switched to a digital only bank like Monzo, Revolut or Starling for their personal banking. They certainly are giving the “bricks and mortar” banks a run for their money!
They are quick to set up in literally minutes, with the ability to operate entirely from your smartphone. Not only do they offer the usual banking services but many also allow you to use budgeting apps, foreign currency transfers and cash transfers at the touch of a button. Seriously, who has time to book an appointment, go to a bank, fill in forms and answer questions these days … we use challenger banks ourselves so we speak from experience when we say they are super efficient.
Here’s our round up of the top 12, some of these may well be new to you I’m sure, take a peek and see what you think.
ANNA
ANNA is open to any UK resident who is a director of a limited company and non-limited businesses that are structured as a partnership or sole trader.
On the app you’ve got smart invoicing, creating sales and purchase invoices for you in under ten minutes. It’ll politely chase outstanding payments that you’re owed and you’ll be notified about VAT, corporation tax and self-assessment tax return deadlines.
In the future it’ll introduce VAT filing with HMRC as well as tax reminders and payroll services.
You can get a three-month free trial directly through ANNA’s website. After the free trial is over, it costs £5 a month if your monthly income is under £2,000; £11 a month if it’s £2,000 – £100,000; and £49 a month if it’s over £100,000.
Revolut
Revolut is a good shout for businesses who travel and trade overseas. Customers can hold, exchange and transfer 28 currencies with the real exchange rate.
You can issue free corporate cards to employees so that they can spend fee-free and with reduced expenses when they’re abroad.
To make running your business easier, you can have individual bank account numbers (IBANs) in all 28 currencies.
Revolut comes with perks and benefits from partners such as Apple, Amazon Business, Google Ads, Deliveroo for Business, Seedrs and Slack.
In terms of accounts you’ve got:
- Free (£0 a month)
- Grow (£25 a month)
- Scale (£100 a month)
- Enterprise (£1,000 a month)
Freelancers can choose from the free account (£0 a month) and the professional (£7 a month).
Starling Bank
The Starling Bank business account is open to you if you’re self-employed or the owner of a limited company or if you’re part of a limited company with multiple owners. You must have been trading for a minimum of 18 months to apply. Note that sole traders must have a Starling Bank personal account to open a Sole Trader account.
There’s no monthly charge on the account and it comes with an overdraft. If you’re running a limited company, you can apply for an overdraft limit from £250 to £150,000 and if you’re a sole trader, your limit is £250 to £10,000.
If you want to deposit cash, you can do so at 11,500 Post Office branches across the country. It’ll set you back £3 per deposit. Each Post Office withdrawal up to £1,000 is 50p and 0.3pc after that.
What’s more, you can integrate it with Xero, FreeAgent and Quickbooks.
Tide
With Tide there are no fees on card payments in the UK or abroad and you get free transfers between Tide accounts. Transfers outside Tide are charged at 20p each, ATM cash withdrawals are £1 and cash deposits at Post Office are charged at £1 and 3pc at PayPoint.
You can have up to 35 team members available per account on the Tide Mastercard.
You’ve also got instant invoicing and the ability to set up scheduled payments. The package is rounded off with in-app support as well as integration with FreeAgent, Sage and Xero.
Monese
Monese says that it isn’t a bank, instead specialising in multi-currency accounts. It gives you unlimited transactions, fast bank transfers and the ability to get cash out at ATMs globally.
Open an account from your smartphone; Monese ensures you’ll have full access within ‘a matter of hours’.
The app is supported in ten languages and you can have accounts in both GBP and Euro for international banking. To make running your business that bit easier, you can do unlimited transactions.
Convert currency at competitive rates in 14 currencies including US Dollar, Australian Dollar, Euro and Danish Krone.
To keep your money safe, the app uses biometric unlock and backend encryption.
The Monese account will set you back £9.95 a month (but it also gives you the features of a Classic personal account).
Coconut
For sole traders and limited companies (with up to two directors), Coconut has the functionality to handle banking, bookkeeping, invoicing and tax.
You can connect current accounts and credit cards from 20 different banks including Barclays, Lloyds and Starling. Notifications will let you know that a payment has been made or received, automatically categorising it.
Sole traders can an extra help up with tax reports to help them with their self-assessment. Of course, it has Making Tax Digital-compliant software.
See calculations of how much tax you’ll owe and tips on what expenses you can claim, maximising your tax savings.
The Start package is £0 a month. It comes with a free UK current account, expense tracking, a tax estimate for sole traders, three invoices a month and 2pc on purchases abroad.
Grow is £5 a month (excluding VAT) and has everything in the Start package as well as unlimited invoices, free foreign currency exchange and free replacement cards.
Mettle
Mettle is part of NatWest but is an independent arm. This means that you can’t ring NatWest and expect them to assist with your Mettle account.
You’ll be eligible if you’re a sole trader or a limited company with up to two owners, though you must have a balance of less than £100k (or £50k for sole traders) to apply.
The biggest caveat is that it’s only available in the App Store (Android is said to be in early release), but you do get in-app support from Mettle.
One of the main highlights is that you can create and send invoices directly from your smartphone, complete with company logo. Like Coconut, notifications will let you know when you’ve been paid. However, you’ll need to match the payment to the outstanding invoice yourself.
Again, it goes half-way there in terms of chasing overdue invoices. It’ll remind you that an invoice is overdue, but you’ll have to send the client a follow-up yourself.
Transactions-wise, you can manage recurring payments in-app, add receipts to transactions and export your expense data.
Other than that, you can sync your account with Xero but you can also export to CSV which is compatible with other accounting software.
You might have to wait a little while to sign up. At present, Mettle is only able to process UK passports, EU passports and national identity cards as well as full UK driving licences.
A key consideration you must make is that the app isn’t covered by the Financial Services Compensation Scheme (FSCS). Though it’s backed by NatWest, it’s no guarantee that Mettle won’t go bust. FSCS protects your first £85,000 investment so it’s worth having.
Mettle is free to use and free to join.
Cashplus
Cashplus says that it takes as little as four minutes to apply and only seconds to open an account.
It’s a good account if you already have a few members of staff on your payroll – add up to 20 additional business expense cards for your employees to use.
Get a business cash advance up to £15,000 to help with cash flow and integrate it with online accounting software.
Cashplus gives you a specialist iDraft facility. iDraft is a low-cost credit limit that’s attached to your account in case you run out of cash. Use is covered by your annual fee but there is a flat daily usage charge too.
The annual fee for the account is £69.
Countingup
Countingup is a relatively new player in the mobile banking market.
Its business offering comes with automated bookkeeping, professional invoices and automated receipt scanning as key features along with and tax calculated and filed for you.
Add notes and attachments directly to your transactions or you can remind yourself to claim tax relief on the purchase.
This is best if your business is UK-based as you can’t make or receive international payments with this account. Countingup hopes to include this feature in the future.
All accounting features appear in all of the accounts; these include the P&L report, receipt capture and tax estimate.
The Starter package is free for businesses with incoming funds of £0-£500 a month.
Standard is free for the first six months (£4.95 a month thereafter) for funds of £500-£4,000 a month.
Premium is also free for the first six months (£9.95 a month thereafter) for businesses with incoming funds of over £4,000 a month.
Fair Everywhere
From currency exchange bods, FairFX, Fair Everywhere lets you send and receive payments all over the world.
Get access to three currency wallets: GBP, USD, EUR, with a currency conversion fee of 2.5pc.
It’s a fine account if you’re a bigger spender. Up to 8pc cashback on any card spending with over 50 major UK high street retailers (discounts only available in-store).
All types of small businesses, sole traders and partnerships can apply – and they can link as many cards to the account as you like for employees.
There’s no doubt that this is a pricey account, though. You’ve got a minimum monthly charge of £12.50 with a £55 application fee.
Holvi
Holvi is geared at freelancers and small business owners. It’ll work anywhere where MasterCard is accepted.
Send invoices from your phone – synced with your account – and find out when invoices are paid with instant notifications.
What’s more, you can share documents with your bookkeeper, upload receipts, add VAT and create account reports for easy bookkeeping.
It comes with a business current account for entrepreneurs which has features of a traditional bank account.
To apply you’ll need to be a more established company as sign-up requires ID, company registration number, VAT number (if applicable) and registry extract from Companies House. A sole trader only needs the ID and the VAT number.
There are 3 accounts to choose from starting at free to £25 pm each come with a business current account and a business Mastercard, bookkeeping prep and unlimited free bank transfer within Europe. The Basic account also allows you to create, send and track invoices.
CardOneMoney
CardOneMoney (formerly CardOneBanking) is more old school. It uses text alerts to confirm when money is in your account and to confirm that bills have been paid. Use text messages to check your balance too.
The account is aimed at sole traders, limited companies or partnerships who have a turnover of up to £2m.
Add up to four additional prepaid corporate MasterCards which will link to your business account. You can also export statements to a cloud accounting network.
Just be aware that this one isn’t covered by the Financial Services Compensation Scheme either.
It’s £12.50 a month with a £55 application fee.
Monzo
Monzo has a business bank account offering here.
- Manage your account wherever you are, with mobile and web access
- Integrate accounting tools so everything’s in one place
- Keep on track with in-app invoicing and digital receipts
There are 2 tiers here, Lite which is free and Pro which has everything that Lite offers along with accounting integrations, budgeting apps, Invoicing.
Of course, the right bank account will depend on the needs of your small business. Factor in how many employees you have, your turnover and what features will support you in the day-to-day running of the firm. Whether you choose one as your primary account or a secondary account, digital banking platforms offer up a quick and convenient alternative to contend with your high street bank.
So what do you reckon, any of those take your fancy? If you found value in this article then please pay if forward by sharing with others – thank you.
