Following on from our blog on Open Banking, here we go a little deeper into some of the alternative online banks and what they can offer compared to traditional high street banks.
Now open banking is becoming more and more common, companies are beginning to develop more apps and services to help your money go further. And with tech-savvy banks now entering the market there’s more choice than ever for consumers.
The Full Package
Back in the 1990s, Lloyds Bank introduced the first Packaged Bank Account, where for a monthly fee a customer could receive a range of benefits – travel insurance, breakdown cover or mobile phone insurance.
Now, more than 20 years on things have developed. Customers can now receive a range of financial tools and benefits designed to help your money go further and in some cases, even increase your balance!
Banks with Benefits
Since open banking has taken off, the shift from traditional high street banks has been recently underlined by the results of the British Bank Awards earlier in 2019. Out of the 24 awards displayed on their website, only 1 is from a traditional high street bank.
Let’s take a look at some of the main features offered by tech banks in this new emerging financial market.
Voted “Best British Bank” at the 2019 British Bank Awards, Starling Bank launched in 2017 and describe their account as a “game-changer”. As it is all online, customers can have their account set up in minutes with no paperwork or monthly fees at all.
Once set up Starling Bank will send you insights into your spending habits to allow you to budget better by breaking down exactly where your money goes each month. Your payment notifications are displayed in real-time so you know exactly what money you have in your account.
You can move money into savings pots within the account so you can set an amount for each goal you want to save for – holiday, new bike – you move what money you want into what pot.
If you lose your card you can temporarily block it at the touch of a button while you look for it, or cancel it if it’s lost.
You can also send money directly to one of your phone contacts instantly.
According to their website, 55,000 people a week join Monzo making them one of the most popular online banks around. Monzo also offers accounts for 16-17-year-olds that offer all the benefits of their regular account but have things blocked that is illegal for under 18s, like gambling websites.
In the Monzo app, you can switch energy suppliers, split bills (even household bills with flatmates) and keep tabs on who’s contributed what – handy for ongoing payments like holidays with friends.
The best new feature on a Monzo Current Account is their new “Get Paid Early” feature. We’ve all been there, the day before payday and the cupboards are bare! If you have your salary paid into your Monzo account they can advance you your wages the day before!
You can also pay cash into your account using PayPoint.
Other Banking apps
With a plethora of online and alternative banks out there on the market, some features are now becoming so popular, you could consider them a “general” feature of online banks/apps.
Take a look online and you’ll soon find a raft of options to choose from.
Think about what is important to you and your personal needs before choosing to open a bank account, or download an open banking app.
Here are some ideas or pointers to help you decide what account is right for you
• Do you withdraw/send money abroad? If so, do they charge a fee?
• Do you save regularly for different things – choose an app/bank with savings features to allow you to move money into different pots
• Do you want to build your savings but find you have little spare cash – there are some apps that can “round up” your transactions and put the pence into a savings pot – this is called a “microtransaction” and is a great way of building up a savings pot little by little
• Do you share the cost of things regularly – household bills for flatmates, restraint bills, holidays, petrol money – new open banking apps allow different people to pay into the same thing so you won’t have to do the bank details dalliance when it comes to collecting payments any more
• Are you interested in investing – open banking apps are available that will “invest” your spare change (or a set limit) into the stock market for you – it may unleash the inner wolf, but it is designed to invest literally pence so although the amounts invested may be small, there is always a risk involved so be aware to only invest what you think you can afford to lose.
As we’ve explored a little, the new laws around open banking allow companies from many industries to view your finances in real-time allowing for so much more flexibility and control than the traditional “money boxes” offered by banks for the last 500 years.
Who knows, with innovations in Artificial Intelligence and banks partnering with other companies to develop algorithms on our behaviour, you could be driving home from work and your fridge has told your bank you have run out of milk! Your bank could then automatically log onto your supermarket website and do the weekly shop for it to be delivered as you arrive home without you pressing a button!!