What are challenger banks?

A challenger bank, sometimes called an app-based bank, is a new and smaller sized bank that tries to compete for business with the more established and traditional banks. This is often achieved through the use of technology; particularly online banking with easy to use apps that offer sophisticated features.

The best challenger banks

Here's the PocketRate list detailing some of the best challenger banks in terms of popularity, features and benefits.

Starling Bank

Launched in 2014, Starling is one of the earlier challenger banks and offers both personal and business bank accounts.

You get interest on your balance together with an agreed overdraft facility and the option of applying for a personal loan.

Starling Bank have partnered with the Post Office so that you can deposit cash at over 11,500 Post Office branches across the UK.

Starling app features

  • Set up Direct Debits, payments and standing orders
  • Connect with digital wallets including Apple Pay, Google Pay, Samsung Pay and Fitbit Pay.
  • Real-time Pulse updates showing you the exact amount spent so far that day.
  • Instant notifications on activity relating to payments
  • Spending Insight feature provides an overview of your account broken down by category or individual merchant.
  • Savings Goals - put money aside for a specific goal and transfer back if required. Personalise goals with your own images and get notifications to help you save.
  • Round up your spending to the nearest pound and automatically add it to one of your Goals.
  • Settle Up feature enables you to send a message link to someone who owes you money. A couple of taps and it's been settled up.


With 40,000 people opening an account every week and over two million customers, Monzo have become one of the most popular UK challenger banks.

You also get interest on your savings and the ability to open a Cash ISA from within the app.

Monzo app features

  • Set spending budgets and get alert notifications
  • Account summary broken down by categories to show you where your money is being spent.
  • Use the 'Pots' feature to split up your money into multiple Pots to help you save.
  • Automatically send spare change to a Pot every time you spend money.
  • Set up Direct Debits and standing orders
  • Make payments in seconds
  • Shared Tabs feature enables you to keep tabs on what you and your friends are spending on a night out or shared bills. Automatically split the bill.
  • Send money abroad

Atom Bank

Founded in 2014, Atom Bank say they were the first UK bank created exclusively for mobile banking.

Atom offers a range of banking products including:

  • Fixed savings accounts with competitive rates of interest
  • Mortgages with fixed rates
  • Business loans with a maximum loan to value (LTV) rate of 75%

You can open an Atom account by downloading their free app. You simply select the product you want, go through some security and ID checks and fund your account.