For many businesses, an app-based bank account is all you’ll need. They’re agile, simple, well-priced, and have most of the necessary functionality.
Challenger banks continue to disrupt the traditional banking space by offering convenience, technological efficiency and cheaper prices than their high street rivals.
In this article, I delve into the realm of digital-first bank accounts for business, discuss the key features that may be useful for you, and provide a detailed comparison of the ones I feel are the best. I’ve spent months going through this sector in detail, assessing the functionality, costs and drawbacks of each account available.
By the end of this article, you should be well-equipped to decide on the best app-based account to help your business thrive.
My Top App-Only Bank Accounts
|Bank||Reasons to Choose||Visit|
|Tide||Tide has no fees on card payments in the UK or abroad, coupled with the convenience of a Tide Mastercard. Get instant invoicing, integration with popular accounting software, plus 24/7 legal help. This is my top account for most UK businesses. It offers free company formation, plus a £50 sign up bonus!||Visit Tide|
|Revolut||Cashplus, regulated by the FCA and offering FSCS protection, provides easy account setup without a credit check. Its unique Creditbuilder feature and round-the-clock fraud monitoring provides a secure and growth-supportive banking environment.||Visit Revolut|
|Starling||Anna is a great small business bank account designed to minimise hassle and admin. Get a payment link, and instant notifications, pay in cash at any Paypoint and earn 1% cashback at selected locations.||Visit Starling|
|Cashplus||Cashplus, regulated by the FCA and offering FSCS protection, provides easy account setup without a credit check. Its unique Creditbuilder feature helps build credit over time|
|Anna||Anna is a great small business bank account designed to minimise hassle and admin. Get a payment link, instant notifications, pay in cash at any Paypoint and earn 1% cashback at selected locations.||Visit Anna|
|Monzo||Choose Monzo Business for simple pricing, separate tax pots for expense tracking, and integrated accounting software connection. Enjoy multi-user access, virtual cards for online purchases, mobile/web access, easy bank transfers, advanced security, and 24/7 customer support.||Visit Monzo|
|Wise||Mettle, designed specifically for self-employed and small businesses, offers a free banking experience with seamless features such as mobile invoicing and payment notifications. Backed by NatWest, it offers a trusted banking experience with the assurance of FSCS protection for eligible funds up to £85,000.||Visit Wise|
|Mettle||Mettle, designed specifically for the self-employed and small businesses, offers a free banking experience with seamless features such as mobile invoicing and payment notifications. Backed by NatWest, it offers a trusted banking experience with the assurance of FSCS protection for eligible funds up to £85,000.||Visit Mettle|
8 Top App-Based Bank Accounts in Detail
Tide offers a very well-designed digital bank account and app with an array of built-in tools for invoicing, accounting, expenses, and forecasting cash flow.
You can send and track invoices in-app, automate tax and accounting activities with integrations like Xero and Sage, and control company expenses with Tide Expense Cards.
The app also offers business loans through trusted credit partners and provides insights to improve business credit scores. I love their current offer, which allows you to register a free limited company while opening your account: this is a real bonus if you need that service.
Tide gets my top vote for a small business bank account, with the only small complaint for the £1 ATM withdrawals. Overall, their user experience, customer service and fair pricing make it hard to beat.
Revolut Business is my top choice if you need to make international payments within the EU due to its comprehensive suite of features designed for businesses operating globally.
The ability to receive, hold, and exchange in over 30 different currencies at interbank rates simplifies the process of international payments, especially within the EEA. Furthermore, Revolut allows businesses to lock in exchange rates up to 6 months in advance, offering financial predictability.
Added conveniences such as purchasing business insurance through the app and access to discounts and rewards on various financial products make it an appealing choice. However, you should be aware of its limitations, such as the inability to deposit cash, a daily withdrawal limit of £3,000, the unavailability of overdrafts, and the lack of protection by the Financial Services Compensation Scheme (FSCS) as it is not a traditional bank.
Nevertheless, Revolut has a lot to recommend – some people open an account just to send money abroad more cheaply while retaining a more traditional account for their day-to-day business in the UK.
Starling Bank’s award-winning account is already used by 500,000 UK SME’s who appreciate its simplicity, efficiency and low pricing. With no monthly fees or UK payment charges, an easy application process within the app, and free 24/7 support, it offers a competitive account for any UK business.
Key features include integration with accounting tools such as Xero, QuickBooks, and FreeAgent, automated business spending categorisation, receipt capture, and free ATM withdrawals. Furthermore, the account is fully regulated in the UK, providing financial protection up to £85,000 through the Financial Services Compensation Scheme.
Currently, the free account doesn’t offer invoicing; it’s worth pointing out. You’ll need to upgrade via the ‘business tool kit’ at a cost of £7 per month, including VAT. A Euro business account is also available for an additional £2.
While Cashplus is a digital-first bank account, it is also a fully regulated and FSCS-protected company. The Business Go account is a no-monthly fee solution, while the Business Extra account offers cashback and a Business Creditbuilder feature for a nominal monthly fee.
Both accounts offer services such as in-app/online payments, contactless Mastercard, additional debit cards, accounting integrations with Xero, Quickbooks, & Sage, 24/7 online banking, UK phone support, spending reports, and more.
Cashplus also supports small business needs with features like accounting app integration, business spending categorisation, and up to 20 business cards with trackable expenses. Business banking with Cashplus is made more convenient with 24/7 online and app access, secure card controls, instant notifications, and the ability to deposit cash at any Post Office.
ANNA (Absolutely No Nonsense Admin) refers to itself as a business account and tax app that simplifies financial administration for small businesses.
With a straightforward sign-up process that takes as little as 3 minutes, ANNA offers a business debit card and a variety of useful business tools, including invoicing, expense tracking, VAT sorting, and more. Features such as real-time account transactions, shareable statements, and account integration benefit accountants working with ANNA clients.
The mobile app allows businesses to manage finances on the go, and the 24/7 chat support provides quick assistance when needed. ANNA also offers tax reminders, ensuring no important deadlines are missed. Pricing starts from £0 per month, including free ATM withdrawals and transactions.
Monzo Bank offers a digital-first experience with instant notifications on payments, seamless integration with accounting tools, instant UK bank transfers, and a unique “Pots” feature allowing businesses to separate money for specific purposes.
Their business accounts also include innovative features such as virtual cards for each created Pot and an Instant Access Savings Pot with interest.
Monzo’s commitment to customer service is exemplified by its 24/7 award-winning support, providing assistance to businesses whenever needed.
With over 300,000 businesses utilising their services each quarter, Wise provides a means for making and receiving international payments, offering up to 6x savings compared to traditional banks.
You can set up local account details in 10 currencies to receive payments faster from overseas customers, or use Wise’s business debit cards to make transactions in over 170 countries without foreign currency transaction fees.
Wise integrates seamlessly with popular software such as Xero, QuickBooks, and FreeAgent to streamline your operations.
Additionally, Wise’s unique Interest feature allows your GBP balance to work in a fund backed 100% by government assets, providing a competitive 3.89% variable rate. Their security measures, transparency, and dedicated customer support make Wise a good choice if you operate internationally.
Mettle is designed specifically for the needs of the self-employed, sole traders, and limited companies with up to two owners.
It offers a free and user-friendly digital banking solution with benefits such as seamless integration with popular accounting software like FreeAgent, Xero, and Quickbooks, reducing administrative burden and streamlining financial management.
Additional features include creating, sending, and tracking invoices on the go and in real-time categorising business transactions to help with tax preparations. Mettle, being part of the trusted and regulated NatWest group, provides assurance of funds’ safety, as eligible funds are protected by the Financial Services Compensation Scheme up to £85,000.
With an easy application process and prompt customer support, Mettle is used and trusted by over 80,000 self-starters. Its forthcoming features, like Apple Pay and Google Pay, further promise to enhance user convenience.
Pros and cons of app-based business bank accounts
- Convenience: With everything done digitally, app-based banks can make the process of managing finances more streamlined and convenient. The ability to handle banking transactions anytime, anywhere, without visiting a physical branch, is a huge benefit.
- Real-time Tracking: These apps often allow for real-time tracking of income, expenses, and cash flow, which can help businesses manage their finances more effectively.
- Integration: Many app-based banks integrate easily with other business software such as accounting or payment platforms, streamlining business processes and reducing administrative overhead.
- Lower Costs: Some app-based banks offer lower fees compared to traditional banks, as they don’t have to support physical infrastructure.
- Fast Onboarding: The process to open a new account is often much quicker with an app-based bank than a traditional one. This can be a big advantage for new businesses.
- Innovative Features: Many app-based banks offer innovative features like invoicing, expense tracking, payroll integration, and more, that aren’t typically offered by traditional banks.
- Security Concerns: While app-based banks take security seriously, the very nature of digital banking exposes them to cybersecurity threats. This may not be comfortable for some businesses.
- Lack of Physical Branches: While being digital-first is an advantage in terms of convenience, it can be a disadvantage if a business prefers face-to-face banking services, needs to deposit cash or cheques frequently, or has complex banking needs that require personal attention.
- Customer Service: Some businesses may find that the level of customer service offered by app-based banks is not as high as that of traditional banks, particularly for complex issues that may be more easily resolved in person.
- Reliance on Technology: The reliance on an app and internet connection for all banking transactions can be a disadvantage if there are technical issues with the app or if the business operates in an area with unreliable internet service.
- Limited Services: Some app-based banks may not offer the full suite of business banking services that are available from traditional banks.
- Uncertainty: Some businesses may be uncomfortable banking with a relatively new and unproven entity compared to traditional banks with long track records.
Top Features to Consider When Choosing an App-Based Business Bank Account
- Ease of Use: The app should be intuitive, user-friendly, and easily navigable to streamline your banking transactions.
- Cost Efficiency: Assess any fees associated with the account, including transaction fees, monthly charges, and costs for international transfers.
- Integrated Features: Look for features such as invoicing capabilities, expense management, payroll services, and seamless integration with your preferred accounting software.
- International Capabilities: If your business has global operations, the app should enable easy international payments and offer competitive foreign exchange rates.
- Customer Support: A good business banking app should have robust customer support that is easily accessible, ideally 24/7.
- Security: The app should have strong security measures, including two-factor authentication, data encryption, and a proactive stance on fraud prevention.
- Accounting Software Integration: Consider if the banking app can integrate with your current accounting software, streamlining financial operations.
- Overdraft Facilities and Interest Rates: Some banks may offer interest on business account balances or provide an overdraft facility. These could be important features for your business.
- Positive Reviews and Reputation: Check the app’s reviews and reputation among other businesses. This could provide insight into customer satisfaction levels and potential issues.
- Regulation and Compliance: Ensure the bank is regulated by relevant authorities, like the UK Financial Conduct Authority (FCA), to give you peace of mind regarding your financial transactions.
App-Based Digital Banks vs High Street Banks
The decision between app-based digital banks and traditional high-street banks often comes down to your individual needs and preferences.
Pros of App-Based Digital Banks
App-based digital banks, also known as neobanks, are usually completely online. They offer a host of features that appeal to tech-savvy customers, such as real-time transaction alerts, instant payments, and financial management tools. They are often known for user-friendly interfaces, quick and easy account setup, and 24/7 access to banking services from anywhere in the world with an internet connection. They’re also likely to have lower fees as they do not bear the costs of maintaining physical branches. However, digital banks may lack certain financial services like loans or mortgages and some have faced security challenges, although they use robust security measures.
It’s also worth pointing out that many online ‘bank’ accounts are not fully regulated but offered under an e-money license. This
E-money institutions are regulated by financial authorities, but they don’t fall under the same level of regulation as traditional banks or protected by the Financial Services Compensation Scheme (FSCS).This means that if the e-money institution fails, there’s no guarantee you’d get all of your money back.That said, e-money institutions are required to safeguard customer funds by keeping customers’ money separate from the company’s own funds, typically in a separate account at a traditional bank or in secure investments. In case of the e-money institution’s insolvency, these funds should be protected from other creditors’ claims. But the process to claim the money back might be more complex and time-consuming than with FSCS protection.
Pros of High Street Banks
On the other hand, traditional high-street banks have the advantage of physical branches where customers can receive face-to-face service for complex transactions or issues. They often have a more extensive range of services, including checking and savings accounts, credit cards, loans, mortgages, and investment services.
They are regulated by the same standards as digital banks and their longevity and familiarity can evoke a higher sense of trust among some customers. However, their banking processes can be slower, their fees higher, and they may lack the innovative digital tools that app-based banks provide.
Are app-based banks safe?
App-based banks, often called neobanks or challenger banks, have to adhere to the same regulatory standards as traditional banks, including data security and privacy regulations. T
hey are typically regulated by the same national bodies as traditional banks. For instance, in the UK, app-based banks are regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
Key safety aspects include:
- Regulatory Protection: As noted above, if the bank is regulated by the relevant financial authority, this provides a level of protection. In the UK, eligible deposits up to £85,000 are protected by the Financial Services Compensation Scheme (FSCS).
- Data Encryption: App-based banks generally use high-level encryption to protect your data and transactions from being intercepted or viewed by unauthorized parties.
- Fraud Detection: Many app-based banks have robust fraud detection systems that can often detect and alert you to suspicious activity on your account.
- Two-Factor Authentication: This is an additional layer of security used to ensure that you are the only person who can access your account, even if someone else knows your password.
However, as with any technology-based service, there are potential risks:
- Cyber Threats: Digital platforms can be vulnerable to hacking, phishing, and other forms of cyber-attack. Using strong, unique passwords and avoiding sharing sensitive information is crucial.
- Technology Reliance: If the app or its servers experience issues, you might be unable to access your account temporarily. Moreover, losing your phone or device could potentially provide an access point to your bank information if it’s not properly secured.
- New and Unproven: Some app-based banks are relatively new and might not have the same level of trust and confidence as traditional banks. Some may also face business risks if they are not profitable, potentially impacting their stability.