Are you considering switching to a challenger bank? In this blog post, we’ll take a closer look at challenger banks and explore whether or not they’re a good option for you.

So-called challenger banks are trying to change how banking is done by offering more convenient and customer-centric banking services. They often operate online or through a mobile app, and they may offer features like automatic budgeting tools and high-interest rates on savings accounts.

So, are challenger banks worth considering? This post will dive into the pros and cons of these newer banking options and help you decide if switching to a challenger bank is the right move for you.

challenger banks

What Is a Challenger Bank?

A challenger bank is a digital-only banking institution that operates primarily through an app with no physical branches. These banks, also known as app-based or neo-banks, offer current and business accounts and often provide convenient features like free transactions abroad and a savings option. While they may be smaller than traditional high-street banks, challenger banks are gaining popularity among customers who want a more user-friendly and modern banking experience. 

Some of the most popular challenger banks here in the UK are:

You might have heard of other brand names, such as Tide and Mettle, which offer accounts but are not banks and are “money management platforms”. It is essential to know the difference as certain functions and protections that come with a registered bank are not the same as when working with money management platforms. 

How Do Challenger Banks Differ From Traditional Banks?

The main difference between a traditional bank and a challenger bank is that challenger banks primarily offer their entire service digitally via apps. In an age where traditional banks are closing their high street banking operations almost weekly – this critical difference is soon to be confined to the history books. 

As a rule, traditional high street banks such as Lloyds or HSBC are much bigger than challenger banks such as Starling and Monzo – but recent figures show that they are much more customer-centric, innovative and quicker to implement new ideas. Some key benefits of challenger banks are things such as:

  • Real-time notifications of banking transactions
  • Lower fees
  • Money management features

Are Challenger Banks Safe?

Earlier in the blog, we mentioned ensuring that your banking provider is a registered bank because a registered bank offers certain protections that other money management platforms do not. For example, a registered bank is protected under the Financial Services Compensation Scheme (FSCS), so if the bank fails for whatever reason, you are guaranteed to get your money back up to £85,000. A money management platform does not offer the same protections, so you might not get any of your deposits back if the business fails. 

Challenger banks are subject to the same regulations, protections and legal criteria as a high street bank, so there is no difference in the protection and safety of your money when using them. If you feel safe leaving your money in an account with Lloyds, it is just as safe as it would be with Starling Bank. 

Should I Use a Challenger Bank for My Business?

In the modern digital world where everything is done online, and change happens quicker than ever, challenger banks have embraced this and plough ahead like a streamlined speedboat. In contrast, high street banks are more like an oil tanker – slow and steady and take an age to change direction. 

There is an argument that traditional banks are rock-solid institutions and will outperform so-called challenger banks. But if the last 20 years have taught us anything, even the “solid” institutions are not as rock solid as they once were!

Whether you choose to use a challenger bank is a purely personal choice. The list of benefits that traditional high street banks now offer is dwindling. The only real difference is the ability to do branch banking, but with branches closing quicker than you can find, is this a real benefit anymore? 

Challenger Banks: Are They Any Good?

As you can see from the details in this blog, there is not much difference between a challenger bank and a high street bank other than how they interact with their customers and the pace at which they embrace change. Registering with an actual bank and not a money management app gives you the same protections and guarantees as any traditional bank. 

Based on our research and interactions, we would say that challenger banks are here to stay and are a force for good within the industry. So are challenger banks any good? We would say that there are pros and cons, but overall, they are a good option for your business banking. 

The team here at RJF Accounting are the experts in helping you make sound financial decisions for your business. Everything from banking to tax returns, we can help with it all!

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If you need assistance with the day-to-day accounting for your business or looking for more in-depth advice, you can call the team on 0161 5040629 or email us at to see if we can help you get your plans off the ground! We are open Monday to Friday, 9 am – 5 pm!