The past few years have been great for challenger banks in the UK and Europe. They’ve grown rapidly, much to the customers’ pleasure. Although they haven’t replaced traditional banks, they have changed how people send and receive money and added various features that make sending and receiving money easier.
Customers don’t have to wait in lines to fill out extensive paperwork. Instead, they can open an account with any of these online banks quickly and conveniently. Moreover, these neo-banks support all types of workers, including freelancers, remote workers, digital nomads and global citizens.
Monzo, Revolut and Starling Bank are three of the main challenger banks with a presence in the UK. Their unique services mean at least one of them should be on your radar. But which one is the best? Here is an in-depth comparison.
About the companies
These online banks and money transfer options might have matured in the eyes of their users at the same time, but they didn’t start at the same time. Each of them has its timeline and its story.
Revolut and Monzo were founded in the same year – 2015. Its founders are Nikolay Storonsky and Vlad Yatsenko, a former trader at Credit Suisse and Lehman Brothers. The founders got the idea to start Revolut after being frustrated with traditional banks’ high fees and poor exchange rates when they travelled abroad.
They teamed up to build a digital banking platform allowing users to exchange and spend money abroad without incurring high fees. Like Monzo, Revolut’s first product was a prepaid debit card allowing users to spend money in multiple currencies at the interbank exchange rate in 2015.
Revolut has grown in popularity, raising a staggering $1.8 billion by 2018, which allowed it to expand its services by adding features such as insurance, cryptocurrency trading and peer-to-peer payments. Also, in 2018, it became a licensed bank in Lithuania, allowing it to offer deposit and lending services across the European Union.
Starling was founded in 2014 by Anne Boden after working in the traditional banking sector for over three decades. During her time there, she realised so many things weren’t working with conventional banks and that she had to “Build a bank from scratch” with a customer-centric approach.
Today, Starling is known for always being ahead of the competition, using marketing-leading technology and solutions and providing customers with fast, easy and secure financial services.
The creation of Monzo has a lot to do with Starling. For starters, the creators of Monzo broke away from Starling and started the challenger bank in 2015. The Starling employees who founded Monzo are Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippon and Gary Dolman.
Monzo’s first product in the financial market was a prepaid debit card. The cards were issued to customers as part of an initial testing programme. The company then went ahead to launch full current accounts in 2017 and has since gone ahead to become one of the leading challenger banks in the market. It has maintained its commitment to staying ahead of the curve by regularly introducing new and innovative features and enhancing the functions of its app.
Most challenger banks offer similar services, and these three aren’t different. But the fees associated with the services can vary widely.
Monzo has partnered with Wise (Formerly Transferwise) to offer international money transfers. Wise fees are based on the type of transfer the customer requests, and the available options include low-cost, advanced or fast transfers.
Wise has low fees for everyday medium-size transfers of up to £500. However, the higher the transfer, the more you will likely pay in fees. But the charges don’t exceed 0.35% to 0.65% of the transfer, depending on the amount in question.
International payments on Starling incur a 0.4% transfer fee as the standard fee. An additional flat fee of £5.50 is added on as a delivery charge when arranging a priority delivery via SWIFT transfer. If you would like to save even more money when sending money with Starling, you can use the No Recall payment, which has a tiny flat fee of £0.30, but this method cannot be cancelled or reversed.
Revolut applies a small fee to all international money transfers. Premium customer accounts receive one fee-free global transfer monthly, while Metal account holders get unlimited transfers.
Standard international money transfers on Revolut are charged 0.3% of the amount sent with a minimum of £0.30 and a maximum of £9.00, depending on the amount sent.
SWIFT transfers are charged £5.00 when sending GBP, EUR, USD and CHF. Other supported currencies are charged £9.00. Other fees on Revolut include;
- A fee for international payments outside the SEPA zone of between £0.30 and £5.00, depending on the transfer size.
- Currency exchange rates of between 0.5 to 1% depending on the transfer size
- 1% charge on transfers conducted on the weekends and UK bank holidays
- Payments over £1,000 per month incur a 0.5% fair usage fee.
Winner: Starling Bank
Revolut has a complicated fee structure with many variables that could affect the final fee. Monzo has a simpler structure, but Starling Bank’s flat fee guarantees transparency of all international money transfers and customers know what to expect.
Challenger banks also make money from exchanging currencies when sending money internationally. When sending large amounts, the exchange rate costs can accrue and constitute a significant amount of the fees.
Monzo applies the Mastercard exchange rate to the payment when spending money abroad. However, Monzo customers get the Wise exchange rates for international money transfers. Under the Wise terms, customers are offered an exchange rate that is nearly identical to the mid-market rate. The average exchange rate spread on Wise is just 0.05 -0.5%, added to Wise foreign currency transfers. This is quite competitive compared to what you would get from traditional banks.
Starling Bank guarantees completely transparent rates for international payments and spending provided by Mastercard. The challenger bank also has a currency converter calculator where customers can look up the live Mastercard exchange rates before paying, sending or spending money to know the expected exchange rates.
Revolut gives the strongest exchange rate to smaller-size transfers and popular currencies like USD, CAD, NZD, CZK, JPY, AUD, EUR, GBP, HKD, and PLN, among others.
During the week when the market is open, Revolut will match the themed-market rate with a zero exchange rate spread. But on the weekend, it applies a spread of 1% to all currencies. For example, the exchange you receive on Thursday will be different from what you will receive on Saturday.
Revolut recommends checking the currency exchange rate via the app before submitting your transfer.
Although each company relies on Mastercard rates at some point, Monzo has the edge because of their partnership with Wise and their better currency exchange rates.
Transfer and Payment Options
One downside the challenger banks haven’t overcome is getting paid directly into their account. Therefore, their customers must load money into the accounts using third-party sources and methods to complete their transfers and payments. Luckily, they’ve been able to expand the options available to complete this, but this varies depending on the service you use.
International money transfers on Monzo are handled by Wise. The available transfer options under Wise are as follows;
- Fast and easy transfer – This is the quickest way to send money on Monzo and Wise overseas. You can pay for the transfer using your debit or credit card or a digital wallet like Apple Pay or Google Pay. Although this method is fast and convenient, it is the most expensive.
- Low-cost transfer – This is the most cost-effective option. It’s ideal for customers prioritising cost over speed. Although it’s low-cost, this method takes the longest because the payment is via bank transfer which can take some time to complete.
- Advanced transfer – This type of international money transfer uses the SWIFT network, meaning there’s a fee. However, you also access the safety precautions for SWIFT transfers, and you can send more to more locations.
The payment options available when using Wise (for Monzo) are :
- Credit card
- Debit card
- ACH direct debit
- Bank transfer
You can choose one of two ways of sending international money transfers with Starling Bank. These are as follows;
- Low-cost transfer – Like in the case with Monzo, this method is also for customers that prefer to save costs over time. This method will take longer and can’t be recalled or cancelled. The transfer costs for this service are about 0.4% of the total amount and a minimum of £0.30 per transfer.
- SWIFT transfer – This method of transfer sends the money via the SWIFT network. That makes it easier to track the status of the payments. Transfers sent using this option are deposited directly in the recipient’s bank and cost the sender about 0.4% in transfer fees but with an additional delivery fee of £5.50 per transaction.
The available payment options for setting up international transfers with Starling are;
- Bank transfer only
Revolut offers different transfer options including;
- Cross-border transfer – This is a cheap but slightly slower option for sending money. Like the low-cost options under Monzo and Starling, this is for customers that want to save costs over time.
- SWIFT transfer – This option is the converse of the cross-border transfer. It prioritises speed over cost. Therefore, customers using this option might pay more to complete the transfer sooner.
Payment options to set up transfers on Revolut include the following;
- Bank transfers
- Credit and debit card
Once again, Monzo rides on the partnership of Wise to deliver superior services at more competitive rates. It offers more payment and money transfer options compared to Starling and Revolut.
One of the customers’ pain points when transferring money with traditional banks is how long it takes to complete the transfer. This is also the main selling point for challenger banks. So how fast can these three challenger banks complete a transaction?
Monzo offers excellent transfer speeds for domestic transfers. Transfers between Monzo account holders are instant, while international transfers take between 1-3 days to get to the recipient, depending on the method of transfer you choose.
Domestic transfers are also processed instantly at Starling Bank. Like Monzo, international transfers can take up to 3 days to get to the recipient’s account. This will also depend on the method of transfer you choose.
With Revolut, you can transfer money to UK accounts instantly. Depending on the payment type, international transfers can take up to 3 days to clear.
International transfers can take up to 5 days to get to the recipient. However, you can go for faster transfer methods like fee-free SWIFT transfers. But these are only available to premium monthly membership price plans like the Metal account.
With all three options, you can send and receive money relatively quickly. All options offer instant domestic transfers, and the period taken for international transfers is the same, although, with Revolut, you can cut back on the time if you have a premium account.
Revolut, Monzo and Starling are all UK-based companies. But the demand for better and more efficient financial services has seen them grow drastically, even being registered as banks in other countries.
Monzo’s partnership with Wise has opened a world of opportunity for the FinTech company and its customers. Courtesy of that partnership, Monzo has access to all the 61 destinations that Wise has worldwide and can transact in 53 different currencies.
With a Revolut account, you can hold and manage over 30 currencies with over 150 destination countries supported. That makes Revolut’s reach wider than that of Wise.
Revolut has a further reach than both Monzo and Starling Bank. That makes Revolut an excellent choice for globetrotters and also if you send regular payments across the globe.
Ease of use, Accessibility, Transparency and Security
Challenger banks offer an extensive range of benefits and features. However, having too many features can complicate the ease of use and accessibility of the app and compromise security. So how do the three services compare as far as ease of use, accessibility, transparency and security are concerned?
Revolut has a highly-rated mobile app that is available in Android and Apple stores. The app is available in 24 languages which is quite commendable.
Revolut has a quick sign-up process, and once you’re registered, you can enjoy 24/7 customer service that you can access by phone or in-app chat.
Although Revolut has the largest selection of payment options, including cryptocurrency, which many people don’t understand, Revolut has made it easy to buy, hold and exchange cryptocurrency among its users.
Premium account customers get added benefits that include unlimited fee-free foreign currency transfers.
Revolut’s fee structure differs for each country which can be confusing when arranging transfers to less frequented countries using less commonly traded currencies.
Another advantage of being a Revolut customer is that you have access to the Financial Services Compensation Scheme (FSCS), meaning your funds are protected, which says quite a bit about the security features Revolut offers to secure their customers’ deposits.
Also, like most online banks, Revolut doesn’t have a physical branch. All its operations are digital. For some customers, this might be a concern, while for others, it is a benefit.
Monzo is more restrictive in its accessibility package. It’s only accessible in English, even on the app, which locks out users from other countries or speaking other languages as their first language.
The customer support Monzo can only be accessed through in-app messaging service and on the phone between 7 am to 8 pm, Monday to Sunday. On Monzo, speaking to a real-life human customer support agent is easier than it is on Revolut.
However, it is important to note that the specialist services provided by Wise are also applied to Monzo international money transfers. Although Wise is a leading money transfer service, it doesn’t have a phone number to reach its customer support making it harder to reach out to customer service when in distress. However, Wise is quite responsive on its other platforms. Monzo customers enjoy the same FSCS protection of up to £85,000.
Monzo customers also enjoy the upgrade in features and transfer services that Wise makes. But there are no physical stores here as well.
Like Monzo, Starling Bank is only accessible in English, which locks out customers with other language preferences. Starling’s customer support is available 24/7 through various channels.
You can reach customer support through the live chat, direct message function and a direct phone number provided by the service provider. Starling also has a helpful FAQ section where you can find answers to the most commonly asked questions and concerns that Starling customers have. The section can save you the need to get in touch with customer support.
As far as security goes, Like Monzo and Revolut, Starling also guarantees FSCS protection of funds of up to £85,000.
Starling has a transparent and clear pricing structure with no monthly fees for account holders. There are no ATM fees at home or abroad, and the transfer fees are minimal.
It’s also worth noting that Starling has won the coveted award for the Best Bank of the Year for three consecutive years.
All three banks are neck-to-neck in most aspects. They share the same security features and have FSCS-protected funds. They excel in areas like customer service, but Starling offers better customer service and has a more transparent and clear pricing structure, not to mention that its efforts have made it an award-winning bank.
The online banking sector is becoming extremely competitive. Challenger banks have had to deploy more features and services to attract new customers and maintain their current ones. If you haven’t made up your mind yet, looking at the additional features might help you find the clear choice;
Monzo offers various additional features. For instance, Monzo customers can switch energy suppliers through Monzo and get rewarded with £50 credit.
Also, Monzo eases the saving process with their Saving Pots features with zero interest rates on free savings accounts and up to 1.5% AER on paid accounts.
Monzo has junior accounts for 16 to 17-year-olds and joint accounts for couples, making it easier to align your financial goals and the services you need.
Starling has some impressive additional features, like allowing its customers to use any of the Post Office’s 11,500 branches across the UK to make cash deposits of up to £20,000.
Starling customers can also scan and deposit a cheque via the Starling app, allowing them to forego the time-consuming traditional method. This is in addition to the fact that Starling Bank supports all digital wallets, including Google, Apple and Samsung Pay.
Starling offers current accounts for under 16’s and joint accounts. Business customers can also connect their accounts to important accounting tools like QuickBooks, Xero and FreeAgent.
Additional features on Revolut include budgeting and saving features to help you round up transactions and deposit spare change into savings pots or set up recurring payments. Other additional features on Revolut include;
- Cash-back incentives
- Cryptocurrency options available
- Fee-free spending abroad
- Apple and Google pay
- Recurring payment functions
- Various memberships and cards
Starling is clearly the winner when it comes to additional features. It has more mature offerings that suit all personal and business banking needs.
Revolut Vs Monzo Vs Starling – Which One is Best for You?
There’s no question that Monzo, Revolut and Starling have been making waves in the UK financial products and services industry. They have raised the bar on efficiency, costs, transparency, convenience and expedience. The customer-centric approach has earned them the customers’ attention and rapid growth.
Because of the vast range of features they offer, and how fluid their activities are, it’s hard to pick one as the best in all categories. Some flourish in some aspects, like location, while others have better rates. You have to choose the right one based on your needs and the features you need most