Digital banks offer traditional banking services but are completely app-based. They can be a good solution for short stays or as a temporary account.
What’s digital banking?
Digital banks offer traditional banking services but are completely app-based. Unlike traditional banks, digital banks don’t have a physical location in the city. All functions, from money transfers, to exchanging currency, to contacting customer service team or even cancelling or freezing your card can be done from your phone. Some digital banks will allow international students to open accounts.
Why open an account with a digital bank?
Digital banking can be a temporary solution to access your finances and manage your expenses. They’re usually quick to set up, can be open in addition to a traditional bank account and can often be used in combination with it. For example, many people use their traditional bank account to receive their salaries but then transfer their monthly spending money into an app-based bank to manage their everyday expenses.
Some digital banks will allow you to open a bank account before you arrive in the UK provided you submit documentation that meets their needs.
Most traditional banks require students to be in the UK for at least six months to open an account with them. Digital banks are a good solution if you’re studying in Leeds on a short course of six months or less.
Finally, it can take about two weeks for you to set up a traditional bank account with a high street bank. Digital banks allow you to access money and make payments while you wait for your UK bank account to be set up.
Once you’ve set up an account, you’ll be able to use a digital card for contactless payments but you can also request to receive a physical bank card.
Digital banking and high street banking comparison
- While digital banks do offer similar services to traditional banks and they’re faster to set up, they don’t have a physical presence in the city and wouldn’t offer . So if you ever need to speak to someone about your account, you’ll only be able to interact with their costumer service team either by phone or via the chat function available through their app.
- Not all digital banks have an overdraft function. An overdraft lets you borrow extra money if you have no more money in your account.
- Most digital banks set limits on money you can transfer or withdraw overseas for free. They also have a limit on how much money you can withdraw from a cash point for free before they charge you a fee.
- Some of these banks also allow you to exchange money in a different currency and transfer money easily to anyone who has the same app, all through your phone.
The University can’t recommend any digital banks to students but it’s useful for you to know that these normally open accounts for international students if the appropriate documentation is provided and meets their requirements.
If you’re considering opening an account with a digital bank while you wait for your UK bank account to be set up, make sure you check whether the digital bank you plan to use is regulated and authorised by the Financial Conduct Authority (FCA) to ensure that its conduct is monitored and controlled, and whether it is protected by the Financial Services Compensation Scheme (FSCS) which could entitle you to a compensation of up to £85000 if the digital bank goes out of business.
Digital banks and how to set up an account
Digital banking providers include Monese, Monzo, Revolut, Starling, Chase, Atom Bank, Wise. The University can’t recommend any digital banks to students.
Whichever bank you choose to open an account with, check:
- They’re regulated by the Financial Conduct Authority (FCA) however not all will protected by the Financial Services Compensation Scheme (FSCS).
- Whether there’s a limit on the amount of cash you can withdraw and what fees you’ll be charged if you withdraw more than allowed.
- Whether you can deposit cash into your account.
- If the bank of your choice will allow to set up an overdraft (if you need one).