Digital Banking Guide

Digital banks run entirely through a mobile app. There are no branches: accounts are opened, managed and closed in the app, and support comes through in-app chat, email or phone rather than over a counter.

The label covers more than one kind of provider. Some are fully licensed UK banks. Others are e-money institutions offering an account-like product. Two apps can look near-identical in the app store while differing in the payment features they support and in how your money is protected.

The clearest difference is cash and branches. Digital banks have neither. Paying in cash usually means PayPoint, the Post Office or a partner service, and cheque handling is often limited or unsupported.

Digital banks are typically stronger on app experience, spending notifications, budgeting tools and card spending abroad. Many people use both: a high street bank for a mortgage, cash handling or face-to-face help, and a digital bank for everyday spending.

A digital current account from a licensed bank works like any other: a sort code and account number, a debit card, Direct Debits, standing orders and salary payments.

An e-money account can look the same in the app but is a different product legally. Payment features can be narrower, and customer funds are safeguarded rather than held as protected deposits. Check the terms for the specific product rather than relying on the brand.

Savings inside a digital app can sit with the provider itself or with a partner bank. Where a partner holds the money, the deposit protection limit applies to that partner — which matters if you already hold savings there.

Withdrawal rules and rate conditions vary between providers. Check how quickly you can reach the money, and what conditions are attached to the advertised rate, before moving savings across.

A licensed UK bank holds eligible deposits under FSCS protection, up to the current limit, per person per banking licence. Several digital brands share a banking licence with a parent bank, so holding money with both does not double the cover.

An e-money institution is not covered by FSCS. Customer funds are instead safeguarded, meaning they are held separately from the firm's own money. Safeguarding and FSCS protection are different arrangements, and the difference matters most if the firm fails.