online banks

Online Banks vs Traditional Banks

When it comes to banking, should you go digital or stay analogue?


Today, our phones function as our TVs, our entertainment centres and our calendars, offering us multiple technologies all on one device. Unlock your phone and you’re also looking at today’s bank. With more and more banks offering their customers digital banking solutions and ever-improving features, the idea of a bricks and mortar bank might be starting to look like a quaint notion. In this post, we’re weighing up the pros and cons of staying with your traditional high-street bank, or opting for a new, app-only alternative.


Online Banking


online banks


There’s a new wave of innovative start-up banks which are challenging the old guard. App-only banks such as Tide, Starling and Revolut are offering customers branchless banking in streamlined, user friendly apps.


What do we mean by online banking?


It’s app-only banking solutions that provide you with all the same features as a traditional bricks and mortar bank. You might also know them as ‘mobile banks’ or ‘challenger banks’. But are they really any different—or better–than using the RBS mobile app, or popping into your local branch? Here we’re delving into the advantages of going branchless versus sticking with your local bricks and mortar bank.


The Advantages of App-only Banks


Quick Set-up


Need quick access to a new business bank account? In a digitally connected world where everything moves at double speed, setting up a current account should be instantaneous. Choose an app-only alternative, and it will take you less than 5 minutes. No muss, no fuss.


Real-time Banking


online banks


Online banks such as Starling, Tide and Revolut offer advanced spending analysis and a detailed breakdown of your spending into categories. Get mobile notifications when you spend and set spending caps to help you save.


Accounting Software Integrations


Become a badass bookkeeper by choosing a bank account that seamlessly connects to a range of accounting software, business finance and mobile invoicing providers. Challenger banks such as Starling Bank offer integrations with accounting solutions like Xero and FreeAgent. And mobile banks like Starling and Tide also synchronise automatically with Xero, so you don’t need to upload any statements. We just love it when stuff works!


Launching their Xero integration at Xerocon London 2018, we had the chance to meet the innovators of Starling Bank in the flesh. Check out our Xerocon blog post to find out all about it.


Beat Exchange Rates with Revolut


online banks


Marketing themselves as a ‘traditional banking alternative’, Revolut are leading the way in app-only banking. Working on the basis of a pre-paid debit card, Revolut offer fee-free foreign spending and overseas cash withdrawals. If you have clients internationally or you regularly travel for business, this could be the banking solution for you. Spend abroad with no additional rates and you can change your currency in the Revolut app with no additional cost. This can be great as a secondary bank account for when you travel on business, or when going abroad with family.


Simplify your Expenses with Soldo


online banks


Soldo offer pre-paid business cards which connect to the Soldo app. This is definitely one to consider if your employees travel often and have lots of expenses. Use your Soldo card to pay on the tube, for example, and it will automatically connect to Xero, streamlining the expense management process. There’s no need to send expense claims to then get refunded. Just photograph your receipts using the in-app receipt capture and attach them to your transactions. This saves you valuable time managing expenses and chasing receipts that you could be spending on growing your business!


Disadvantages of App-only Banks


Limited Lending and Additional Fees


Although they have incredible functionality, some challenger banks such as Tide don’t let you borrow money and they’ll charge fees, which is something to look out for.


Traditional Banks


online banks


Opting for the traditional bank scene, the ‘Big Four’ in Britain are Halifax, Lloyds Bank, HSBC and RBS. As a customer, you’ll still have access to online banking, with some services only available in the bricks and mortar branch. Here are the pros and cons of opting for branch banking:


Advantages of Traditional Banking


Secure Mobile Banking


Track your spending, send money instantly, and view your standing orders all in a secure mobile app. In today’s digital world, you don’t need to go branchless just to go digital.


Flexible Lending


Unlike some branchless banks like Tide and Starling, you can take out loans and larger overdrafts with traditional banks such as RBS. This is definitely a big area where traditional banks have the advantage over challenger start-ups.


Disadvantages of Traditional Banking


Longer Set-up


When setting up a bank account, it tends to be a much clunkier process. It can take up to 3-4 weeks to set up a current account, including a trip to your local branch and some paperwork!


Limited Online Functionality


Since traditional banks operate with branches, the functionality of some mobile banking apps is fairly limited. For example, if you want to set up a new standing order with RBS, you’ll have to go into the branch, which isn’t always ideal during a busy week. Plus, traditional banks such as Clydesdale don’t connect to Xero, which means you still need to send expense claims.


Exchange Rates


online banks


With traditional banks, you’ll receive additional charges when spending or transferring money abroad. This shouldn’t be a huge problem, unless you frequently travel abroad for business or make regular payments outside of the UK. In this case, it might be worth considering a more flexible banking solution such as Revolut.


The Key Takeaway:


online banks


There are countless banking solutions out there, so it’s important to choose the right one for your business. Whether you travel often, need a loan, or want an intuitive banking app that connects to your software solution, traditional banks and branchless banks each have their own advantages to suit a range of needs.


If you have any questions about the banking alternatives in this post, or about switching banks more generally, ping us an email at or DM us on Twitter or Instagram. If you’re an AM client, drop us a message on Slack and one of the team will get back to you that same day.


As the banking scene continues to evolve, we hope this guide will help you pick the right one for you and your business!