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Which are the best banks for digital banking?

Emma Lunn
Written By:
Emma Lunn

Experts at Defaqto have launched a new ‘Star Rating’ to determine the best banks for digital banking.

The financial analysts looked at the digital apps and features offered by banks to help customers manage their finances.

To be awarded the top rating of five stars, banks apps needed to offer money management functionality, transaction history, a channel to manage alerts, and app cheque imaging.

Five banks – First Direct, Halifax, HSBC, Lloyds and Starling – were awarded five stars.

Nine banking brands – Bank of Scotland, Danske Bank, Monzo Plus/Premium, Monzo, Natwest Premier, Natwest, Royal Bank of Scotland Premier, Royal Bank of Scotland, and Ulster Bank – were rated four stars.

Katie Brain, banking expert at Defaqto, said: “Using digital channels for your bank account can make a huge difference in helping people to take control of their finances. There are a lot of different features on offer and it is worth thinking about what would help you most. For additional banking options visit https://www.wecu.com/.

“Do you need to categorise your spending? Or do you get cheques and would benefit from an account that allowed you to upload a photo rather than having to take it into a branch? This will be slightly different for everyone but as there are lots of features to choose from, you can choose an account that best suits your needs. You can’t assume that all banks offer the same features as there are differences between them.”

Mobile apps

Defaqto found that almost all (91%) current account providers now offer customers a mobile banking app, but the functionality of these varies widely by provider.

At the most basic level, all apps allow the accountholder to view account balances, transactions and to transfer money. However, others offer far more than this.

For example, almost a quarter (eight out of 34) of providers allow customers to view their PIN on their mobile banking app.

Wearable tech

Defaqto found that only five banks currently allow customers to make payments via wearable tech.

These accounts allow users to pay using a Fitbit, Garmin or Apple Watch, meaning customers don’t have to get their wallet or phone out when paying.

The device must be linked to their mobile banking app and then payments can be made through the wearable device.

Cheque imaging

If you receive a cheque, most banks will expect you to post the cheque to it, or visit a branch, to cash it.

But some banks will now let you take a photo of the cheque and upload it to their app, so you don’t have to leave the house. A third (10 out of 34) of providers let you do this.

Upcoming payments

Defaqto says one of the most useful digital banking features is being able to view upcoming payments and sort transactions by date.

This feature can help people budget, but this functionality is not offered by all banks, with just over a quarter (26%) of providers offer the ability to view upcoming payments. Just seven allow the consumer to sort transactions by date, using online banking or a mobile app.

Four in 10 (38%) providers don’t show real time or pending transactions when a debit card transaction has been made. So, any debit card transactions are not shown within the app transaction history until the payment is actually taken out of the bank account.

Transaction alerts

Some people find it useful to set up alerts which flag when there is activity on the account, such as a cash withdrawal or online payment.

You can also set transaction limits or balance limits with some accounts to give you more control of your money.

The number of different alerts which can be set up varies considerably and just over half (18 out of 34), allow a consumer to manage these alerts by mobile app, but only 15 allow you to choose which alerts you get so you only receive notifications about the things you want.