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Published on 29th December 2017

Monzo vs. Starling Bank

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Monzo vs. Starling Bank: Who will win the mobile banking battle in 2018?

2017 will be noted as the year that challenger banks really started to heat up the banking landscape. And while some mobile banks are having to radically rethink their business models, there's little doubt that both Monzo and Starling Bank have become the ones to watch for consumers looking for great mobile banking experiences.

Starling Bank - which we profiled a while back has a current account which though still officially a beta, can be downloaded and opened today. Meanwhile Monzo is still invite only, but aims to “get a current account to everyone who signed up for one by the end of 2017”. That would be pretty impressive, given that over 500k consumers are carrying around a Monzo card.

And as we head into 2018, we wondered which of these two new current accounts is best? Is either of them worth switching to as your “main” current account? Read our thoughts below, and tell us what you think by leaving either of them a review.

Sign Up & On-boarding

With current account switching volumes still relatively low, it’s imperative that the sign-up process is as smooth and frictionless as possible. With Monzo still invite-only, it’s a little more involved right now (sign-up requires an install of Apple’s testing app), but once up and running, it’s every bit as easy as Starling’s offering.

With both banks, this takes typically less than five minutes. Crucially, neither require any paperwork to be filled in, no forms need printing and posting via snail mail. It’s as simple as taking a photo of some ID, entering a name and address, and recording a quick verification video to prove your identity.

Once signed up, Starling Bank offer a “virtual card” via Apple Pay so it’s possible to go from downloading the app to spending money on it in literally minutes, whereas for now, Monzo requires a physical card to be sent out and topped up first. This will surely change once Monzo begins supporting Apple Pay, for which their appears to be strong demand.

Once up and running, the apps themselves require little in the way of “hand holding” as they’re both very self explanatory, and put the most common features front and centre. Adding funds and viewing transactions is as easy as can be expected.

WINNER: Starling Bank...for now

COULD BE IMPROVED: Perhaps it’s part and parcel of registration without paperwork, but we do have reports of users being unable to be identified on registration, which is obviously frustrating and leaves potential customers with a bad first impression.

Interest Rates / Fees & Charges

While both accounts are free — for now — that doesn’t mean they always will be. Monese infamously adopted a monthly £4.99 charge which didn’t exactly go down well with existing users following a free for life promise.

Starling Bank customers receive 0.5% interest on current account balances up to £2,000 (0.25% thereafter up to £85,000) which is more than most banks. Monzo has yet to announce any interest rate incentive for current account customers. Funds held in both banks are covered by the FSCS  up to £85,000.

The Starling Bank overdraft is 15% EAR which they admit is not the market leader, but both banks have made special effort to be clear and transparent with regard to charging, and overdrafts are an important frontier for customers. Both banks have made it easy for the customer to better manage their overdrafts; just move the slider to set the size of your overdraft, and the cost updates immediately below.

Interesting, Monzo currently has a vote out with its community on how to charge for foreign ATM withdrawals, which are proving costly for the business. For now they’re free, but it seems likely that some sort of charge will be brought in at some point. For now, Starling Bank remains completely free to use (subject to fair use of £300 a day).

What really marks both banks out pretty markedly from some of the other "new banks" is that both are trying hard to promote a culture of transparency, and honesty with customers, which so far, their respective communities seem to greatly respect.

WINNER: TIE (we'll have to sit on the fence on this one for a bit)

COULD BE IMPROVED: We'll have to wait and see how both banks evolve their fees and charges as the commercial realities of marketplace models won't be known for a while yet.

The App & Day to Day Use

Current rating in the App Stores: Monzo: 4/5 | Starling Bank: 4/5

It’s difficult to put the Starling Bank app and the Monzo app side by side and not see similarities in their approach - Monzo is of course, closely related to the origins of Starling Bank. So in terms of app usage, it may be a case of choose whichever you find easiest to use, or nicest to look at.

They’re everything you’d expect in banks designed from the ground up — no legacy systems to hold them back, and a modern feature set making full use of a smartphones in-built technology like TouchID, real-time notifications for payments in or out, Google Maps integration, and more.

Monzo feels slightly more feature rich — it already has great support for budgeting (coming soon to Starling), and feels a little more fleshed out. Features like showing an average spend per retailer, and the ability to add notes to specific transactions are useful no-brainers.

Starling’s future lies in its marketplace — they’ve recently partnered with Flux - which allows receipts to be automatically added to transactions. Currently support is limited to a sandwich chain called EAT, but it’s easy to see how handy this could be. Speed of use is largely the same between the two, with both apps reacting immediately to inputs.

That’s not to say either is niggle free. Monzo suffered outages earlier this year, and both apps still encounter the odd payment refusal for certain retailers. It’s very rare but annoying enough to make carrying around only one of these cards sometimes difficult — the official line from both banks is “carry a backup card”.

One thing to note for anyone wanting to sign-up to Monzo’s current account today, is that customer support is limited from 9-6pm. You very much have to expect that today, Monzo is not "the finished product", but the Monzo community no doubt views this as part of the charm.


COULD BE IMPROVED: Both apps are going to have the occasional glitch, which is fine, but when they leave “beta” they’d better be rock solid.

Customer Service

Both apps take a chat-first approach to customer service, via a customer service tab. And while both banks offer support via telephone, Monzo certainly do their best to push customers to in-app chat first, whereas Starling Bank encourage customers to call for more complex queries.

Customer service takes a modern approach overall, with both using emojis and an almost overly friendly disposition to “soften” the approach, but for day to day queries, chat is a useful way to solve simple queries without moving from the sofa. We’ve also seen both banks offering little freebies to customers, ranging from tee-shirts for spreading the word about Monzo, to chocolates for Starling Bank customers who’ve had app teething problems. If customers don’t mind losing face to face interaction, expect app-based chat to become more and more commonplace.


COULD BE IMPROVED: While the method of contacting customer service has changed, the security questions, and script-like nature of some customer service queries has not. A truly personal and approachable customer service is no doubt difficult to achieve when everyone is slightly different, but as both banks pass the app hygiene test, it's clear that customer service could be the real battle ground going forward.

The Future

Starling Bank released a much-lauded feature roadmap earlier in the year, and hinted at support for joint accounts, savings goals, and much more. With a slight head-start as a fully functioning current account, they might be able to tout more interesting features like this, while Monzo plays a bit of catch-up offering Direct Debits and so on.

Starling Bank are sticking staunchly to only offering a current account, with a single product focus, and doing it better than everyone else — with greater monetisation through their marketplace platform. Whether Monzo takes a similar approach remains to be seen.

One area where Monzo is probably beating most companies in the UK is in transparency. They publish A LOT publicly, be it the number of current accounts actually opened, or their entire page dedicated to transparency including investment ethics, diversity, and plenty more.

Either way, it’s going to be interesting watching the Starling marketplace develop, and to see what new functionality Monzo might add to attract new customers and to retain existing ones who might look to jump to the next shiny app that may be just around the corner.


COULD BE IMPROVED: Only the future will tell...


It’d be hard to choose a winner between the two when they’re both the clear leaders in a frontier that will only become more competitive. We wouldn’t be surprised if they were feverishly "borrowing" ideas from one another, and as long as the output is better than what the big banks of today are managing, then it should result in a win-win for customers too.

But if you’re at all intrigued as to whether these new banks can offer something a little more exciting than your existing bank, dive right in and see what they’re about. It will be interesting to see if either of the two manage to make it into the British Bank Awards league table in 2018, or whether the passionate communities behind both banks vote in their droves to displace NatWest as the new “Best Banking App”.

Are you already using Starling Bank or Monzo? Help others decide whether these banks are worth switching to by sharing a Monzo review or a Starling Bank review today!

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