Opt for a newer app-based bank such as Monzo or Starling and you risk missing out on potentially hundreds of pounds in perks from traditional players.
Since 2016, banking definitely seems less beige.
I noticed it first with the bright orange (officially 'coral') cards my friends would produce to pay for a round at the pub – where previously, they would have used cash.
The same people seemed to do all their banking on their mobile phones and were suddenly keen to talk about foreign exchange fees and other big bank rip-offs.
The emergence of Monzo and more recent mobile banks Starling and Revolut have shown that banking doesn’t have to be boring or stressful – and can even be stylish (if that sort of thing interests you).
Monzo orange is a thing and you should definitely be wearing it: https://t.co/BwFVV7kQ2x pic.twitter.com/YghMyCBBOW
— Sunday Times Style (@TheSTStyle) October 31, 2018
Two years on and Monzo has a current account, is fully FSCS protected and has just launched a savings account, paying 1%.
Meanwhile, a German bank, N26, is on the brink of launching a similar mobile-based current account in the UK, with unusual features such as metal debit cards.
Thousands are switching to these banks and few are regretting their decision, recent figures show.
Yet I wouldn’t advise making these providers your main bank, yet. And the reason has nothing to do with reputation or bank branches.
Earn up to £200 just for switching your bank account
Show me the money
Let’s not kid ourselves: however stylish, your bank is not a lifestyle choice. It’s a necessity, that should cost you as little money as possible and possibly make you some on the side.
And interest rates of 1%, which is what Monzo is offering in its 'savings pot', or 0.5% for money in Starling’s current account, aren't that great.
Nationwide and TSB will pay you 5% for what’s in your current account and that extra interest could get you to that holiday, new TV or house considerably quicker.
So what do you gain by being with a mobile bank? Monzo and Starling’s main perk is that you get fee-free foreign spending (check out our best cards for spending abroad here).
That’s great if you travel often, but it’ll take you a long time to notice the savings if you don’t.
Meanwhile, other less fashionable banks will give you hundreds of pounds in cash through ‘switching bonuses’, cashback on bills and interest-free overdrafts.
HSBC, for instance, is currently offering £200 for new customers to switch accounts to them, whilst Nationwide will split £200 between you and a friend if you recommend them.
Or how about NatWest’s Reward account, which not only pays you £125 to join, but also pays cashback on household bills, on average £83 a year.
And for those who struggle to make their money last until the end of the month, First Direct offers a £250 interest-and-fee-free overdraft (as well as free gadgets to join).
Monzo and Starling’s overdrafts might be cheaper than most, but they can't compete with free.
You can also save money when travelling with a travel credit card
Don't write the big banks off
Some of these banks are, admittedly, offering you this money as a bribe, to overlook their glaring deficiencies.
Yet should a bank’s endless phone waiting times or glitchy mobile app really matter that much?
Chances are, you don't need to interact with your bank that often, especially if you're happy to do without bank branches.
It’s also wrong to assume that more established banks necessarily have awful customer service.
First Direct and Nationwide came 1st and 3rd respectively in the Government’s poll of how satisfied customers were with their banks (Monzo and Startling were too small to be included).
HSBC, meanwhile, has released an ‘open banking’ app that can show all your bank accounts in one place.
And if the design of your debit card matters to you, then Barclays will let you personalise your debit card with whatever image you'd like.
The best bank accounts for switching bonuses
All the right ingredients
Don’t get me wrong: there’s a huge amount to like about the new wave of mobile banks.
I like their simplicity, transparency and a refreshing approach to money for a generation who, like me, barely used and doesn’t care about bank branches.
But to recommend these banks, they need to offer more in the way of hard cash to customers.
Individually, they have great perks, such as Starling’s in-credit interest, Tandem’s excellent cashback cards and Atom’s high-interest savings products.
If one of these banks can give their customers the best of all worlds, then sign me up. Until then, they’re not the best place for your money.