Since their advent, “neobanks” – banks that operate exclusively online and without physical high-street branches – have found a firm base in the UK market.
For students, banks such as Monzo, Revolut and Stirling Bank offer obvious advantages over their traditional competitors. As a Monzo customer myself, it seems that its best selling point is its user-friendly app. Monzo, in its own words, aims “to do for personal finance” what has been done by Google “for finding information”. For the tech-savvy, their apps offer convenient tools to track spending and split costs. Monzo also attempts to make its Terms and Conditions more accessible, using a large font and clear headings. The low fees charged for using their cards – including when travelling abroad – also appeal to students.
However, this new form of banking is not without its issues. Monzo and Revolut have both been under fire for security failings. In 2019, Monzo revealed that the pin numbers of nearly 500,000 customers had been available to unauthorised employees for six months, whilst customers of Revolut have complained about fraud not being taken seriously.
Because Revolut is an “electronic money institution”, customers are not protected by the Financial Services Compensation Scheme (FSCS) – but Revolut says it has “safeguarding” methods to protect clients’ money. These issues raise the question of whether “neobanks” offer customers the same level of security as that provided by high-street banks. Could this be because these new business models have not been subjected to the same level of scrutiny as those of their traditional competitors?
Neobank customer experience is also characterised by a lack of face-to-face contact with staff. One Revolut customer described to The Times how a payment of £1000 into his account was in limbo for a month. Customers are not provided with a phone number, only a website “chat” function: “I find it extraordinary that it’s impossible to speak with anyone,” he said. It is still not possible for all Revolut customers to make cash deposits, and Monzo users have to go through a third party. As “neobanks” continue to drive us towards a cashless society, will we come to regret losing the ability to make payments and deposits in cash?
Neobanks clearly offer students advantages that are not available to the customers of traditional high-street banks. However, for each new offering we must be clear about any loss in security, customer service and government protection through the FSCS.
“Pink Piggy Bank On Top Of A Pile Of One Dollar Bills” by kenteegardin is licensed under CC BY-SA 2.0.