Would YOU trust a bank that only exists on your mobile?

Millions have been lured in by their top savings rates and perks. But with no branches, no track record and a complete reliance on the internet...

USInG a mobile phone to do all your banking is no longer the preserve of tech- savvy twentysomethings. Many of us have got used to checking our balance or making payments using smartphone apps offered by major High Street names.

but a new breed of banks are launching accounts that can only be managed via an app on your mobile phone.

Incredibly, more than 1.2 million current accounts have now been opened in the UK with banks which can be accessed only via a smartphone or tablet computer app.

On top of this, more than one million customers are using mobile-only banking apps for savings accounts, mortgages and credit cards.

It means that this once-niche market has become a genuine alternative to the mainstream banks, as customers go in search of better interest rates and service.

With stylish debit and credit cards in flashy colours and handy budgeting tools, these new challengers are increasingly tempting. but what are By Louise Eccles the risks with moving from an established brand to a tiny and relatively unknown app bank? Here Money Mail guides you through the new digital world, looking at five of the bestknown app-based banks. STARLING BANK IT MAy have launched its current account only last year, but Starling already has more than 300,000 customers. Starling bank was founded by Anne boden, 58, the Swansea-born daughter of a steelworker, who set out to create her own mobile- only bank from scratch in 2014 and remains in charge. WHAT IT OFFERS: The current account allows you to receive payments and set up direct debits and standing orders. It has a clever, vertically designed debit card which is easier to read when you insert it into a chip and pin machine.

customers can apply for a personal loan within the app. you can deposit cheques by posting them to Starling’s london address, and deposit cash into any natWest branch.

Its customer services team is available 24/7, not only through the app but via the website’s live chat, email and phone — although this is for support rather than transactions.

Starling also has some extra features you wouldn’t get with a traditional bank.

you can receive instant notifications on your phone whenever you spend money, even for cash withdrawals and direct debits, as well as when money enters your account.

you can also squirrel away money into a special ring-fenced part of your current account if you want to save without putting it into a separate savings account.

It also pays interest of 0.5 pc on current account balances up to £2,000 and 0.25 pc above that.

It is has free overseas spending and no limit on the amount you can with- draw from foreign cash machines without incurring fees. It is also fully licensed, so customers are protected up to £85,000 if it were to go bust.

DRAWBACKS: It does not offer savings accounts, ISAs or mortgages direct but you can use the app to apply for these with its partners Wealthify and Habito, and then manage them via your mobile. Starling receives a commission.

Starling is only available from a mobile so you cannot do online banking through your computer.

BEST FOR: This will appeal to people who are usually in credit and want to earn interest on their current account balance, as well as those who travel a lot. It is also good if you still need the traditional functions of a bank account, such as paying in a cheque. MONZO BANK I n c r e d I b ly Monzo bank now has more than one million (1,087,669) current account customers, almost a third of whom are over 40. To put this into context, it has more customers than 42 out of the 44 building societies in the UK.

The london firm was co-founded by Tom blomfield, 33, an entrepreneur, raised by a civil engineer father and illustrator mother.

The Monzo chief executive studied law at Oxford University and went into management consultancy before joining Starling. He quit after six months and cofounded Monzo with four Starling colleagues.

WHAT IT OFFERS: It started off as a pre-paid debit card which offered fee-free spending overseas. Its neon orange payment card became instantly recognisable to young people in the know.

but in April 2017, it became a fully-fledged bank. It is recruiting around 20,000 customers a week. They are protected by the Financial Services compensation Scheme, which covers up to £85,000 of their money if the firm goes under.

Monzo offers perks for holidaymakers, with no fees on spending and free cash withdrawals up to £200 every 30 days, after which it is 3 pc. you can also set up direct debits, standing orders and overdraft facilities. you can switch your main current account to Monzo — and rival Starling — using the official current Account Switch Scheme.

Monzo’s app sends instant notifications of any spending, and the app can set monthly budgeting targets. It also lets you pay friends over bluetooth — which allows you to connect with phones nearby — without needing to know their account details. For this to work they must also use Monzo and have the ‘ nearby friends’ part of the app open.

If you lose your phone or cannot access your app, it offers an emergency web service at web.monzo.

com. customers can also freeze and unfreeze their card. you can pay in cheques by Freepost.

As well as using live chat in the app, you can still call and email the bank for help.

DRAWBACKS: customers cannot pay cash into a branch yet, but it with be launching a partnership with a third party in the next few months. It also has no savings account, but plans to launch one.

BEST FOR: The app is most likely to appeal to customers who travel a lot and want to save money on

foreign spending charges. It’s also great for those with a busy social life as you can easily keep track of spending and pay friends back if you split the bill. REVOLUT THREE years ago, Revolut was co- founded by Russian- born Nikolay Storonsky, who had been a trader at Lehman Brothers.

It started as a pre-paid foreign exchange card offering fee-free spending abroad.

But Revolut has ambitions to become a fully-fledged bank and, last year, it launched services which mirrored a current account. It has already amassed 1.2 5million customers in the UK, almost a third of whom are over 40.

WHAT IT OFFERS: You can load money onto a card via a phone app and then spend it when you’re overseas, receiving the best exchange rate at the time.

Its new current account type service means that customers can accept payments, including their salary, into their account.

They can also transfer money into other UK bank accounts in around 30 minutes. Its cards allow spending in more than 150 currencies at the interbank exchange rate, with no fees on spending up to £5,000 a month in 24 currencies and no cash withdrawal fees on up to £200 a month.

Customers can request a card in stylish designs, including one made of metal.

DRAWBACKS: You cannot set up direct debits or standing orders, or have an overdraft.

Revolut is able to offer bank accounts without a licence because it operates under an e-money licence in Europe.

And if Revolut went bust, all money deposited in its current accounts would be refunded because it is held in ring-fenced accounts with Lloyds and Barclays.

But in the event that Lloyds or Barclays went bust, you would join the queue with other creditors of the banks and might not get your money back.

BEST FOR: It is another card that is likely to appeal to frequent travellers, but until it has received a full banking licence and allows you to make direct debits, customers are unlikely to be able to use it as their main current account.

TANDEM

OUTSPOKEN chief executive of Tandem, Ricky Knox, attends press interviews in motorbike leathers and turns the air blue.

But behind its colourful cofounder is an attractive credit card with cashback perks and competitive savings accounts.

Both products have helped it acquire more than 300,000 customers since its launch last year — their average age is mid-40s.

In January, Tandem purchased Harrods Bank, which gave it a UK banking licence — opening the door to bigger things.

WHAT IT OFFERS: Tandem has three fixed savings accounts and two types of credit card.

Its main credit card is fee-free when spending abroad, but also gives customers 0.5 pc cashback on every £1 they spend — the only mobile-only bank to do so.

It has a ‘first’ credit card for people who have not had one before, which offers zero transaction fees abroad. You can also temporarily block your card if you cannot find it. As a licensed bank, savings are protected via the FSCS.

DRAWBACKS: Tandem does not offer current accounts but pairs itself with existing bank accounts so it can analyse transactions.

Earlier this year, UK banks agreed you would be protected if you shared your account data with budgeting apps, as long as the apps were on the Financial Conduct Authority’s register.

This system was called Open Banking. This means, if you lose money through fraud by using a regulated app such as Tandem, your bank should pay out.

You will need to enter your usual online login details for your online current account into the app. However, Tandem uses encryption to make sure your bank login details are secure.

BEST FOR: Its focus on customers who haven’t had a credit card before and fee- free spending abroad make it an ideal card for young people on gap years. It’s also great for keeping tabs on your finances across different banks and earning money back on your purchases.

ATOM

LIKE many banking apps, Atom feels young and quirky. American rapper and The Voice judge Will. i.am is the bank’s ‘ strategic board adviser’, for example.

But the bank is also appealing to older customers. Atom says two-thirds of its customers are now over 40, while its oldest customer is 99 years old.

Itwas founded by Anthony Thomson, who also started London challenger bank Metro. He stepped down as chairman earlier this year. Its chief executive is Mark Mullen, the ex-chief executive of First Direct.

Atom was one of the first banks to introduce biometric security measures which included face and voice recognition. And in 2015, Atom became the first mobileonly bank to receive a UK banking licence.

WHAT IT OFFERS: Behind the brand are attractive interest rates and perks. It might only offer fixed savings accounts and mortgages, but its interest rates often top the best buy tables. App-only banks are partly able to offer better rates because having no bank branches means low overheads.

Tom Adams at Savings Champion, which tracks interest rates, says: ‘Some people do not want to open a savings account with an online bank, let alone a mobileonly bank.

‘It means banks such as Atom have an extra hurdle to attract customers so offering more competitive rates than rivals has been a good way to do this.’

As a licensed bank your savings will be protected via the FSCS.

DRAWBACKS: You can’t get a current account.

BEST FOR: Customers who are happy to manage their savings or mortgage via a smartphone can find good deals through Atom.