Online: the future of banking

It seemed unthinkable in the last century but today online channels are revolutionising the way we interact with our banks, in the UK and across the world. Gone are the days when customers were restricted to managing their money during a bank branch’s opening hours. Now we can simply turn on our computers and manage a bank account digitally 24/7.

In fact, online banking has become so popular that some banks are doing away with physical branches altogether. But how exactly does that work – and can it really be the future of banking?

Online banks in the UK

Banking without a branch might seem ground-breaking, but most of us have been doing it for decades. Automated Teller Machines (ATMs), telephone banking and of course digital banking are all effectively “branchless” ways to withdraw, deposit and transfer money. But, until recently, these channels were complementary to bricks-and-mortar bank branches.

However, some newer banks operate without high street outlets altogether. It’s a concept that still feels alien to many customers, even those who are fans of digital banking. But as mainstream banks like the Royal Bank of Scotland, Barclays and Lloyds TSB continue to attract bad press in the recession, more and more people are flocking to these seemingly smaller, simpler banks.

Aldermore, for instance, was launched in 2009 during the height of the credit crunch. Take a quick look at its website and there’s little to differentiate it from a more established bank: as well as current accounts, savings accounts and mortgages for personal customers, it also offers commercial mortgages and financing for businesses. Like its bigger competitors, it’s regulated by major regulatory bodies, including the Financial Conduct Authority and the Prudential Regulation Authority. Moreover, since it’s covered by the Financial Services Compensation Scheme, deposits are protected for up to £85,000 – the same level of cover you get with larger banks.

Older branchless banks in the UK include Smile and First Direct. Both of these banks, like Aldermore, interact with their customers only online or by telephone. They too offer most of the same basic services as large banks, including current accounts, mortgages, loans and savings accounts for personal customers and are regulated by essential financial bodies. So, apart from being able to speak to a banker in person at a branch, they have similar offerings for individuals who require simple day-to-day banking services.

Choosing an online bank

If you’re thinking about making the move to an online bank, it’s not as daunting as it might seem. Money comparison sites like and Money Supermarket often include online-only banks in their rankings, especially when they offer the best rates for a particular type of account or mortgage.

But bear in mind that you should always look for banks that are regulated by major financial authorities in the UK, in addition to being covered by the FSCS, so you know that your money will be covered for up to £85,000 in the event that the bank collapses.

Always seek independent financial advice from a variety of sources too before signing up. Financial advice sites like and Money Saving Expert offer invaluable tips for customers, helping you figure out what’s best for your particular financial needs before making a decision.


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Mother of three grown-up daughters I am the ultimate multi-tasker and am passionate about my role as Silversurfers Website Editor and Social Media Manager. Always on the lookout for all things that will interest and entertain our community. Fueling fun for the young at heart!

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