Opening 12 bank accounts

On average, people stay with their bank for 17 years—which implies that it’s either too much effort to switch, or that they have brand loyalty beyond belief. People are more likely to stay with their bank than they are to stay with their partner.

A study from 2020 estimated that within 5 years 44% of brits will have a digital-only bank. But most of you reading this will already have an account with at least one of the challenger banks, like Monzo, Revolut or Starling. You probably also remember the experience being far better than when you set up your traditional bank account more than a decade ago.

But was the application process actually any better, or are you just wrongly assuming that your traditional bank hasn’t improved since 1995?

This chapter sets out to answer the question: is it actually any easier to open an account with one of the challenger banks, or it is all a brilliantly orchestrated marketing spin.

The industry can be confusing. Promises of “opening an account in minutes” are enticing, and might technically be true, but don’t reflect what we really experience.

In the real world, you’d probably only say your account was active when you could actually use your card. So I set the following parameters:

1. I can use my card in a shop. This includes receiving my PIN.

2. I have access to online banking on my mobile. This includes receiving my card reader (if needed).

And remember, none of the banks knew they were in this race.

As you’d expect, the challenger banks were considerably faster than the more traditional banks. And remember; these are working days, not calendar days.

But when we talk about how easy something is, there’s another metric to consider: effort required. Typically, products feel more intuitive—and easier—the less input they need. So I also logged every time I had to do something.

As you can see, the challenger banks not only required the fewest clicks, but needed significantly fewer than even the best scoring traditional bank.

So the answer is yes, it actually is easier to open an account with the challenger banks. Maybe not significantly easier than every traditional bank—Barclays and Lloyds were also very good—but they were certainly easier than the average traditional bank.

But how did they achieve this? The second part of this chapter explores that question.

It shouldn’t come as a surprise to you that all the banks have IOS apps. But what may surprise you is that not all of the banks let you actually open an account through their apps.

For this, if I was required to phone somebody, or visit their website in a browser, I counted it as a fail. I wanted to open the account using their app, and just their app.

So which banks allow you to open an account via the app?

Two thirds of the banks forced me to go to their website at least once to get an active account. Some of them let you apply for an account through their app, but then you couldn’t create your online banking credentials unless you log in through their website.

And it’s worth noting that parts of Nationwide, Metro, Santander and Natwest were not even fully responsive on mobile.

What the challenger banks—and to their credit, Barclays—have done is consolidate all of their processes. Sure, this is considerably easier when starting with a blank canvas, as these new banks were, but nonetheless, it makes a significant improvement to the experience.

Whilst the challenger banks are also tethered by the speed of the postal service, they do have a trick up their sleeve. They allow you to add your card to Apple Pay as soon as your account has been approved. None of the traditional banks let you do this.

Sceptics may argue that this feature is a gimmick, because you can’t use your card in all shops, or to get cash out, but they’re missing the point. They’d be mistakenly assuming that the value of this feature was in its utility, which it isn’t.

Instead, the value of getting some instant access is in the feeling of progress, achievement and ownership. By giving some access to the account, and proving that it is open, it subconsciously changes the way you think.

Traditionally, you’d not say that you had an open bank account until you’d actually received your card.

But the challenger banks have rephrased this wait as being “your account is open, see, you can use your card it right now, we just need to post it to you“.

This is immensely subtle and clever. That simple change of perspective makes opening an account with Monzo, Revolut and Starling feel instant, even if it really does take a few days to get full access to your account. You get an immediate feeling of ownership and objective success.

The key here is to understand that most of the time we cannot change external factors. The challenger banks couldn’t make the post arrive faster. But when building an experience you can change the users perception of that wait. There’s another analogy in the footnotes if you’d like more on this point.

Understandably, you need to prove your identity when opening an account. Traditionally, this would mean walking into a branch with your passport, or sending scanned copies of your ID in the post.

But what was a laborious exercise—and might’ve taken a whole afternoon—can now be done in seconds, from the comfort of your own home.

The user scans a suitable ID document, and then takes a photo or video selfie, that’s it. No trip to the bank required. So who actually utilises digital identity verification services?

To clarify, there are some circumstances where banks will probably always have to complete at least some of the checks manually. But for your average consumer, like me, there are very few excuses to not use one.

Cost certainly isn’t the issue. Third parties like Onfido (Revolut), Jumio (Monzo), and HooYu (Natwest) provide this service for—in my experience, and estimating a bank’s volume—less than 50p a check. Possibly a lot less.

It’s obvious that this is such a major improvement on the user experience. It’s possible that proving your identity in the traditional way, would have been the worst part of the entire process. And because of a psychological heuristic known as the 🏔 Peak-end Rule, it would have been one of the most rememberable.

The challenger banks also asked fewer questions. Let’s focus on one area: address history.

Banks all ask for your address history so they can run a Credit Search. But there’s some discrepancy in how much address history the banks ask for:

Monzo, Revolut and Starling only asked for my current address. Whereas everyother bank required at least one previous address—normally asking for 3 years of address history.

In short, the more address history you provide, theoretically, the higher the chance that the bank will accurately find your credit report.

Which highlights an important trade-off:

1. Ask the user to provide previous addresses — Increased input required, but a greater chance of finding their credit report.

2. Remove the previous address fields — A better user experience, but a slightly increased risk of not finding their credit report.

This decision is not quite as simple as that and i’ve discussed the broader impact of this in the footnotes.

But, it’s clear that the challenger banks have made a conscious decision to prioritise the experience. This self-restraint is even more impressive when you consider that for many years companies have been trying to harvest as much data as possible—even if they never use it.

Since publishing this chapter, Monzo has been in touch with me to talk through a third option—which is immensely clever. They will ask for one address, run a search, and if they cannot find you, they’ll then ask for more.

I’m unsure at this point if the other challenger banks have done the same—but it’s entirely possible. Mitigating risk in this two-step process adds technical challenge, but reduces the amount of input required from the user in many cases.

Receiving your card in the post is an experience—or rather, it’s an opportunity for the bank to create an experience that you remember positively.

It’d be foolish for a bank to downplay the impact that this letter has. It’s not just a piece of paper, it’s the moment your digital actions become physical. Let’s focus on just one element that they all have in common: the envelope.

If I asked you to imagine the most boring envelope you could, it’d probably be a plain white rectangle with ‘Private and confidential’ written on it.

And which of our banks used this exact envelope?

I’m not sure there could be a more literal example of these banks trying to look different. They’re not just sending their cards out in less boring envelopes, but in envelopes you probably haven’t seen very often.

All 3 of the challenger banks have sought to create an experience that feels different. Something that—before you even open it—signals “we are not your typical bank”.

Personally, my favourite is Monzo’s, because it’s brilliance is in the subconscious comparison you’ll make when picking it up. When was the last time you received a letter in a blue envelope? Possibly never. If you did it would have been probably a birthday card from a friend.

And if you’re in any doubt over the opportunity missed here, try searching Twitter for “Starling card arrived”, then “HSBC card arrived”.

It’s not even close: opening an account with any of the challenger banks, is considerably better than with any traditional bank.

In this chapter I’ve highlighted 5 things they’ve done differently, but there are a lot more. Other than Barclays—who I was really impressed by—the traditional banks have a lot of catching up to do.

I know you’ll want me to pick a winner between Monzo, Revolut and Starling—as I will in later chapters—but there was very little between them here. Whilst Monzo took nearly twice as many clicks to open an account than Revolut, Monzo actually opened my account faster. Meanwhile, Starling was consistently good throughout all the tests.

I’d probably give all 3 of them a very similar score.