A challenger bank is an alternative to High Street banks, such as HSBC, and can offer small businesses a wider range of products and services than traditional banks and, in some cases, be cheaper.
Key takeaways
- A challenger bank is a smaller, newer retail bank that offers innovative, technology-driven solutions for consumers.
- Revolut Business is the best option for small businesses making or receiving regular international payments.
- Starling Bank is the best option for sole traders because it does not have account fees and free invoicing and MTD software.
- Cynergy Bank is the best option for linked savings accounts.
Comparison table of UK challenger banks
| FSCS | Monthly fees | Free UK transfers | |
| Revolut Business | ✅ | From £10/month | 10 per month |
| Monzo | ✅ | £0* | Yes |
| Allica | ✅ | £0** | Yes |
| Cynergy | ✅ | £5 | No |
| Starling | ✅ | £0 | Yes |
| Zempler | ✅ | £0* | 3 per month |
| Metro Bank | ✅ | £0** | 30 per month |
| Handelsbanken | ✅ | £25/month | Not specified |
| Unity Trust Bank | ✅ | £7 | Yes |
* With free plan.
**With minimum balance requirements.
Review of challenger banks for UK businesses
Revolut Business
The Revolut Business account is best for businesses looking to send and receive international payments with its multi-currency account.
There are no fees for currency exchange, meaning your business won’t eat into its profits.
Revolut recently received its banking licence, meaning funds will be FSCS protected up to £120,000 (of eligible deposits).
Plans start from £10 per month for a Revolut Business Basic plan, although this is an essentials package. The Grow plan, £30 per month, sees a significant increase in features, such as 5 no-fee international transfers (as opposed to 0 with Basic) and 100 fee-free local transfers (as opposed to 10).
With the Grow plan, you can earn up to 2.15% AER variable on savings up to £500,000.
Why choose Revolut Business?
- Multi-currency account which accepts, sends and spends funds in up to 30 currencies
- No-fee currency exchange
- Payment solutions available with low transaction fees
- HR software available
Right now, you can receive £100 welcome bonus by signing up to Revolut Business via Small Business. To receive the £100 you must onboard via the link below. Offer ends 31/12/2026. Fees, promotional terms, and T&Cs apply.
Get started with Revolut Business
Trustpilot rating: 4.7/5 (401,484 reviews)
Monzo
Monzo has three plans available for business accounts: Lite (£0), Pro (£9 per month), and Team (£25 per month). Lite is best for sole traders just starting out, while the Pro and Team plans are better suited to more established businesses.
Pro gives you access to invoicing software, virtual cards, integrated accounting, and exclusive partner offers.
Team has the same benefits as Pro, but in additional offers bulk payments, expense cards and up to 15 team members can be added to the account.
Monzo is a digital-only bank, meaning it has no physical branches, however it does have 24/7 human customer support.
Monzo’s savings accounts aren’t the most competitive, with higher rates available elsewhere.
Why choose Monzo?
- No monthly account fees (with Lite)
- 24/7 human customer support
- Sole trader loans available
- Making Tax Digital software included
Trustpilot rating: 4.6/5 (67,851 reviews)
Allica Bank
Allica Bank is geared towards established businesses rather than start-ups or sole traders who’re just getting started as you’ll need £50,000 to open a Business Rewards Account (their business current account) and have been incorporated for at least 12 months.
As well as a dedicated relationship manager contact, you can earn up to 4.08% with market-leading linked savings accounts. The Business Rewards Account integrates with Xero, Sage, FreeAgent and QuickBooks.
There are no monthly account fees with Allica Bank.
Why choose Allica Bank?
- No monthly account fees
- Market-leading savings accounts
- Telephone support during operating hours
- Up to 1.50% cashback on card spend
Trustpilot rating: 4.7/5 (1,799 reviews)
Cynergy Bank
Cynergy Bank offers businesses a wide range of savings options tied into an interest-earning current account.
You could earn £350 with Cynergy Bank’s current account, which has 3.50% AER variable, if your balance is up to £10,000. Their easy access saver, which has a minimum deposit balance of £10,000, is also 3.50% AER variable, making Cynergy Bank a solid option for businesses that have built up reserves.
There are monthly account fees linked to Cynergy Bank, £5 per month, although right now there is a limited time offer that waives these fees for the first 12 months. Terms and conditions apply.
You can make international payments with your business bank account in up to seven major currencies.
Why choose Cynergy Bank?
- Earn interest on funds in your current account
- High interest rates on easy access and notice account products
- Option to open EUR or USD accounts
- Low monthly account fees
Trustpilot rating: 4.4/5 (5,630 reviews)
Starling Bank
Multi-award winning Starling Bank offer business accounts for limited companies and sole traders, with 24/7 support and no monthly fees for both account types. It is a digital-only bank, meaning it does not have any physical branches.
Included with a Starling sole trader account is free, HMRC-recognised Making Tax Digital (MTD) software and free invoicing software. Business Account users also receive this free invoicing software, although the MTD software is replaced by Accounting Plus, which submits VAT returns directly to HRMC, and costs £7 per month until April 2027, when it rises to £14 per month.
Starling doesn’t offer any savings accounts for business accounts but it does have Spaces, which allows you to create pots separate from your balance for things such as tax returns.
Why choose Starling?
- Free access for multiple directors
- No fees on UK payments, in or out
- No monthly account fees
- Invoicing software and MTD software included free for Sole Trader account
Trustpilot rating: 4.1/5 (46,107 reviews)
Zempler Bank
Formerly Cashplus Bank, Zempler Bank has already helped over 650,000 businesses get up and running, with its bank accounts aimed at sole traders, freelancers and SMEs.
The Business Go account has no monthly fees, although it is limited to 3 free payments and transfers per month (35p afterwards), which means it may not be suitable for small businesses who will need to make a lot of payments each month.
Instead, the Business Go account may be more suited for sole traders with minimal payments to make, such as online tutors or freelance writers.
There are no savings accounts linked to the free account, only pots to set aside money for expenses.
Right now, Zempler will reward you with £100 if you open an account and deposit £100 into your new business account. Terms and conditions apply.
Why choose Zempler Bank?
- No monthly account fees
- UK telephone support from real humans
- Integrated accounting with Xero, QuickBooks and Sage
- Free MTD tool
Trustpilot rating: 4.5/5 (16,832 reviews)
Metro Bank
Founded in 2010, Metro Bank’s Business Bank Account is for businesses with a turnover of less than £2 million, including sole traders, limited companies and start-ups.
If you’re looking to switch providers, Metro Bank are offering 31 months of no account maintenance fees, no charges on eligible transactions, no minimum balance requirements, and fee-free cash paid in, paid out, and exchanged up to £10,000 per month.
Metro Bank also offers savings deposit accounts for businesses, including a 1 year fixed-rate 3.20% AER, although higher rates can be found elsewhere.
Why choose Metro Bank?
- No monthly account fees if your balance stays at £6,000 or above for the whole month
- Branches available nationwide
- Local Business Manager at hand to help
- Borrow up to £60,000 with Business Overdraft
- Invoice support
Trustpilot rating: 2.3/5 (5,679 reviews)
Handelsbanken
Swedish challenger bank might not be a familiar name, but they rank very highly in an independent survey of SME banking, coming 4th in overall service quality, 1st for overdraft and loan services, 1st for relationship/account management, and 1st for services in branches.
If you are looking for a slick online or app experience, Handelsbanken have scored low for their digital banking, coming last in the independent survey.
Handelsbanken charge £25 per month, which may make them more suitable for larger SMEs looking for a private bank experience.
Why choose Handelsbanken?
- High overall service rating
- Dedicated account manager
- Over 100 branches across the UK
- Corporate borrowing solutions available
Trustpilot rating: 4.2/5 (175 reviews)
Unity Trust Bank
Founded in 1984, Unity Trust Bank, based in Birmingham, provides specialist business banking services for socially minded organisations. They focus on lending to organisations that help people in places that need it the most, so if your business is a social enterprise, Unity Trust Bank might be a good fit for you.
Fees start from £7 per month if your turnover is below £100,000, and Unity Trust Bank have set aside £100 million to help customers achieve their decarbonisation objectives.
Unity Trust Bank also provide business savings accounts for business current account customers:
- 1 year Fixed Term: 3.50% AER
- 32-Day Notice Account: 2.73% AER variable
- Instant Access: 1.96% AER variable
Why choose Unity Trust Bank?
- Great fit for socially-minded organisations
- Business borrowing solutions available
- Savings accounts available
- Payment solutions available through partnership with Elavon
- UK-based support team
Trustpilot rating: 4.5/5 (409 reviews)
Frequently asked questions
What is a challenger bank?
A challenger bank is a small, recently created bank that competes with traditional, longer-established banks (often called High Street banks). To differentiate themselves from larger competitors they often focus on digital solutions and can be digital-only with no branches.
Are challenger banks safe?
If you have funds deposited with a challenger bank that fails and FSCS protected, you will be covered up to £120,000 per eligible person. It’s important to note that if you are registered as a sole trader and use the same bank for your personal and business accounts, your cover is only £120,000 between the two accounts.
We have only listed challenger banks that are covered by FSCS in this article.
Which challenger bank is best for international payments?
Revolut Business is the best challenger bank for international payments because you can hold and exchange up to 25+ currencies. However, to receive 5 no-fee international transfers you must have the Grow, Scale or Enterprise plans.
Do challenger banks accept sole traders?
Starling Bank, Monzo, Zempler Bank offer business accounts for sole traders without monthly account fees. Metro Bank also has no account fees, but only if your balance stays over £6,000. Revolut Business, Cynergy Bank, Handelsbanken and Unity Trust Bank accept sole traders but have monthly account fees starting from £7 per month.
Allica Bank does not accept applications from sole traders.
Which challenger bank should I choose?
This will depend on your business. However, these are the factors you should consider when making your decision:
- Monthly account fees
- Number of free transactions per month
- Additional savings accounts linked to the bank
- Wider business solutions available with the bank (e.g. card readers or HR software)
- International payments
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