What is the UK’s best bank?

The UK financial services industry is rich and complex, with more than 1,500 banks, building societies, credit unions, insurers and investment firms regulated by the Prudential Regulation Authority, the Bank of England’s supervisory arm.

Of these, around 150 are banks incorporated in the UK itself, including the UK operations of some foreign-owned banks such as the Spanish banking group Santander.

Some of the biggest banks in the UK include:

  • HSBC
  • Royal Bank of Scotland
  • Lloyds TSB
  • Halifax
  • Bank of Scotland
  • Barclays
  • Santander
  • Co-operative Bank

There are also many banks that are incorporated outside the European Economic Area but which are authorised to accept deposits through branches in the UK – more than 80, in fact – and about the same number again that are incorporated inside the EEA and authorised to accept deposits in the UK.

Finally, about 30 banks have permission to open branches in the UK but not to accept deposits.

What about building societies?

There are still nearly 50 building societies in the UK and these offer financial services similar to banks, with current and savings accounts, as well as lending products like mortgages.

Since the 1980s, it has been possible for building societies to convert to become banks if their members vote in favour of doing so, and in the 1990s several major building societies did so, including:

  • Abbey National (1989)
  • Halifax (1997)
  • Alliance & Leicester (1997)
  • Northern Rock (1997)
  • Woolwich (1997)
  • Bradford & Bingley (1999)

Of these, Abbey National, Alliance & Leicester and Bradford & Bingley were all later acquired by Santander, The Woolwich was acquired by Barclays, Halifax is now part of the Lloyds Banking Group, and Northern Rock was eventually acquired by Virgin Money following its high-profile collapse in September 2007.

So which bank is best?

The best bank for you depends on your circumstances and what you want from your account – for example, some people prefer the ‘safety net’ of a large overdraft, while others prefer not to have that temptation to run up large personal debts.

Some banks offer premium accounts that may be better if you have a substantial regular income, or perks like bundled travel insurance, but you’ll usually pay an extra monthly fee for these.

In practice when you are thinking of opening a new bank account, it’s always worth comparing several options – and not just from your current bank, but from all the major high street banks, local building societies and online operators too.

How does the Arro Personal Account compare?

The Arro Personal Account is not a bank account, but it gives you an online money account with many of the same capabilities, for example access to Faster Payments to send money online, and Direct Debit (not currently available, but it’s coming soon!) for regular payments.

Many of the transactions you carry out with your Arro Personal Account are fee-free, including deposits made into the account, and we make sure any account fees are published in full so you know if you will be charged anything, for example if you make a withdrawal in a foreign currency.

Unlike the banks, we do not take customers’ deposits and invest them to make a profit – all customer deposits with Arro Money are ringfenced in a separate account which means not only that we cannot spend that money, but also that it is protected from any future claims by our creditors.

You may remember the queues of people outside Northern Rock in September 2007 as they tried to get their money out of their accounts, or the expansion of the Financial Services Compensation Scheme to cover accountholders’ losses in the financial crisis that followed.

With Arro, your deposits are fully protected, not by a third party scheme or compensation claims, but because we keep them safe and separate, so your money is always there if you choose to withdraw it.

How to get an Arro Personal Account

Opening a new Arro Personal Account is easy, we guarantee to accept all eligible applications (subject to our Fair Fit criteria) and there is no fee for applying.

With no overdraft or credit card – just a MasterCard® debit card to spend from your account – there is no need for a credit check, no black mark on your credit file, and less risk of finding yourself in debt.

Arro Money is not a bank, but we believe our account is up there with some of the best as a way to manage your own money with access to plenty of ways to pay people and withdraw cash, all in a way that is designed to suit you.