A new online bank that describes itself as "the bank in your pocket" plans to launch in the UK later this year after winning its banking licence.
Durham-based bank Atom, which will use mobile apps and will not run high street branches, secured its licence from the Bank of England, paving the way for the group to offer a full range of banking services from current accounts, personal lending and mortgages to individuals and small businesses.
It is one of several challenger banks to emerge since the financial crisis in competition with dominant high street rivals such as Barclays and HSBC.
Other new entrants include Metro Bank, Virgin Money and Aldermore.
Atom is being set up by chairman Anthony Thomson, who is also a founder and former chairman at Metro Bank. It is led by chief executive Mark Mullen, who was previously the boss at phone and internet bank First Direct.
They have raised £25 million to fund start-up costs and are now looking to raise another £100 million in the City to finance its balance sheet lending. The firm is backed by superstar investor Neil Woodford.
The bank has 100 staff, and plans to recruit another 60 later this year. Its head office and a call centre are both based in Durham.
Mr Mullen has big targets and said that from a standing start it is "possible" that his bank may have five million current accounts by 2020, which is 5% of the UK market.
He said: "It is entirely possible if you are brave enough and good enough to transform the industry."
He added: "Trust in banks is pretty low, and the customer needs to have a better experience."
Mr Mullen said the lender will target 18 to 34-year-olds, but added that this type of technology would appeal to a broad range of people over this age group.
Just last week Royal Bank of Scotland suffered an embarrassing IT glitch that saw 600,000 payments fail to go through to customers.
The industry has been dogged by such failures as ageing IT systems become ever more complex.
Mr Mullen said: "I can't guarantee we will never have an IT problem, but we are building and testing a bespoke system. We are in a hurry to get it right, we are not in a hurry to launch."
Atom said it was on track for a launch in the second half of this year. It added that it planned to break even over the next three to five years.
Once you have opened a current account with a bank or other lender, you will get a steady flow of emails, letters (and maybe phone calls) offering you a savings account, loan, mortgage, ISA etc to go with it. But while it may be tempting to have everything in one place, it's better to do the legwork and shop around for the best financial products. You can compare interest rates on loans and savings accounts in the 'best buy' tables in the newspapers, or look online on comparison sites. Remember you can still easily transfer your money between accounts, even if they are not with the same financial institution.
Whether you want to apply for a new mortgage or refinance an existing one, your bank will probably be very happy to give you an instant quote in the hope that you will go with them. They may not tell you that you can shop around at other lenders. A mortgage broker can give you an overview of the best interest rates on offer, and might be able to cut you an even better deal him/herself.
Want to cash in your jars of change that are sitting on your shelves at home? Many banks are not very keen on coins. They often only take it from their own customers. You will have to sort it into different denominations and put the coins in the bank's bags in set amounts (for example, £1 for coppers, £5 for silver, etc). Some banks only take a limited number of bags a day, or won't take any at busy times. Others take a different view: HSBC has free coin deposit machines in many larger branches where you pour your jar of coins into the machine and it counts them and automatically credits your account. Barclays, NatWest and RBS also have machines in large branches in city centres.
Bank employees now have a duty to point out that they only advise on the bank's products and don't offer independent financial advice. What they won't tell you is that even the advice they give you about the bank's own products should be treated cautiously. Bank staff are often undertrained, underpaid and overworked. (You could ask for the employee's qualifications before getting advice.) So do your own research and/or find an independent financial adviser.
Nothing is set in stone. Your bank won't tell you this, but sometimes it will waive a fee, for example an overdraft or an ATM fee, depending on the circumstances. You have nothing to lose by asking, if you can argue persuasively why they should waive the fee. Citizens Advice says your bank should treat you sympathetically if you can show financial hardship.
As stated in the previous slide, some things are negotiable – such as interest rates or waiving fees – if you can make a good case for it. In that instance, talking to an employee in person is better than filling in a form online.
If your account is overdrawn and you get paid, your bank could use this money to pay off your overdraft without your permission. However, you have a right to ask them not to do this so you can pay your rent or mortgage first. This is called first right of appropriation. You have to ask your bank in writing, and you'll need to write to them with new instructions every time money gets paid into your account. Make sure you write 'first right of appropriation' in your letter.
If money is mistakenly credited to your account, your bank or building society can recover the money, assuming they do this within a reasonable time. But you may be allowed to keep the money, for example if you didn't realise the bank had made a mistake and spent the money in good faith. You would have to prove that you spent it in such a way that it would be unfair to ask you to pay it back. You can complain to the Financial Ombudsman if you think your lender is being unfair in asking you to repay the money.
If you do have to pay it back, you could try to reach an agreement with your bank to pay it back in instalments without interest being added.
The Financial Ombudsman Service has more advice on what happens when payments have been credited to the wrong account. If you did something wrong - for example, by entering the wrong account number - rather than the bank, the Financial Ombudsman may still uphold your complaint. They consider whether the financial institution made it clear to the consumer that only the bank sort code and account number are used to process the payment, rather than the name of the payee. They will also ask whether the lender should have realised that the consumer had made mistake, and once the problem came to light, did the firm take reasonable steps to try to get the money back from the recipient.
If too much is deducted from your account, your lender may have to refund the full amount of the payment. For example, if the money is taken through a direct debit or credit card payment for a hotel room or car rental. When deciding whether the debit was reasonable, the bank or building society will take into account your previous spending pattern. But the bank doesn't have to refund the payment if you agreed the amount beforehand or were informed of the payment by your lender at least four weeks before.
If you don't have enough money in your account to cover a direct debit payment, your bank may not make the payment. It doesn't have to tell you that the payment hasn't been made, so the onus is on you to keep checking your account. If, on the other hand, the payment goes through, you may be charged for an unauthorised overdraft.