New digital bank Viola Black to launch this month

Viola Black functions as a prepaid card with multi-currency accounts and offers paid account services rather than having a free basic account.

In January, they launched an advertising campaign to pitch themselves against Monzo but have been quiet since.

Their statements suggest they've been focusing on app security and have taken extra time to fully test the integrity of the app.

© Violablack.com

What are Viola Black offering?

It's important to note that Viola Black aren't a bank in the traditional sense, and instead offer a prepaid card to their customers which must be loaded with money prior to use.

The prepaid card will come with an account number and will be managed via the accompanying app where customers can transfer money into the account.

Viola Black seem keen to emphasise the multi-currency uses of the account, offering the capability of making card payments abroad without fees.

This functionality comes at a price, however, with a minimum £4 per month fee and a list of extra fees related to cash withdrawals, foreign ATM withdrawals an inactivity fee if customers don't use the card for four months.

As Viola Black doesn't operate as a traditional current account, there are no overdraft facilities, nor can customers set up direct debits or standing orders.

It's worth highlighting, too, that deposits to the prepaid card are not protected by the Financial Services Compensation Scheme (FSCS) as they are not a proper bank.

That said, money is being held in a ringfenced account by Viola to ensure it is protected even if Viola itself collapses.

This is a similar arrangement to the one Loot customers faced when the challenger app went into administration earlier this year.

Learn more about prepaid cards in our dedicated guide.

Viola versus Monzo

When Viola first began promoting their banking product back in January, they did so with a marketing campaign containing the strapline 'Move Over Monzo'.

Their claim to be a 'modern money management tool' seems to be predicated on their spending and budgeting tools, although these are available with other banking apps and non-banking apps like Emma and Cleo tool.

So, while Viola may have ambitions of challenging Monzo, it's worth remembering they are completely different types of banking app as things stand.

Monzo have expanded massively in the last year and became the first digital challenger to offer ISAs when they launched a partnership with OakNorth in April.

Yet Monzo themselves started life as a prepaid card provider and evolved to a fully-fledged bank following their initial growth.

Saturated marketplace?

Viola Black are the latest entrant in a challenger marketplace that has various digital apps seeming to offer similar services.

We covered some of the bigger names in our guide to mobile only banks, but there are many smaller apps around hoping to snap up customers.

In terms of what they offer, Viola is most like Revolut, a digital prepaid account launched in 2015 and targeted mainly to the foreign exchange market.

It doesn't seem that Viola are launching with any features which make them dramatically different from their competitors, so it will be interesting to see how they fare.

However, it's worth noting that the streamlined nature of digital banking accounts and apps mean they might not be around forever in their current form.

For example, Fidor announced earlier this month they would be ending their UK operations in September following uncertainties in the UK marketplace.

This demonstrates how simple it can be for challenger banks to cut ties with UK customers and move elsewhere, something that may deter some customers from using them.

Learn more about how mobile only banks work in our dedicated guide.