6 Best Alternatives to Traditional Banking

Adam Rozsa

Traditional banks aren’t right for everyone. Some alternative banking providers may be able to offer financial services more conveniently, with lower fees and better features.

More and more customers are moving away from brick and mortar banks and choosing non-traditional banks and financial technology companies. Wondering what the best available alternative to banks might be? This guide to modern banking alternatives is for you.

We’ll introduce a few smart options, including the Wise account to cut costs when you send, spend, or withdraw money around the world.


What are some alternatives to big banks?

Before we get started, it’s worth noting that bank alternatives might not offer the full suite of products and services you get from a traditional bank. That means you may want to use a few different specialist providers to get the best deals on all the services that matter to you.

Not all of these services offer standard checking accounts, for example - some focus on specialist areas like ways to save money while accessing higher interest rates, others specialize in low-cost currency services, and a few provide easier ways to get loans through peer to peer lending. Let’s dive right into the best alternative banks out there.

alternative to banks

Credit unions

Credit unions are different to banks in that they’re run for the benefit of customers, rather than to generate profits for shareholders. Credit unions tend to be able to offer lower fees for their account holders, but may not have as full a range of products and services as a traditional bank might.

Credit unions serve customers who are linked by what’s known as a bond of association. That means that all customers will have something in common - like where they live, where they work or a connection with a charity. Many credit unions are local rather than national in their focus, which leads to smaller branch networks. However, there are also some extremely large credit unions like the Navy Federal Credit Union which serves employees of the armed forces, Department of Defense, veterans and their families.

If you’re thinking of choosing a credit union, you’ll first need to check which you’re eligible for. Often credit unions extend membership opportunities to the family of existing members, so checking if any of your family or household are already credit union account holders is a good way to start your research.


If you want an account to send and receive international payments, and spend without foreign transaction fees, the Wise multi-currency account may be right for you.

Wise accounts allow customers to hold 50+ currencies, send money to 80+ countries and receive payments from 30 different countries. You’ll also get a linked debit card to spend with the mid-market exchange rate all around the world. Use your Wise account to get paid, to set up local and international direct debits, and to convert your money to the currencies you need, when you need them.

Wise isn’t a bank - but Wise international payments can be up to 6x cheaper than your normal bank, thanks to their modern approach to cross-border transfers and currency exchange. You’ll always get the mid-market exchange rate with no markup, and low, transparent transaction fees.

Get a free Wise account

alternative to banks

Online banks & neobanks

Online banks and neobanks have grown enormously in popularity over the past few years, with more and more expanding their services around the world.

An online bank won’t usually have any branches at all - all services are offered online, in an app or by phone. But like a regular bank, an online bank is likely to have its own banking license. Neobanks are more often financial technology companies which work in partnership with licensed banks to keep customer money safe. However, the 2 terms are used fairly interchangeably, so you’ll want to check the details for any service you’re interested in to make sure it’s safe and legit.

Some online banks and neobanks offer specific niche services like currency exchange and international payments, credit and loans, or products for underserved customers. Other providers have a wide range of products and services, much like a regular bank might.

Wondering if a neobank is right for you? Check out these:

alternative to banks

Certificates of deposit

If you’re looking for a banking alternative because you’d like to earn a higher rate of interest on your savings, you may want to check out Certificates of Deposit (CDs). CDs are offered through many banks and credit unions, and involve you investing funds for a fixed period of time in exchange for a pre-agreed interest rate.

The rates you are offered will vary based on the provider, the amount you’re paying in, and how long you’re willing to leave it. CDs are often offered for time periods from just a few months right up to 5 years. Typically the more you invest and the longer you leave it, the better the interest rate - but there are penalties to pay if you withdraw your funds early. Get your guide to certificates of deposit here.

alternative to banks

Money market mutual funds

Certificates of Deposit require you to lock away your money for an extended period. If you want a reliable rate of return on your savings but you need to be able to access your money quickly, a money market mutual fund might be a better alternative.

Money market funds invest in high quality, highly liquid assets. Many focus on buying government backed assets for extra security and peace of mind. These funds are pretty reliable in that they normally produce a steady rate of return - but as with any investment, this isn’t guaranteed. Because the rate of return from money market funds is on the low side, the amount of money you make may also be overshadowed by overall rises in the cost of living. However, money market mutual funds remain a popular choice - not least because it’s pretty easy to get your money back any time you need it. Learn more about money market funds here.

alternative to banks

Peer-to-peer lending

Our final banking alternative, which may be useful if you need to access a loan - or if you’ve got spare cash and want a different way to invest it. Peer-to-peer lending providers like Lending Club bring lenders and borrowers together.

If you’re looking for a loan, you can apply to the provider, giving details about your situation and the money you need. Investors - who are just regular people in most cases - will then offer loans, which they fund with their savings. In many cases, the peer-to-peer lending site itself will provide a credit rating service, so investors can choose to lend to people with a risk profile they’re comfortable with. Overall, this can mean that investors get a better rate of return compared to a regular bank - and borrowers who wouldn’t necessarily qualify for a bank personal loan can access the funds they need.

Bottom line

There are a broad range of alternatives to traditional banks, which can often offer some or all of the financial services you’d expect to fund from a brick and mortar establishment, with lower fees or more features. Depending on what exactly you’re looking for, one or more of these banking alternatives may mean you can manage your money more conveniently and pay less overall.

Use this rundown of the 6 best alternatives to traditional banks to start your research - and see how much you can save by picking alternative and specialist providers for the financial services you use most often.

*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

Money without borders

Find out more

Tips, news and updates for your location