Coconut is a new digital finance service aimed solely at helping freelancers and the self-employed manage their money. Unlike most other new, digital-only finance services it is not a challenger bank – it works solely to help the self-employed manage the unique financial challenges that working for oneself can bring.
Coconut Products and Services
Coconut offers business banking current accounts to freelancers. It is currently in beta and is therefore only available to sole traders using iPhones, but the company plans to roll it out to Android users and limited companies in the near future.
Currently, a free current account is the only available product but a paid account, to be named ‘Grow’, is expected soon. This account will cost £4.95 / month and will have a number of additional features including the ability to send invoices and to share access to your finances with an accountant.
Both the paid and free accounts incur a number of charges, including a £1 charge every time money is withdrawn (£2 for withdrawals made abroad) and £4 if your card needs to be replaced. The account also has a maximum limit of £40,000.
As well as functioning as a business current account Coconut has several unique features aimed specifically at its audience of freelancers, including keeping a record of invoices (both paid and unpaid), a running estimate of the taxes customers can expect to pay at the end of the year and a record of all spending.
Coconut is app-only; customers are sent a card in the post, but there are no physical branches and no online banking facility.
Coconut uses Amazon Web Service for cloud infrastructure and the database is fully encrypted, even when the app is not being used. Accounts are protected using two-factor authentication. Coconut also run regular third-party penetration tests and security vulnerability scans to ensure account safety.
Coconut is not a bank and so deposits are not covered by the Financial Services Compensation Scheme (FSCS).