Atom Bank has no branch network, no personal current account, and no debit card in its current product line-up and it's still turned a profit doing things its own way. While rivals like Monzo built their business around a free current account and interchange fees, Atom went straight for lending.
Understanding how Atom Bank makes money means understanding a business model built almost entirely around one thing: the gap between what it pays savers and what it earns from mortgages and business loans.
What Atom Bank Actually Is
Atom Bank is a UK digital bank that offers savings accounts, mortgages and business loans through its app, with no personal current account and no physical branches today. It's authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA, and was co-founded by Anthony Thomson who also co-founded Metro Bank and Mark Mullen, former CEO of first direct, who remains Atom's chief executive.
Atom describes itself as "founded in 2014," and it spent its first decade based in Durham before moving into its new headquarters, the Pattern Shop in Newcastle upon Tyne's Stephenson Quarter, in autumn 2025. The bank employs nearly 600 people and describes itself as one of the UK's largest four-day working week employers.
Where Atom differs from almost every other UK challenger bank is what it deliberately left out. There's no current account or everyday spending product, just savings accounts, Atom Bank mortgages distributed through independent brokers, and secured business loans for SMEs. That narrower focus is the whole point of the Atom Bank business model: rather than chasing customers with a free transactional account and hoping to monetise them later, Atom built its business around savings and lending rather than everyday current-account banking.
How Atom Bank Makes Money: Net Interest Margin Explained
Atom Bank makes money mainly through net interest income, the gap between what it pays savers and what it earns from mortgages and business loans, which reached £100m in FY24 at a 2.8% net interest margin. Its business is overwhelmingly lending-led: most of its income is generated from mortgages and secured business lending, with net interest income capturing the difference between interest earned on those loans and the cost of funding them through customer deposits.
In its own words, from the bank's FY25 annual update: "the majority of our income came from lending. We primarily gather deposits so that we can fuel economic growth by lending; we are not a business model dependent on placing deposits at the Bank of England to make a turn at the taxpayer's expense."
That's the clearest possible summary of how Atom Bank makes money and the trend has held broadly stable:
The margin has stayed within a tight band even as the loan book has scaled, a sign that Atom's pricing on both sides of the balance sheet (what it pays savers, what it charges borrowers) has kept pace with growth rather than being squeezed by it.
The Mortgage and Business Lending Engine
Atom Bank's loan book reached £5.3 billion in FY25, up 29% year-on-year, with Atom Bank mortgages accounting for the bulk of that lending. In FY24, residential mortgage balances alone grew 55% to £3.2bn, with mortgage completions of almost £1.6bn a 20% rise in a market that had actually contracted by 25% over the same period.
Credit quality was strong during that FY24 growth: just 0.3% of residential loans were in arrears or subject to forbearance, rising to 0.7% across the whole portfolio once business lending is included, a low figure for a bank expanding its book this quickly.
Deposits are the fuel behind all of it. FY25 deposit balances grew almost a third (31%), with customer numbers up 19%, helped by Atom offering 52% more interest on instant access savings than the market average. That mechanical loop savers funding the growth of Atom Bank mortgages and business lending is central to how Atom Bank makes money: attract deposits with competitive rates, then lend that money out at a margin.
Why No Branches Means Lower Overheads
Atom Bank keeps costs low by running entirely through its app, with no branch network or physical banking locations to fund though it does maintain a customer support team, reachable by phone, chat, email and social media. As the bank puts it on its own site: "We're branch free and proud of it. As we don't have any physical locations, we can keep our overheads down and pass the savings on to you with competitive rates."
Atom argues that this branch-free structure is central to the Atom Bank business model, giving it more flexibility to offer competitive savings and lending rates than banks carrying a branch network. It's a big part of how Atom Bank makes money without needing the physical scale of a Barclays or a Lloyds.
Spanish banking group BBVA has been Atom's largest shareholder since 2015, having increased its stake through multiple funding rounds. That long-term institutional backing has given Atom the capital runway to build out its lending books without needing to chase a broader product range simply to generate more revenue lines.
Atom Bank vs Monzo: Lending-Led vs Fee-Led Models
Atom Bank and Monzo make money in fundamentally different ways: Atom leans on net interest income from lending, while Monzo built its revenue around a free current account, interchange fees and subscriptions. It's a genuinely useful comparison for understanding how challenger banks diverge once they scale.
Monzo's FY2025 (year ended 31 March 2025) results show revenue of £1.2bn, up 48% year-on-year, with profit before tax of £60.5m and an adjusted profit of £113.9m once a one-off cost from a secondary share sale is excluded. Customer deposits rose 48% to £16.6bn, and Monzo passed 12.2 million customers over the same period.
The Atom Bank vs Monzo comparison ultimately comes down to sequencing. Atom built its lending base first and is growing a wider product range from there; Monzo built the everyday spending relationship first and has since layered lending and interest income on top. Both now generate meaningful interest income but they arrived at it from opposite directions.
Is Atom Bank Safe? Regulation and FSCS Protection
Atom Bank is a PRA-authorised bank, regulated by the FCA and the PRA, and eligible deposits are covered by the Financial Services Compensation Scheme (FSCS) up to £120,000 per person, subject to the scheme's rules and limits. That £120,000 limit is a relatively recent change; it rose from £85,000 on 1 December 2025, alongside an increase in the temporary high balance limit from £1 million to £1.4 million.
Atom's Financial Services Register number is 661960, and its FSCS coverage applies per eligible account holder, meaning joint account holders are covered up to £240,000 between them. Atom operates within the same UK banking regulatory framework as other PRA-authorised deposit-taking banks for anyone weighing up whether the Atom Bank business model is trustworthy enough to bank with; that framework is the relevant benchmark, delivered here through an app rather than a branch.
Still Have Questions About Atom Bank? Start Here
1. Is Atom Bank safe?
Yes, in regulatory terms. Atom Bank is authorised by the PRA and regulated by the FCA and the PRA, and eligible deposits are protected up to £120,000 per person under the FSCS the current limit from 1 December 2025.
2. Is Atom Bank better than Monzo?
It depends on what you need. Atom Bank vs Monzo isn't really a fair fight for everyday banking, since Atom has no current account; it's built for savings, mortgages and business lending, while Monzo covers day-to-day spending as well as lending.
3. Does Atom Bank make a profit?
Yes. Atom Bank delivered its first full year of profitability, before and after tax, in FY24, with operating profit rising to £27m from £4m the year before. It's a clean illustration of how Atom Bank makes money: net interest income from lending, not fees, drives the bottom line.
Also read: How Alex Depledge Built Hassle.com Into a Sharing Economy Blueprint
Sources: Data drawn from Atom bank's own annual report releases and FY25 financial update, the Bank of England and PRA's FSCS policy statements, and Monzo's FY2025 statutory results as reported by Reuters and City A.M. Figures reflect the most recent independently verifiable data at the time of writing.
The EP+ Editorial Desk covers UK startups, founder stories, and venture capital. All editorial content is independently produced and human-reviewed before publication.
