Digital bank Monzo is foraying into the mobile market with the launch of a phone plan that gets cheaper the longer the customer stays.
The bank's customers can join a waiting list for the mobile service built on the Virgin O2 network and due to launch in the summer.
Monzo's entry into the market will intensify competition between phone providers who are already being challenged by newer players such as Revolut and Klarna.
The bank, which has more than 15 million customers, said its phone plan challenges the traditional mobile model by rewarding, rather than penalizing, long-term loyalty.
Customers can get 5% off their monthly bill each year, resulting in up to a 30% discount over time.
It offers three plans using a digital simulation and with different data allowances, and cost £8, £12 and £20 a month.
From 2025, new rules have cracked down on phone and broadband providers who increase prices mid-contract without notice.
But some firms have continued to be criticized for effectively penalizing loyal customers with inflation-linked mid-contract price rises, and chancellor Rachel Reeves wrote to bosses last year to demand more protection for consumers.
Like other new providers, Monzo aims to get around the issue of mid-contract price increases by designing plans that don't lock people in for a year and don't charge an exit fee, but that doesn't mean it can't increase the prices of its plans at any time.
In the UK, only four providers operate their own network infrastructure: EE, Virgin Media O2 and Vodafone and Three.
But numerous smaller providers, known as virtual networks, take advantage of their signals: Monzo uses the Virgin Media O2 network for its service.
Financial firm Revolut began rolling out a phone plan earlier this year that works on the Vodafone network and offers 5G, unlimited calls and texts in the UK for £12.50 a month.
