Up and Atom: the bank’s chairman, Anthony Thomson, is targeting young and older savers. Photograph: Darren Staples/Reuters

Your iPhone can now be your bank branch as a result of a new digital banking service that launched on Tuesday.

Based in Durham, Atom Bank has become the first of a number of aspiring digital-only banks to start offering products. It has no branches or vast call centres. All contact is via an app, through which customers are able to talk to a 30-strong service team.

Its first products are a one-year fixed saver offering an interest rate of 2% and a two-year savings product with a 2.2% rate, but if you want to put your money away you need to have signed up already. New customers will need to register and wait to sign up.

Anthony Thomson, Atom’s chairman, says savings might not be the most obvious start for a bank likely to be aiming at young users, but he believes older people are also interested in digital banking.

Current accounts, loans and mortgages should be launched by the end of the year and a service for Android users is also in development. Loans for small businesses are being provided through intermediaries for now.

It is far from clear how quickly digital-only banking will take off. “With Britain’s banking habits becoming increasingly digital, smartphones are fast becoming the new local branch for many consumers, and the 2% offered for Atom Bank’s one-year fixed savings account could be competitive enough to persuade those still on the fence about controlling their finances from their phones to take the plunge,” said Matt Sanders, Gocompare.com’s money spokesperson.

Thomson also launched Metro Bank, which was heralded as the first new high street bank for a century when it opened six years ago. Opening a bank with branches now though would be like BT installing phone boxes, he said.

Metro recently floated on the stock market and Atom – backed by the veteran City investor Neil Woodford and in which the Spanish bank BBVA has a 29.9% stake – could follow suit in three years’ time. Thomson says, though, that he will not be involved in any new banking startups.