Neobanks, challengers, the future of fintech: call them what you like but the next generation of banking is being driven by the new guys.
With Ulster Bank gone from the Irish market and KBC having one foot out the door, the new banks have an opportunity to swoop in and grab customers from traditional banking institutions, offering more flexible features and lower fees. They are also a step removed from the banking crisis of 2008 and the subsequent bailout, which has coloured many opinions of Irish banks.
There are plenty of advantages to going digital. The banks tend to have more innovative features than their traditional counterparts, forcing the incumbents to up their game or lose customers.
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With the app as the key point of contact for a digital bank, it must not only be reliable but also offer everything the customer needs in an easily accessible format. Virtual cards instead of physical ones, the ability to temporarily freeze your card if needed, and notifications every time you make a transaction have all become a common feature of banking, primarily led by the new fintechs.
You can now do more, and more quickly, on apps than you could before and the thanks for that should go to the new generation of fintechs and banks.
No branches means lower overheads for the digital banks, which means lower – or no – fees, unless you want the premium features.
However, there are some things you should be aware of. Digital banks don’t have physical branches, which means you can’t lodge cheques or cash. While cheque use has decreased dramatically, there are some occasions when you will need to lodge a cheque, for example some refunds from companies, insurance claim payouts and so on.
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It also means you can’t walk into a branch and ask for help in person, but will have to rely on webchat or phone support if you have a problem. That isn’t always ideal, especially in an emergency, as some customers have found, but most people should find it relatively easy to get their queries solved as needed.
They also don’t have an ATM network, so you are relying on other banks and private operators to pick up the slack if you need cash, and are therefore bound by their limits and fees – although with contactless payments surging every month, cash is becoming less prevalent. That should help customers stick to the monthly limits the banks impose. Overdrafts are also not an option for many of the newer bank entrants.
With that in mind, who are the main players in the digital banking space? And are they worth considering if you are looking to make a banking change?
Revolut
Once the upstart fintech, Revolut has matured somewhat since it launched in Ireland. Initially used to spend in foreign currencies without incurring large fees from your bank, and in order to split bills easily with friends, it now offers a range of services you would usually find at a traditional bank, from savings accounts to personal loans, even on its free tier account.
Revolut also gives customers the option to use its Pay Later option, splitting the cost of a purchase in three instalments. On the way in the coming months is car insurance.
The most recent introductions have been Revolut’s credit cards and joint accounts, although to avail of the latter, both parties need to have an existing personal account with Revolut.
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With the introduction of Irish Ibans for account holders, one of the last hurdles for many has been cleared. Until recently, it wasn’t unheard of to be told that a business couldn’t pay into a Revolut account on a customer’s behalf, despite it functioning as a regular bank account. This is called Iban discrimination, and has been an issue for customers trying to make or receive payments through their Revolut account. However, Revolut has just finished switching all customers in Ireland over from the previous Lithuanian ones, which should end any objections.
Aside from its free plan, which gives you five ATM withdrawals (up to a maximum of €200 a month) and currency transfers before the fees kick in, Revolut offers three paid plans.
The most basic of these, Plus, costs €3 per month and adds purchase protection for theft or accidental damage to your phone, tablet or other gadgets for 365 days after you buy them. Another benefit is event tickets protection, which will cover costs if you have to cancel your planned night out. The catch is that both of these are limited to €1,000 per year. Priority support and full access to two of Revolut’s under-18s accounts is also included.
The middle tier is Premium, costing €8 per month for unlimited foreign exchange, travel insurance and discount lounge access at the airport. Limits on the purchase protection and the event cancellation benefits increase to €2,500, with ATM withdrawals at €400.
The top tier account, Metal, gives you additional benefits, including cashback of up to 1 per cent on purchases, reduced fees on commodities trading and cover up to €2,000 of car hire excess when you travel, for €14 a month.
N26
German-founded N26 has been around a while. The digital bank has had its banking licence since 2016, which means your deposits are as protected as they would be in a traditional bank in Ireland.
The bank offers an easy-to-open account that can be – all going to plan – completed in minutes, although it might take a little longer to verify your identity.
At its most basic, N26 offers a free account, N26 Standard, that has a free virtual card and a physical card for a €10 delivery fee, contactless payments and up to three withdrawals from euro ATMs per month before fees kick in. Customers can also avail of cryptocurrencies.
More advanced benefits, such as the travel and lifestyle insurance, are reserved for the paid-for accounts, as are features that Revolut offers free of charge, such as Spaces sub accounts that can be used for saving towards a specific goal and the ability to round-up each transaction and shift the extra to one of those subaccounts.
Fees for N26 are a bit higher than Revolut, with the next tier account, N26 Smart, costing €4.90, and the top tier, N26 Metal, coming in at a hefty €16.90 a month. That will get you free withdrawals from ATMs abroad, reduced fees for cryptocurrency trading, and coverage for winter sports accidents, car rental and phone insurance.
Bunq
Last year saw the official entrance of Dutch-based digital bank Bunq to Ireland, bringing another option to people on the hunt for a new bank.
The fintech, which has a banking licence from the Dutch central bank, operates in Ireland under passporting rules and has received authorisation from the Central Bank to do so. At its launch in May 2022, it was the first of the new digital banks to offer Irish Ibans to customers, making it easier to get paid or to pay bills.
Tagging itself as the bank of the free, Bunq charges a €3 a month fee for even its most basic current account, although you can try it out free for 30 days. It also offers a free savings account.
One of the features that sets it apart from other digital banks is its “Green” account. For €18 a month, you can offset carbon emissions by having a tree planted for every €100 you spend on your cards, having a metal card instead of a plastic one and eco-friendly deposit investments.
There is a middle ground between the two: the €9 a month Easy Money plan, which includes extras such as the ability to have a card in your chosen name, banking in multiple currencies and the chance to win prizes at least once a day.
Money Jar
Irish-founded Money Jar is slightly different from the others in that, although it offers a digital current account, it is covered by an e-money licence. Your money is still covered, with the institutions relying on such licences required to safeguard the money it receives from customers and ringfence it. If something goes wrong, the money will be used to repay customers before anyone else.
It comes with a prepaid debit Mastercard that is issued by PFS Card Services, so you can only spend what is loaded into the account.
Money Jar is designed to make you think more about your spending and budgeting, but it still has all the basics of a current account. You can pay bills, set up direct debits, transfer money through Sepa payments and use your card for contactless payments. It also allows you to set up standing orders, which covers almost everything you would ask of a current account in a traditional bank.
