Banking and finance is of paramount importance in todays society. Income is paid into bank accounts, day to day expenses are often paid by debit card, and bank transfers ensure the payment of fixed costs such as utilities and rent or mortgage. Globalization and virtual economies trigger a sentiment for several people all around the world to seek efficient financial solutions outside the standard perimeters of their home country.
Financial Technology (FinTech) utilizes fast changing developments to create innovative financial solutions. At this time, most FinTech firms do not have a banking license. They qualify as electronic money institutions. The difference between the two is mainly regulatory. As such, banks insure deposits for qualifying customers, where electronic money institutions simply provide an IBAN number with transfer facilities.
Currently, there are two well-known FinTech firms in Europe that potentially qualify as electronic money institutions and have a banking license. These licenses prevent such firms from operating in all countries. As such, residents of specific countries can open bank accounts with FinTech firms. This relates to N26 from Germany and Revolut from Lithuania.
Both N26 and Revolut provide their customers with an effective mobile application to make instant bank transfers to connected accounts within the same framework. Foreign currency transactions are cost-efficient, and the card allows for instant payments and withdrawals. These FinTech banks have no physical branches and are therefore applicable for standard banking facilities. Cash withdrawals are free of charge once per month. Yet, ATM withdrawals from global ATM machines are not free of charge. To open an account with N26 you can follow this link. For bank account opening at Revolut, click here. You may wish to open an account at both firms for maximum flexibility and protection.
Digital transformation creates shortcuts and enables flexible and efficient solutions throughout society. The financial industry is disrupted by combined efforts in telecommunication, digitalization and financial technology. As such traditional banking is subject to radical change in the near future. While the focus is currently on effective and efficient improvements, traditional relation-based and branch-centered banking is not (yet) covered by FinTech. Something to take into consideration before opening a FinTech bank account.