I’ve got to admit, I was pretty shocked with the news yesterday that KBC was kicking off plans to exit the Irish market. The news comes just weeks after Ulster Bank announced the same. Ireland isn’t exactly rich with banking options and now customers are left to choose from the remaining “big three” banks of Allied Irish Bank (AIB), Bank of Ireland (BOI) and Permanent TSB (PTSB). There are two further alternatives in modern “online-only” banks or neobanks like N26 and Revolut, but are they really a full alternative to traditional banks?
Are Revolut And N26 Proper Banks?
While both organisations let you manage your money, give you a bank card and let you buy online or in stores, there are some subtle differences between the two.
N26 Is A Bank
N26 launched as Number 26 back in 2013 and today has its headquarters in Berlin. In 2016, N26 was awarded a European Banking License and this year passed the 7 million customers mark. Even at that, N26 is definitely the smaller of the two online-only banks and it’s estimated that just over 200,000 of their customers are in Ireland.
This is a bit of a surprise given they’ve been around a little longer and offer some more of the official banking protection not available with Revolut.
If you are an N26 customer, your money is protected by the German Deposit Guarantee Scheme which means up to €100k of your money is protected.
Revolut Is Not A Bank
Revolut is absolutely the more dominant of the two companies. Founded in 2015 and now with 15 million customers, 1.2 million of which are in Ireland, Revolut has grown popular largely owing to their refer a friend approach. Today, it’s unlikely that grabbing a drink or splitting to price of dinner couldn’t be easily done with everyone at the table by just sayings “Revolut?”.
Revolut offers everything you’d expect for day-to-day banking. You can your cards, IBAN and can even buy stocks, commodities, cryptocurrency and get rewards for using your card to pay for stuff.
I have both N26 (for business) and Revolut for day-to-day banking. Revolut’s app is incredible and packed full of rich features like vaults, Revolut Junior for your kids and the ability to split bills. My favourite feature is being able to pay internationally and always get the best exchange rate. I’ve tested that from New York to Seoul and love it.
As slick as Revolut is, and it is slick, one reason some have apprehensions about going all-in is down to their banking license. Revolut operates under a Lithuanian banking license, much like N26 operates under a German licence. European Union laws dictate that you can “passport” or transfer a banking license from one EU nation to another and this is what N26 did to properly become a bank in Ireland.
Revolut hasn’t passport their licence from Lithuania which means they’re not a proper bank in Ireland.
This all means that your money isn’t protected by a €100k Deposit Guarantee Scheme. Instead you rely on “safe guarding” and which might not be so straight forward or transparent.
Can I Use Revolut Instead Of KBC Or Ulster Bank?
This is very much an “it depends” scenario.
For day-to-day banking, there’s no reason why you couldn’t really use Revolut instead of KBC and Ulster Bank. Generally speaking, I always have a bit of money in my Revolut. Anywhere from 10% to 30% of my monthly wages go into Revolut for daily spending. For now, at least, the rest stays in my “proper” KBC bank account. The reason for this is that I have some, not a lot, of savings. If you have money every month that you don’t touch, from €500 to €50k and beyond, you probably shouldn’t leave it sitting in Revolut, just in case.
N26, on the other hand, would be fine for some savings as it’s got the German Deposit Guarantee Scheme up to €100k.
If you have, or want to have, access to credit facilities, these “online-only” banks are of no use to you. While this is the next big obvious area of expansion and development for neobanks, credit cards, loads and mortgages are still reserved for the big traditional players like BOI, AIB and PTSB. It’s almost certain that offering credit is just around the corner for the new online-only banks, but right now it’s not an option.
Cheques And Branches
Because of their online-only nature being one of the reasons they can cut many costs and remove excessive fees and the likes, neobanks don’t have physical branches. If you have an issue with Revolut, for example, you might have to engage a chatbot or chat assistant. I’ve had good experience with the care teams of Revolut and N26, but this won’t be for all.
Also, if you want to lodge cash or cash a cheque (which I actually did have to do last week) it doesn’t look like there’ll ever be a way to do so.
This all means that chances are, you’ll continue to require a traditional bank while using neo