With free cards and a vast number of services, digital banks’ offers are intriguing and sometimes scary. Let’s analyze the advantages and disadvantages of these newcomers who shake a banking sector hitherto frozen.
N26, Revolut, or Orange Bank … You have certainly heard about these new banks. They want to dust off a sector that was sorely lacking in innovation. Between start-ups and traditional banking institutions, they are shaking the landscape with digital and mobile services.
Above all, the digital banks offer to show off incredibly low rates (when they are not free). You have to know everything about this new trend that shakes the market.
Digital banks offer an overview
Neo-bank, mobile bank, fintech company … different names exist to define start-ups that provide banking services. They all have one thing in common: they are inspired by large companies that have also changed their sector in depth.
We take examples of Uber for the transport, Netflix, for movies, or even Spotify for the music. The digital banks offer a break with what traditional banks do. Indeed they succeed in diversifying by offering complete online services, even life insurance at a discounted price.
The differences with traditional banks
Among the most notable differences: the free. No monthly payment or account management fees, one of the first aspects of the digital banks’ offers. You can register without fees, receive your card, and use it (or not) without paying one penny.
Another advantage put forward by N26 or Revolut: the totally free of payments abroad. This is a total revolution proposed here by the digital banks’ offers. No exchange rate when traveling.
Finally, they usually give the customer full powers through just an application. That replaces the traditional bank counselor! Viewing your balance in real-time, changing your limit, borrowing money, or making a transfer abroad takes only a few seconds. And it requires no paperwork or extended administrative verification. A sense of freedom that traditional banks do not offer.
Open an account is also a breeze: everything is done from the app with your mobile or your tablet. And asking to receive your card does not require eternal discussion with a counselor. Result of digital banks offers: anyone can get an account in a minute. We are far from the long and documented procedures of traditional cases.
Is a digital bank a real bank?
Not all are considered as institutional banks or linked to a big bank group. But all of them can be used as a real bank. Let’s explain that. To be considered an institutional bank, a Fin-start-up must have a license. It’s costly and extremely long to obtain from the European Central Bank. So companies with its digital banks’ offers can take the decision to be legally considered as a “payment institution.” And we are ready to go!
Thus, Revolut is well-known established in Europe. They recently launched its US application license to reach the North American market. They hope to get a favorable response in the coming weeks. Orange Bank and N26 both have their own banking licenses in Europe. Orange Cash or Boon are dependent on the German bank Wirecard, for lack of their personal consent.
Should we favor a bank with a license? Not certainly. Being realized as an institutional bank in Europe offers many benefits to a bank. But the digital banks’ offers are not depending on this status. With over a million customers, it is proof that we can operate without a license. For the customer, the difference is actually … invisible.
Digital banks offer and Technological innovations?
Often designed by young entrepreneurs outside the financial society, these firms, and its digital banks’ offers are primarily start-ups. What we can call form the Fintech. And they dream more of Google than the Royal Bank of Scotland. Revolut, for example, refuses the name of the bank and considers its application as its main product, not its bank card.
Among the digital banks’ offers, technological innovations are apparent. There are amazing intuitive apps, very regularly updated. They are pioneers to test new services (Face ID on iPhone, chatbots…). These services are clearly intended for users seeking reforms. Even if they try now to attract a more large clientele.
N26 and Orange Bank are also among the first banks to have adopted Apple Pay, the mobile payment service of the iPhone. Google Pay is also from the party. Another example: Revolut attacked Bitcoin by launching finance options in crypto-currencies in its app, at the request of its users.
Digital banks offer and saving
All these banks have one thing in common: free. Almost too good to be real, right? In fact, it is not always assured here. Example: if you do not make three pays a month at Orange Bank, the service will charge you 5 euros. Same as withdrawing cash money at the ATM. Check the limits. A practice is similar to that displayed by N26 and other digital banks offers.
Revolut offers a 100% free account without any specific conditions of use. All of these services of digital banks provide, however, charge particular fees, such as cash withdrawals abroad, but have the merit of being clear and limiting their customers beforehand. But for the majority of users, using these accounts for free is entirely possible.
Finally, N26 and Revolut both offer high-end offers called N26 Black and Revolut Premium. There are added services such as extended warranty, medical insurance, or better customer service, for just over 5 euros per month. Another example? The Revolut Premium offer promises access to airport lounges for soon. Sums much lower than similar services in regular banks.
Opening an account is no problem, and you have the choice of the current digital banks’ offers. You can, of course, use your new card parallel to the usual one you already have.
Also, account closure is possible at any time. It must be known, however, that at the moment, the few flaws of mobile banks can repel future customers.
For example, in France, where checks are still relevant, you have to be ready to live without opening an account at N26 or Revolut, which does not cash them. Only Orange Bank has not banned checks and even offers its own checkbook.
Another big reminder: you do not have to talk to an annoying bank adviser. Everything goes through the appeal or over the phone services. The digital banks offer to simplify your financial life with the English Revolut or the German N26.
Your card, your smartphone, what else..?