Should I switch to a digital-only bank?
A growing number of young people are choosing digital-only banks such as Revolut and N26 over traditional banks.
But despite their growing popularity, 97% of Irish people still do their main current account through a traditional retail bank.
There are great benefits to these so-called “challenger” banks, like lower fees and advanced online capabilities, but they won’t work for everyone.
We’ve looked at the pros and cons of digital-only banking.
What is a fully digital bank?
A digital-only bank doesn’t have a physical presence, which means you’ll have to do all your banking online.
For people who have never set foot in a bank, a digital-only bank might be an option.
On the other hand, if you want the choice of going to your branch to deposit a check or having a face-to-face chat with a team member, you might want to stick with one. from major retailers. banks for your current account.
Which are the most popular digital-only banks in Ireland?
Revolut and N26 are the two main players here in Ireland.
Many people already have an account with one of these offers, in addition to their checking account.
Revolut has 1.7 million Irish users and over 100,000 children use Revolut Junior.
Revolut Business is also live here.
N26 has 200,000 customers in Ireland, but a temporary waiting list is in place for new Irish customers.
A spokesperson said this was to ensure they remained within their “agreed monthly boarding volume”.
Dutch digital bank bunq has just entered the Irish market and hopes to grow its customer base.
It is the first so-called neobank to offer accounts with an Irish IBAN.
Are there digital-only Irish banks?
Although Revolut and N26 are the most talked about platforms at the moment, there are other options – and some Irish providers.
Founded in 2019, Money Jar is the only Irish fintech to offer an Irish IBAN to allow customers to conduct their daily transactions online.
It is also the only digital current account to offer cash deposit thanks to a collaboration with Payzone and can handle cross-border transfers, allowing transactions in multiple foreign currencies thanks to its partnership with Currency Cloud.
Last month it announced it was creating 100 jobs to boost the company’s expansion in Ireland and across Europe.
Money Jar customers can also speak to the Ireland-based customer service team if they have any issues, which will no doubt please many people.
The app also has a feature that lets you manage your funds by allocating money to jars.
You also have the option of locking the jars and protecting them from impulse spending.
“There are two specific types of locks, the master lock is the keeper lock where a friend or relative can be appointed to hold a key to unlock the jar,” a spokesperson explained.
“The jar can be unlocked whenever the jar’s objective is completed or the key is requested from the keeper.
“There is also a Fort Knox padlock that will freeze funds until the objective is reached. We recommend using the Fort Knox padlock wisely.”
Does it matter whether a bank has an Irish or international IBAN?
IBAN stands for “International Bank Account Number” and is used to make and receive national and international payments in euros in SEPA (Single European Payments Area) countries.
Revolut issues a Lithuanian IBAN, but has committed to providing Irish IBANs at some point this year, while N26 issues a German IBAN.
International IBANs shouldn’t cause problems for Irish customers, but unfortunately they sometimes do.
“You hear stories of utility providers and sometimes even employers not being able to recognize foreign IBANs,” said Daragh Cassidy of comparison website Bonker.ie.
“We certainly hear stories that it’s a lot harder for people to switch to Revolut and N26 because of these foreign IBANs.
“So my advice to people choosing one of these providers is first and foremost to make sure that your employer is at least able to pay you into your account – and that includes any social security payments that might come out. “, did he declare.
What is IBAN Discrimination?
Under SEPA regulations, it is illegal for an employer or business, such as a utility company, to distinguish between domestic IBANs and IBANs from any other SEPA country.
“An Irish employer or utility cannot insist that you open or maintain an Irish bank account for euro transfers,” says the Central Bank of Ireland.
But despite being illegal, IBAN discrimination still occurs.
How do digital-only banking fees compare to retail banking?
Most digital-only banks, including N26 and Revolut, have no monthly fees.
But if you’re a cash user, you might want to stick with retail banks.
With a digital-only bank, you won’t be able to deposit cash – and withdrawing money from an ATM could be expensive.
N26 allows three free ATM withdrawals per month, but after that a fee of €2 per withdrawal applies.
Revolut allows you to withdraw a maximum of €200 per month free of charge and you are only entitled to five free withdrawals per month.
Once you have reached either limit, you are charged €1 or 2% per withdrawal, whichever is greater.
For comparison, most major retail banks charge a flat monthly fee of between €4 and €6, while others charge per transaction.
Do digital-only banks offer the same services as retail banks?
Digital-only banks don’t provide all the same services as retail banks, so be sure to do your research before setting up an account.
For example, N26, Revolut and Bunq do not currently offer overdrafts.
“While we are always focused on providing better basic banking services in Ireland, we are able to innovate and bring out new products and features,” an N26 spokesperson said.
“Last year we launched N26 Insurance in Ireland and we recently introduced individual IBANs for our Spaces sub-accounts for customers in Ireland, to enable them to set up direct debits and receive incoming payments directly into their N26 spaces to easily stay on top of and categorize their expenses such as managing bills, rent, subscription payments,” the spokesperson added.
Revolut is now offering personal loans to customers in Ireland and is expected to introduce credit cards soon.
This follows the European Central Bank’s approval of Revolut’s banking license late last year.
There have also been reports that Revolut is looking to enter the mortgage market – but this has not been confirmed.
Are digital-only banks a threat to major retail banks?
There is no doubt that fully digital banks offer features that will probably never be available from major retail banks.
These features will appeal to some, and not to others.
You have to weigh the pros and cons and decide if you’re willing to forego a physical bank presence for these new features – and cheaper fees.
The proportion of the population using only digital banking services is expected to increase in the months and years to come with the exit of Ulster Bank and KBC from the market, leaving hundreds of thousands of customers looking for a new provider of banking services.
But with only 1% of people here having their main current account with a digital bank, it will be a long time before our reliance on retail banks fades.