Bunq, Revolut and N26 are online banks for which you only need an app and a bank card. These three fintech companies are just one of many of these companies that currently operate in Europe. In The Netherlands, Bunq broke open the market two years ago and Revolut and N26 have joined since then (Thole, 2017). With these online banks it is made extremely easy to open an account, you only need to install the app and make an account. That is it! So, will they replace the classic banks as ABN Amro, ING and Rabobank?
For now, the online banks only compete with the classic banks on the front of payment accounts, it is not possible yet to open saving accounts, get a loan or get insurances. But they offer these payment accounts at an extremely competitive way. To open an account, you are charged nothing or maybe the sending costs of the card, but other than that nothing. The way that they are making money is by charging when you are taking cash out of the machine more than a said amount of times. Or by charging transactions with non-euro countries (Thole, 2017). However, what for example Revolut and N26 offer is favourable exchange rates. A Revolut account can hold up to 26 different currencies and you can save around 6% by sending money to a foreign account (Revolut). N26 partnered up with Transferwise and makes international transfers 6 times cheaper than a traditional bank (N26). Thus, the main reason to join these fintech companies is because they offer great services and convenience for cheap prices.
So, there are definitely advantages to these new online banks, but they are not able yet to compete with the complete product offering of the traditional banks. Since many people like to have all their payment accounts, saving accounts and insurances under one roof they will not complete replace the classic banks.
References
N26 (n.d.) International transfers into 19 foreign currencies. Retrieved from: https://next.n26.com/en-eu/bank-account
Revolut (n.d.) Wereldwijd geld overmaken. Retrieved from: https://www.revolut.com/nl/
Thole, H. (2017, October 7). Bunq, Revolut en N26: deze nieuwe online banken dagen ABN, Rabo en ING uit. Business Insider. Retrieved from: https://www.businessinsider.nl/bunq-revolut-n26-fintech-banken-rekening-openen/
Hello Nike,
Nice to read your article, it is an interesting topic. I think you have a point in saying they will replace traditional banks, however, you see many banks innovate recently. For example, ABN AMRO recently launched a new application called “Grip” and they also introduced “Tikkie” which is really popular. If they keep on innovating, I believe they will continue to exist.
Hi Niké, interesting post about the internet banks as an alternative to traditional banks. An interesting addition might be the recent negative news on banks like Bunq. 3 months ago the bank suddenly charged its users a monthly fee for the use of their services. One of the main claims that the bank made was that they did not want to invest with the money of their clients, however, as Bunq was granted a “banking permit”, they have to find a way to make more money than their clients initially put in. Do you have any idea how Bunq could find an alternative way to do this? And do you think that they will survive once the hype is over?
Source: Visser, T. (2017) Hoe Bunq het bankwezen wilden veranderen en faalde. Retrieved from: https://big.nl/hoe-bunq-het-bankwezen-wilde-veranderen-en-faalde/
Hi Niké thank you very much for your thoughtful and interesting blog post!
I agree with your assertion that these FinTech companies provide value by separating parts of the traditional banking business and then becoming better at what they do through technological advancements. However, baking is now making a step towards extending their offerings to consumers and leveraging their brand value to enter new markets with ‘beyond banking’ products. This could for instance be a save cloud storage that a bank sells to its customers. Such a product can be sold more easily by a bank because the bank already has a very large customer base to whom it is much easier to cross sell and banks are nevertheless still a institution that is perceived as trustworthy.
So in conclusion, I believe that banks still have a very strategical positioning because of their huge network and access to data and customers to whom they can cross sell and will therefore not be replaced by FinTechs. Nevertheless, I do also believe that the emergence of FinTechs in the retailer banking sector has led to over all better products. One the one hand because these companies make more consumer focused products but on the other hand because this has led banks to invest more money in technology.