A new player joins the whole digital transformation that the banking sector is undergoing: The Neo-banks, totally digital banks
The digital transformation is reaching all sectors of society, and the financial sector has been one of the most changed. The speed with which banks have adapted to new technologies has been incredible.
Most banks have already redefined and diversified many of the ways in which they offer their services. The change has served to allow people to make their transactions from the comfort of their home or office, and to have fewer visits to the offices of a bank. So there is no turning back. Digital banking is already a fact, so much so that now there are virtual banking entities that have been given the name of Neo-banks.
How do Neo-banks differ from Fintechs?
In the context of this new digital era, countless forms of virtual enterprises have emerged that have known how to take advantage of new technologies. Among them we can mention the Fintechs. These are companies dedicated to offering different financial services and products, through the use of ICT (Information and Communication Technologies).
The term fintech is the union of the words ‘finance’ and ‘technology’. So it is obvious that they are companies whose services are related to technology and money. The aim of fintech is to serve as intermediaries in the performance of various financial operations.
An example of fintech business is popular PayPal; due to its main activity (facilitating payments and transfers through the Internet). Fintech is a company that took advantage of the delay that traditional banking had in offering its clients faster financial services through the use of digital technologies.
Key factors to consider
The main requirement is that it can be opened completely remotely and that it is a free product that does not require maintenance costs. In addition to these I have taken into account these other factors:
Type of product:
Due to the number of different business models where there are cards with no associated account, only account, only card…can be confusing. You have to take into account the card issuer (Visa, MasterCard, Maestro) and the type of business. You’ll see neobanks, financial fintech, digital banks etc. Some of them are also “challenger banks”. I remind you that the challenger banks are neo-banks or digital banks that have a banking license and therefore are guaranteed by the guarantee fund and deposits of the country of foundation. This gives extra and important security, does it mean that the rest of the alternatives are unsafe? Far from it, all the options analyzed here are regulated by strict rules and laws that affect the handling of electronic money.
Country and foundation
The digital revolution and globalization has meant that now from your home you can open an online bank account in another country. The country of foundation is relevant because the authority of that country (FGD) would back the money in case of any problem. Remember that with these options your money will be protected.
Today the model that is imposed on many of the products is the fremium, in this comparison we will emphasize the free. If there are payment options you will see their main characteristics. The good thing is that there is always a minimum product that is free and on that will turn the comparison.
Card commissions when paying in different currencies
This is one of the great advantages when opening this type of account. In such a globalized world it is important that the banking product has an advantage when trading with other currencies. For those of us who have lived abroad or are travelers, we value the importance of this factor and I consider it relevant, since for traditional banking it usually has a high cost. The best exchange rate is the interbank one, since Visa and MasterCard apply a minimum commission when changing the currency you use.
Card commissions when withdrawing cash from the ATM
Regardless of where you are, the need to withdraw money from the ATM still exists. The options analyzed here are not based on branches, therefore, the possibilities are quite varied. Just like the fees for currency exchange, check that the ATM does not apply additional fees. Many of the options proposed return that commission instantly, however, it is one of the factors you will have to watch out for more carefully every time you go to a cash machine.
Taking all these factors into account, I am going to analyze different banking products. You will find products of all kinds, from checking accounts to savings accounts. What is really important is the security of the bank and the country.
The discharge of all these products is online and in a few days, you have the contracted product fully operational. I will show you the main features of each product so you can choose the best option for you.
Revolut: The UK’s leading neo-bank
What countries are supported?
They are currently only supporting legal residents of the European Economic Area (EEA), Australia, Canada, Singapore, Switzerland, Japan and the United States.
Product type: Neo-bank with banking license (Challenger bank). Bank account with MasterCard / Visa card.
Country and foundation: England 2015.
Price plans: Free, Plus (£2.99/month) Premium (£6.99/month), Metal (£12.99/month).
Commission when paying in other currency: Free (Official interbank exchange rate)
Foreign ATM withdrawal commission: Free for the basic version (up to £200 or equivalent) worldwide. Black version unlimited withdrawals worldwide (up to £400 or equivalent).
Revolut is another pioneer and veteran neobank and offers a model with a free version and premium versions. The free version is more than enough, as you can withdraw up to £200 per month without commission worldwide and pay without commission in 150 different currencies. In addition, it also allows free transfers in major currencies without any commission. You will even be able to take out health insurance for days or protect your cell phone for little money, a very useful service for trips abroad.
If you opt for the premium version (£6.99 per month) you can extend the free withdrawals up to £400 and you will have free health insurance when travelling abroad. You will also be able to access free promotions for premium customers and instant transfers in 25 currencies. A complete product in any of its versions and that includes a broker to invest without commissions. The most expensive plan, which is Revolut Metal has a metal design card, a cashback on your transactions and other exclusive services.
Opening an account at Revolut is very simple, you only need your ID and a phone, it can only be managed through your mobile application.
THE BEST: Complete product in the free version. Withdrawal, currency exchange and instant transfers in many currencies and with interbank rate. Wonderful and growing application. Broker without commissions. Be able to contract medical insurance abroad from £1 per day.
THE WORST: Its premium version can be expensive, you need to squeeze its advantages.
FOR WHOM IT IS RECOMMENDED: For any person, it is a complete product with many free services like being able to invest without commissions. Attractive also for people who trade with several currencies, since the interbank rate always allows the best exchange rate. The premium version can be interesting for big travellers and digital nomads since it offers health insurance and other premium services.
Transferwise: The borderless account with Iban in several countries
What countries are supported?
United States of America, Europe (all SEPA countries), Switzerland, Liechtenstein, United Kingdom, Japan, United Arab Emirates, Turkey, Singapore, New Zealand, Malaysia, Indonesia, India, Hong Kong, Canada, Brazil, Australia,Bulgaria
Product type: Neo-bank without banking license. Debit MasterCard with bank account.
Country and foundation: United Kingdom 2010.
Price plans: Free, cost according to currency exchange operations.
Commission when paying in other currency: Variable (Official interbank exchange rate).
Foreign ATM withdrawal commission: Free, up to 200£.
Transferwise is a well-known service for exchanging different currencies. Its totally transparent and minimal commissions when sending transfers in all currencies are its main asset. However, in this case, the interesting thing is the services offered by the multi-currency or borderless account of TransferWise.
This is an account that allows international bank accounts to receive payments from all over the world, without commissions. It offers a free MasterCard and service to enjoy several accounts in different currencies:
- An account number and a BSB code for Australia.
- An account number and a sort code for the United Kingdom.
- A European IBAN.
- An account number and a routing number for the USA.
- A New Zealand account number.
- It’s a great way to receive payments from the UK, USA, Australia, New Zealand and any country in the Eurozone, and at no cost to you or anyone else sending you money.
THE BEST: Possibility to get 5 multi-currency accounts in the same application. Great for exchanging money for your low currency exchange fees
THE WORST: Little to highlight.
FOR WHOM IT IS RECOMMENDED: It’s the only easy and simple option I know for opening accounts with a non-European Iban. For travellers who visit those countries or who frequently visit different countries, it is a cheap and simple way to save on fees and to have local accounts to receive payments and make transfers.
Country and foundation: Norway 2003
What countries are supported?
Norway, Denmark, Sweden, Luxembourg
The DnB NOR Bank Group is the largest entity within the DnB NOR Group and the largest bank in Norway, offering services to companies, individual clients, the stock market and the public sector.
The company also has multiple offices in Sweden, Denmark, Finland, Poland, Estonia, Latvia and Lithuania
Their mobile services make it easy for you to check your account balance, transfer money, pay bills and be updated in the currency and stock market.
Their banking packages include a current account, card and Internet bank services. The banking services you use the most, such as debit card purchases and bill payments using the Internet bank are free of charge.
You can use the Internet banking service to securely transfer funds to a payee’s account in another country.
They help you make the right choices when you register the payment to ensure that it is executed in the best possible manner and the way you want.
Europe/SEPA payment is used for:
- Payments to Europe,
in EUR or the currency of the receiving country
– see which countries
General payment is used for:
- Payments to countries outside Europe
- Payments to Europe when the Europe/SEPA option cannot be used
DNB mobile app
Their app makes banking easy. With the DNB app you can:
- Check your account balance without having to log on
- Pay bills and transfer between your own accounts
- Block and replace cards
- Get an overview of pending payments
Country and foundation: Japan 2008
What countries are supported?
Only residents of Japan can open an account at Jibun Bank
Jibun Bank Corporation, a joint venture between KDDI, a leading Japanese information and communications company and Bank of Tokyo-Mitsubishi UFJ, and Oracle Financial Services Software, has won the IT Implementation Award from Asian Banker for the “Best Basic Banking Services Project”.
Jibun Bank also received an Honorable Mention for being the “Most Innovative Project” which recognizes the innovation achieved through this implementation.
The IT Implementation Awards given by Asian Banker are among the most prestigious in the financial services sector, recognizing best practices arising from the strategic use of technology by banks. Now in its third year, the awards were presented this month at the 2009 Asian Banker Summit in Beijing, China.
Jibun Bank is the first to use a new and successful business model
Since its launch in June 2008, Jibun Bank’s popularity has increased rapidly and the bank has already attracted more than 500,000 customers.
Jibun is the first bank in the world to use cell phones as its main access channel; its customers use cell phones to open new accounts and use the bank’s services.
Jibun Bank’s comprehensive services, activated through Oracle FLEXCUBE Core Banking, include deposits in Japanese currency, electronic payments, loans, as well as credit cards and fund transfers.
What countries are supported?
These are some of the countries in which it operates, the complete list can be found HERE
In some countries services are limited
EEA Countries, United Kingdom, Switzerland, Russian Federation, Monaco, Luxembourg, Liechtenstein, Isle of Man, Georgia, Faroe Islands, Andorra – AFRICA: United Republic of Tanzania, South Africa, Nigeria, Kenya, Algeria – ASIA: Vietnam, Uzbekistan, United Arab Emirates, Turkmenistan, Turkey, Thailand, Tajikistan, Singapore, Philippines, Qatar, Oman, Malaysia, Kyrgyzstan, Kuwait, Republic of Korea, Kazakhstan, Israel, Indonesia, India, Hong Kong, Brunei Darussalam, Armenia – AMERICA: Virgin Islands British, Saint Lucia, Saint Kitts and Nevis, Puerto Rico, Panama, Mexico, Grenada, Dominica, Costa Rica, Cayman Islands, Canada, Brazil, Bermuda, Belize, Barbados, Antigua and Barbuda – OCEANIA: Samoa, New Zealand, Fiji, Australia
! Does not provide services in the United States of America or Japan
Product type: Exchange market, debit card, negotiable assets and purse functions
Country and foundation: United Kingdom 2014
Price plans: Rates are subject to the exchange market. There is a monthly maintenance fee of 1.00 pounds / 1.20 euros / 1.50 dollars associated with the use of the Wirex application. In addition, users should note that when making the exchange between cryptocurrencies, or from cryptocurrencies to fiat and vice versa, Wirex will add a slight premium over the market rate. This is how Wirex generates income, instead of imposing direct trading rates.
Although not related to Wirex, users must also anticipate a negligible transaction fee (less than £2) which is used to reward “miners” for verifying their transaction if they move or trade cryptocurrencies.
Foreign ATM withdrawal commission: EEA: 1.75 GBP/2.25 EUR/2.50 USD
International: 2.25 GBP/2.75 EUR/3.50 USD – APAC: FREE
Starting from August 17: FREE up to 400 SGD per month, 2% thereafter
Wirex allows you to spend your crypto-currencies anywhere with a crypto-debit card, and to trade between multiple crypto-currencies and trust currencies within your account. It aims to make real-world spending of crypto-currencies affordable by offering services such as a digital crypto-currency wallet (compatible with Bitcoin, Ethereum, Litecoin and Ripple/XRP), and its exchange service that supports nearly 50 crypto-currencies.
What does this platform offer?
Crypto-currency exchange. It allows you to exchange up to 50 altcoins (including Dash, Monero and others) in Bitcoin, Litecoin, Ethereum and XRP/Ripple through the mobile application.
Crypto-currency and fiduciary coins wallet. Allows users to store and exchange between Bitcoin, Litecoin, XRP/Ripple, ETH, GBP, USD and EUR in the mobile and desktop wallet.
Visa debit card. Wirex can be used to complete online and offline payments, as well as to use ATMs, like a regular debit card. Wirex uses the funds stored in your Wirex wallet to make all transactions.
THE BEST: Physical VISA debit cards, with which you can spend your daily crypto currencies, Virtual cards available, Extensive mobile functionality, Allows storage and exchange of GBP, EUR, USD, Bitcoin, Ethereum, Litecoin, and Ripple/XRP
THE WORST: Currently not available in some countries (e.g., United States, India, etc.), no telephone customer service
What countries are supported?
Strike is currently only offered in the United States and only supports the US dollar.
Product type: Strike is a payments application developed by Zap Solutions, Inc., allowing users to send and receive money instantly around the world, for free.
Country and foundation: USA, 2020
Price plans: Strike does not charge fees for its services. The fees displayed when making an onchain transaction are the Bitcoin network fees. Onchain fees are determined by the free market. This fee is irrespective of the amount of btc being sent, if you were to send $10 or $10,000,000 worth of BTC, the fee would remain the same. Strike has no control over onchain fees.Lightning network fees are minimal and at most will cost a few cents per transaction. We recommend using Lightning to carry out transactions where possible as there is little to no fee associated with a Lightning payment.
What makes Strike Global innovative, even though it does not differ much from traditional fintech applications, is that it uses Lightning Network for settlement. In this, payments can be instantaneous and at a fraction of the commission cost of traditional payment mechanisms.
This means that this instrument is a peer-to-peer network conceived as a second layer system for Bitcoin that allows for almost instantaneous micropayments. In this network, writing on the block chain is valid exclusively for managing the opening and closing of bidirectional payment channels. It also allows the interconnection between different block chains.
Strike Global has two types of transfers, depending on the location of the recipient. For countries with a developed banking system, Strike allows users to send payments without going through Bitcoin (BTC) themselves. Thus, Strike will automatically withdraw the money from the user’s bank account, convert it to BTC, and then change it back to the trust currency of the recipient’s banking system.
The system is based largely on the changed Bitcoin infrastructure that currently exists, which allows for cheaper and easier remittances if users are willing to make them manually.
The startup partnered with Bittrex to incorporate the exchange users into Strike and Lightning Network. In the first quarter of 2021, it expects to complete its public and private beta, as well as issue Strike Visa cards in the United States, while in the second quarter, it expects to launch them in the European Union and the United Kingdom.