At the moment, businesses in Ireland have three main options for banking – Bank of Ireland, AIB and Ulster bank. However, the emerging industry of fintech is bringing waves of change to how we do banking and with it come challenger banks entering the market. These new financial products answer modern needs and pose a serious threat to our traditional banking institutions. As a nation, we have learnt the hard way to harbour no loyalty to our banks and therefore, should a better product come on the market there is nothing but a small bit of administration to stop us switching services.
Although fintech is coming on leaps and bounds, we believe there is still room for improvement before we can depend on one product for all our personal and business banking needs. Let’s have a closer look at some of the challenger banks that have entered the Irish market and find out what they can do for you.
Fintech and challenger banks in the Irish market 2019
This challenger bank started with personal accounts, scooping up 40,000 customers in just their first year. Now they’ve expanded to business, with some of our clients using their business accounts. Our team have tested it out and what we like about it is that it handles currencies very well. Revolut promises a low cost per conversion by guaranteeing a conversion rate very close to the base conversion rate. This is completely the opposite to how the ‘pillar’ banking systems in Ireland work, as they seem to overcharge as a matter of course.
There is also rapid payments available between your Revolut account and other bank accounts. This means that you don’t have to wait three to five days for clearance systems that is typical of banks. Instead, you can expect 90% of payments to go through within a day and a half. The technology powering Revolut is very agile and they have already set up integrations with Xero. Setting up a business account is free.
However, Revolut does come with limitations. You cannot set up an overdraft yet and there is no face-to-face customer service available, which means you can’t deposite cheques or cash because there is no one for you to go to see. This means that you probably can’t do all your banking with this challenger bank, but it is definitely a case of watch this space. Revolut doesn’t have a full EU license yet but, being from the UK, it is regulated by the UK Financial Conduct Authority. They have been issued a banking license by Lithuania in Dec 12th 2018 which allows Revolut to conduct business across the EU.
N26, or Number 26 as it was formerly called, is a German challenger bank that is fully licensed by the European Central Bank and locally regulated by the Central Bank of Ireland. They have only recently added business accounts to their service offering and it is aimed at sole traders. They too boast of low conversion rates for foreign currencies, claiming to be 6X cheaper than regular banks. N26 has the prestige of being Europe’s most valuable start-up with a $2.7 billion valuation.
N26 Business is positioned for individuals and the self-employed, so right now its services won’t adequately cater for the needs of an established company. The dominating characteristic of N26’s design is simplicity. It’s very similar to the personal account offering but with a few added extras such as a free business MasterCard and 0.1% cashback.
Mobile first banking is about ease of use and gaining more control over your finances, which is why with N26 you have the ability to filter your transactions with tags and categories while having access to real-time notifications about payments. You can view your banking information from your smartphone or from the web app, whatever suits you and export your transactions as a CSV file. There is no facility to lodge cash or cheques.
If you’re wondering where the Irish challenger banks are at, just look to Fire. Set up by Realex founder Colm Lyon, Fire is regulated by the Central Bank of Ireland and is licenced by the European Union under the new legislation Payment Initiation Service Provider (PISP) which was recently introduced to open up banking in Ireland. Fire provides a business account service for all sizes and types of company, from start-ups to charities to corporations. They have offices in both Dublin and London.
With Fire you can open multiple accounts in Euro or Sterling so it is easy to segregate your funds and manage your expenses. Money transfers from one account to another in the Eurozone occur instantaneously. They offer as many debit cards as you need which can be linked to both sterling and euro accounts, avoiding unnecessary bank fees. Once again, there is no facility to lodge cash or cheques yet.
Fintech products are built with integration in mind and Fire is no different with an API that easily connects to major accounting services, such as Xero, FreeAgent, Quickbooks and Sage One. With this kind of powerful technology at your fingertips, Fire enables you to automate payments on a large scale, speed up reconciliations and access real-time insights.
Monzo is a tech unicorn being one of the fastest-growing digital only banks with offices in London, Cardiff and Las Vegas. With just four years in business, Monzo now has over 1.3 million customers and a valuation of £1 billion. With investors such as Stripe backing them, we only expect continued growth for the startup in the coming year.
Monzo offers a current account service accessible through your smartphone and a debit card facility. Their aim is to make managing your money easier than ever and their impressive app provides intuitive visuals which clearly show you where your money is coming from and where it is going. You can set up a “Saving Pot” which earns 1% p.a. in interest and you can create budgets that alert you when you’re reaching your set limit. You can also apply for an overdraft and request customer service through a callback feature on the app.
At the moment, Monzo only offers personal accounts. However, on their website you can see that they are in the process of trialling business accounts. Opening an account with Monzo is free and the service is regulated by the FCA. Although Monzo is not available in Ireland yet, it is expanding fast and should be here in the near future.
There is no doubt that fintech is going to provide the next generation of banking. It is swiftly becoming an old-fashioned concept to rely on one service provider for all your banking needs and the early-adopters amongst us are already cherry-picking their banking services from a number of sources. However, we predict there will be a tipping point when these challenger banks can offer full banking services which will result in many people jumping ship from traditional banks for a more user-friendly, economical and modern service.