App-Only Banks Rise in Europe and Aim at Traditional Lenders
nytimes.com
nytimes.com
By the way, if you're in the EU, bunq is a similar mobile challenger bank but based in the Netherlands and serving all of SEPA (if you're in the Eurozone you can use them as your main bank; I live in a non-Euro EU country so hold an account just for the hell of it).
Disclaimer: I have multiple friends who work at Monzo.
Disclaimer: I work for a cybersecurity startup. Also a Monzo customer.
I don't think this is an example of "not taking security seriously". No incumbent bank has done this, because it's expensive to issue new cards.
I have to say the app is just amazing, none of the traditional banks even come close to what Monzo provide. There is nothing overly complex to it - but it just works. Shows you things you would expect a bank to be able to show you, for example the name of the shop where you made a purchase and it's location. Rather than some random name of a parent company.
Sending money to friends has also become so easy now, I make Monzo to Monzo payments on a weekly basis it just works.
I've heard they're great to work for too. Would be interested in working there myself one day.
i would hope that this data can be obfuscated or hidden if the end user desires it.
You can check out open jobs here - http://monzo.com/careers
As for the jobs, fully remote would be ideal, but at least you're offering it at all :). London is such an expensive place, even spending 1 week out of 5 there would be £££.
I live in a nearby non Euro country, and I'm thinking of closing my Halifax (traditional) bank account before Brexit.
I kept the Halifax account for foreign spending and cash, as the Mastercard has no fees for this. The bank account is free, typical in the UK for personal accounts.
Bunq looks to charge €8/month, is that right? I don't think I'd get that much value from it, and going from £0/year to €96/year for my secondary account isn't great.
is there a similar option for people who have citizenship of an EU country but are not physically present in EU?
https://www.tsb.co.uk/current-accounts/faqs/opening-a-curren...
If you tax residence is outside of the UK it will generate more paperwork for the bank and they might decide to close your account. Especially the new banks might not have the infrastructure required to handle that. This is because banks have to report income to the tax country to avoid money laundering and tax evasion.
American citizens have this problem because the US is always a tax residence regardless of where you live so a lot of banks don't want to provide financial service to them. And IRS is particularly bad with paperwork.
If you are thinking of moving abroad, use a big bank like Barclays or HSBC and it shouldn't be a problem.
[1] https://www.revolut.com/uk/pricing
[2] https://www.independent.co.uk/news/business/indyventure/revo...
I've considered bunq but couldn't really make sense out of their monthly fee (at least for me) once compared to N26. At the moment I've got them as my main bank account and Revolut for exchanging money quickly with friends and family.
Does that mean that for individuals there's only a "premium" plan but not standard plan? So premium (with 25 accounts and three cards!) is actually the standard plan?
Once downgraded:
- All your cards will be deactivated. They will be reactivated if you decide to go back to Premium.
- All features exclusive to bunq Premium (such as Apple Pay and Android Tap & Pay) will be blocked.
- You won't be able to open new bunq bank accounts as long as you are using bunq Free.
- Your API keys will be deactivated.
- You will still have access to all your bunq bank accounts and will be able to send, receive and request money normally.
So it's not really a common "standard" plan if you ask me.
I was under the understanding that the 9,99 would be all inclusive, but at the same time it seems there is a fee for "Paying a direct debit.", not sure what is comprised within that term, does that mean every time we pay with a card?
No - a "direct debit" in banking is where you give, e.g. Vodafone, your bank details and permission that they may debit your account once a month to pay your phone bill. For completeness, a "standing order" is similar - a monthly recurring payment to someone else.
The primary difference is that, with a direct debit, the company can change the amount to be paid each month - e.g. if you go over your plan and incur extra changes, they can just debit those from your account automatically.
Edit: oh, apparently bunq does.
If they ever get a free or cheaper plan (like €1/month for 1 card and 1 iban) I'd jump on it without thinking twice.
It is combination of stock broker and credit union (nowadays full-fledged bank) that was founded by bunch of CS graduates. They had internet access to account from the start, originally supported by custom made authentication device and 20 line officially supported shellscript that emulated the device by means of bunch of few "openssl something" commands. They have rest API that really is REST (GET account movements, PUT bunch of payment orders, no bullshit) and when they didn't have API they docummented format of movement notification emails and officially acknowledged and supported machine parsing of such messages (to the order of providing example code).
Somehow I think that EU's PTS2 and such things tries to force banks to do this, but solves the problem from the wrong end.
For instance, right now I'm figuring out how to simply query my account balance in a non-interactive way, just to have it displayed on my machine. I basically have two options - try to drive a headless browser through full login process and scrap the main site, or reverse engineer whatever mechanism they have that lets their mobile app show my balance without logging in. Either way, I'm worried the bank will sack my account for breach of TOS, or "attempt at hacking", or some other bullshit.
Really, why can't I just get a token and query some API?
Fio mobile app is terrible and it feels like it's from 2012.
I recently opened an account with DKB, another German direct bank, but with a shitty app. They offer everything I paid N26 5,90€ month to month (which they raised to 9,90€, can you imagine that) and much more like overnight money and a stock depot, for the tradeoff of having a shitter app, which is basically a webview loading their webpage.
The next thing Europe needs is a Robinhood-like app for fee-free trading.
Revolut is working on this one I believe. :)
Would it give a percentage of every transaction to assorted charities instead? Steal from the rich, give to the poor, after all.
Definitely. For generic Europeans wanting to invest in stock market you don't have much choice. There are couple of archaic and/or dodgy brokers with shitty apps (or no apps at all, just some bad websites built decade ago an never upgraded).
Anyway, why do you hold IB to be best consumer-oriented broker available anywhere?
Edit: Actually I was looking at forex brokers, stocks is probably different in that a lot of people want access to the US market.
What's wrong with Degiro[1], founded in 2013, and available in 18 European countries?
TransferWise has significantly better fees than Revolut for currency conversion and also offers a card.
Do you have a few data points by chance?
I have both cards and I'm trying to figure it out (mostly for CHFEUR). At first glance it seems that TransferWise fees give you a rate that is as good or a little better than MasterCard (Visa is typically quite a bit more expensive). Also during weekends, TansferWise should beat Revolut. However when FX markets are open, it's not clear (mid-market + fee with TW, bid/ask rates with Revolut afaik).
When I tried to convert EUR to ZAR, they wanted 25€ in flat fees, a percentage and had a worse conversion rate than xe who had no fees and a better conversion rate.
I've never paid a cent for my EU € banking needs for twenty years. Decent web based banking. Real people in a branch a 5 minute walk away. Free SEPA € transactions, free debit and credit card.
But you can easily open an online account with Boursorama, ING, Fortuneo and lot of others with no fee (some require specific income or assets tho).
> Real people in a branch a 5 minute walk away.
None of the major banks in the UK meet this critetia (well, maybe in London). Most of the banks are located in city centres, manned 9-to5 Mon to Friday (which is when im working of course), and most of them tell you to do your banking online/using the in-branch machines.
> free debit and credit card.
Again,country specific. Ireland used to charge 2.50/cadx, and now charges 0.12c a transaction, up to 2.50 per year.
Instant account update on purchases (I mean instant, I get a little ding on my phone before the tx has even gone thru at pos). No charges. Can use throughout Europe with no additional cost. No branches no bricks and mortar to subsidise.
In case anyone is interested, the EU has been taking an active interest in disrupting banking monopolies. Check out PSD2! [1]
[1] https://en.wikipedia.org/wiki/Payment_Services_Directive#Rev...
Theres the added advantage that because N26 are German all savings up to €100k are insured by the German government.
I heard it said that these aren't actual "banks" per se ... whereas N26 is, and is regulated as such.
Just another reason to feel a bit more secure.
Though the additional services Revolut offer have piqued my interest. In particular crypto payments.
The -ve with N26 is that they don't offer much beyond standard current a/c services. No loans or savings for instance, or overdraft, which is all totally fine for what I used it for. I'll fall back on the B&M bitches for the harder stuff.
They offer all of these in Germany. Afaik extending credit lines is regulated differently across the EU and it might take time to scale it out. I don't understand why they don't offer savings and investments in more countries though, given they are only an intermediary.
> I heard it said that these aren't actual "banks" per se
IMHO, the test of an "actual bank" in the UK is if the service is regulated by the FCSA, and your money protected (up to £85K) by that.
You can check here https://protected.fscs.org.uk/tools/check-your-money-is-prot...
But the tl;dr is: Monzo is a bank, Starling is a bank. But Revolut is not a bank. Monese is not a bank.
N26 is not UK-based, so this test does not apply. But it does seem to be a bank by German standards:
https://en.wikipedia.org/wiki/N26_(bank)#History "In July 2016 it rebranded as N26 Bank, having received its own banking license from BaFin."
The parent comment indicates that N26 operates under a similar deposit guarantee: "because N26 are German all savings up to €100k are insured by the German government."
[1] https://media.ccc.de/v/33c3-7969-shut_up_and_take_my_money
I'm not too concerned by this to be honest. Since the last 10 years banking is regulated to such a painful degree that such concerns are minutiae.
This isn't bitcoin or a stage coach hurtling through the wild west. The only way money is leaving my account is by way of my chip & pin card, which is no easier or difficult than any other, and subject to the same protections, or by wire transfer which is easily detected and reversed.
Beyond that, it's the bank's problem, ergo their underwriters and if they weren't happy they wouldnt be underwriting. Even then, if the bank does go tits up my deposits are guaranteed.
That said, of course there may be risks of bad actors within the bank itself, but even in that regard I'm at least as safe as I am with any other bank.
This does affect N26's own risk-profile and they'd do well to address it as such it would affect their bottom line but as a customer I have little more to fear than I have with any other bank.
I'd expect they have a lot of latitude to play with on the risk side though vs B&M banks because they don't have any actual physical exposure.
That's only true, if the bank itself was aware of its security issues, which N26 was not. From the bank's point of view, you had just started using its mobile app on a new device after successfully proving your identity without any suspicious activity in the logs.
Obviously if this is the case it's an issue for them to address and to not do so puts them at risk of negligence.
So I reckon I'm safe enough!
I wonder is there a waiver in the T&C that says you’re responsible for any losses of that kind ...
Would make for an interesting court case if not!
I still think any such losses are on the bank itself. It would be incumbent upon them to refund, especially given that the details of such an attack are in the public domain!
That's really the only thing I need over traditional banking. I can handle the rest for myself from there. Even a read-only API would do.
Starling: https://developer.starlingbank.com/
With my old high street bank their app is ok, but often have to refer to the web based service for more extensive features. That made me anxious about using an app-only bank. 1 year in and I have never thought "hmmm wish I could do this on my laptop". You do everything via the app, and it is intuitive.
Since the only time I go into a bank's branch is to open the initial account and then never again, I have no need for them anymore. App-only is fine for me.
I do wonder how services like Curve affects the app-only banks though.
As other commenters have noted, these new banks often have great customer experience. But they don't do much lending. For example, as of February this year, Monzo's loan book totalled 160,000 GBP [0]
Disclosure: I co-founded a UK-based fintech lending business (www.oakam.com). We're hiring PMs, Data Scientists and Software Engineers. Message me if you might want to work on expanding access to credit, and increasing financial inclusion.
[0] https://monzo.com/annual-report/2018/ (ctrl+F 'Loans and advances to customers')
But it's true that we're intending to stay relatively balance-sheet light - the aim is to offer a "financial hub", plugging in third-party products to a central current account (or "checking account" for our US friends).
(I'm the CEO of Monzo)
Funny enough, I am also a long time TSB customer which is a bank mentioned in the article. Ignoring their huge mess around migrating users to new platform (made by Spanish bank that owns them now), their mobile app is surprisingly good.
Given I travel a lot and have lived in multiple countries, I have several bank accounts so I don't rely on any single one.
You can access a web site via ubiquitous, open-standards compliant software known as web browers. This means you can use the service from any operating system/computing platform you wish, existing or future, provided it implements said standards.
It's obviously important that we resist transitioning to a world where core life activities like commerce and banking requires running proprietary software on a finite set of supported proprietary systems.
This is fundamentally about our freedom.
No or os will be able to compete with them because the backing apps don't work.
Now OSes can stagnate and become worse because they know you'll sick to them because you have no choice.
A new player would need to create a OS and a bank to compete. And probably more stuff.
Furthermore, I am going to make a crazy prediction. I think we will see a substantial revival of PCs in the coming decade as people start finding out there are some things mobile phones or tables will just never be able to do. Only thing needed is an open source operating system with good UI because Windows is obviously not a way forward.
Let me illustrate this by outlining a bunch of small tasks I, as a music collector, am confronted with several times a week:
- buy a bunch of releases from bandcamp or other digital stores
- download them
- extract them
- if necessary convert them to Apple Lossless (ALAC) at 44.1 KHz / 16 Bit
- check and adjust the meta data / tags of the files and have them renamed accordingly
- move them to my NAS from where they are served to various devices and players around the house
All of these tasks are fairly simple and should be easily handled by an iPad, yet the OS and lack of a real file browser is limiting the device's abilities to such an extent that I have to get back to my desktop to handle these mundane duties.
You might argue that my use case is a very niche one, the ways in which computers are used are made of countless niche applications and tasks, which repeatedly show the limitations of tablets and phones, despite their potential.
[1] https://tmkk.undo.jp/xld/index_e.html [2] https://www.nightbirdsevolve.com/meta/
Maybe the bigger question I have here is what the core innovation is. I use revolut for the cheap currency exchanges, but there’s no reason any other bank couldn’t offer that. Maybe the market for such services is just very small, or most traditional banks make more money by selling add on services (mortgages, say) based on a very tight relationship (vs revolut’s more temporary/limited usage model).
Great app, great user experience but would be interesting to see how profitable these challenger banks are.
Still, as a skeptic, I can’t shake the thought that they’re just building market share at low profitability based on VC overexuberance.
The app is much more secure especially on iPhone or modern androids with crypto enclave or what ever it is called. With that even if a customer installs malicious app and grant it a lot of permission, the bank app can still be unaffected.
We're approaching a point of lockdown where Google and Apple win the war against general-purpose computing. I don't know what I'll do then, perhaps just keep a vanilla Android device in a drawer purely for running apps that I need? But I'd better keep it updated or else the apps may refuse to run. And with an app-only bank that's a scary scenario.
"crypto enclave" isn't a silver bullet that magically prevents you from getting hacked. it might keep your signing keys from being divulged, but if the attacker has root access (or jailbroken), there's nothing preventing the attacker from getting the enclave to sign whatever request it wants. at the very least it can corrupt the legitimate app's memory to force it to make a transfer.
the security comes from sandboxing, not secure element/enclave.
I suspect it comes down to security and development effort. Modern mobile devices are secure and can be trusted somewhat for authentication, and focusing on a great app for two platforms might be the best use of development resources.
This talk from 2016 shows how they cut corners when it comes to security in order to achieve this: https://media.ccc.de/v/33c3-7969-shut_up_and_take_my_money
Most French banks don't do that, for example.
For a SEPA transfer, you input the code of the account you want to transfer money to, then the amount and various optional messages and transactions codes if you want, then click "submit" and it's done.
https://en.m.wikipedia.org/wiki/Transaction_authentication_n...
For me in the UK to move money I need to generate a TAN using a SecureID token the TAN is generated by using the secret in the token and digits of the account number I need to transfer money too.
The same SecureID also generates OTP for 2FA login.
But there are other TAN schemes including pregenerated lists and TANs sent over SMS or TANs which are generated by using the smartcard in your debit card.
Looking to make a switch right now..
http://olivernash.org/2015/11/18/security-theatre-at-allied-...
Disclaimer: Monzo & Starling Bank customer.
this is the reasoning that prevents me storing any more than trivial amounts in these app only banks
a magistrate understands a paper statement on company stationary
The UK banking sector is not unregulated. You would expect, that when a company is certified by the relevant authority that they would have to comply with standards and reporting requirements.
getting onto the FSCS protection is not trivial, if it was then Revolut would also be on it.
You can check here https://protected.fscs.org.uk/tools/check-your-money-is-prot...
Btw another reason I kept 1st direct was to pay in cheques which the government still insists on using, but Monzo lets you do that with a photo of the cheque now I believe. Can you imagine 1st direct ever being that modern? Their website still opens in a popup and tells you no to use the back button!
The one time I had a problem with Monzo they sorted me out over chat inside the app in ~2 minutes.
What do you think they can do if their internal network is down? Nothing more then apologize and offer you a coffee.
When the TSB problem happened, going to the branch was useless.
Security is a concern, so I wouldn't keep my life savings in it, but they are pretty on the ball compared to the established banks. I know of two absolutely massive banks that have absolutely no clue of what IP addresses they own, let alone what services they have running on them.
I've also used both Monzo and Revolut, and I definitely prefer Revolut. I really recommend anyone in Europe tries them! The crypto integration is interesting, but day to day stuff like an automatic savings pot and interbank rate transfers are really good.
Revolut does this. It also works out 2-3% cheaper for converting SEK to Euros than either SEB or Nordea.
Unfortunately, as it's UK based, it's not at all clear if Revolut will continue to exist in its current form after brexit.
They recently applied for a banking license in Belgium.
You can check here https://protected.fscs.org.uk/tools/check-your-money-is-prot...
Revolut is still a useful foreign exchange service - I find it great for holiday money, but it's not the same kind of account as a bank's current account, and it would be a mistake to use it as if it was.
1) https://en.wikipedia.org/wiki/Financial_Services_Compensatio...
Which one is the best?
-Starling
-TransferWise Borderless Business account
-Revolution Business
Do any of them offer interest on cash balances on business account?
I don't quite understand this logic. Sure there was a very inconvenient failure. But the reaction is the move your money away from established banks with thousands of employees to an app-based startup? No, not for me, thank you.
You seem to be trying to signal that you're conservative. Thus in this scenario, you would leave TSB and go to another established bank with thousands of employees - and maybe, despite their legacy systems, you'd be fine.
The original person in the example though has reached the point where they're leaving and they're willing to try something new. They won't actually be at greater risk of loss, since there's a well established ombudsman and UK banks have a guarantee (FSCS), so then it becomes a matter of inconvenience from any bank mistakes (until they're rectified) and the level of features - with modern systems, it's entirely likely the startup app-only bank will do better on both these points. So it's not the sort of gamble you seem to think it is after all...
Don't get me wrong - I'm firmly in the "don't fix it if it ain't broke" camp and have no problem at all with 40-year-old COBOL code handling my transactions. But in my experience plenty of this code is broke and the amount of manual intervention to make things work would have a lot of people keeping their money under their mattress if they saw it first hand.
Food for thought.
They haven't eliminated it, they just moved from Lloyds cruft to Sabadell cruft.
I have found "Expat" specific banks but they all seem to be of the "You have to be this rich to use" type.
It's a topic that isn't discussed a lot but I'm sure many startups are already working on awesome projects with the PTS2 API spec.