Due to the current situation of two of our retail banks leaving the Irish market, and many other bank branch closures, it is time to decide how to do your day to day banking.
Is there another bank branch, An Post or a local Credit Union nearby? Are you digitally ‘savvy’ enough to deal with the likes of Revolut or N26 – both fintechs – with all product offerings online?
A fintech is a computer programme or other technology used to support or enable banking and financial services.
Dear Money Mentor
I live in rural Ireland. We have a bank in our local town which is due to close which means our nearest branch will now be over 20km away.
I have been doing my banking there all my life. I have a current account and a savings account at the bank and all my family bank there too. Since I retired I do most things using cash or my debit card. I rarely use my cheque book. I get the old age pension, and I also have a small personal pension.
I handed over the family farm many years ago to my son who lives nearby. I still help out a little on the farm, especially during calving season. I do not wish to move banks but would consider the Credit Union or An Post, both know me well. I keep hearing about these other ‘banks’, such as Revolut or N26, but I do not know enough about them. Would my money be safe there and do they offer the same facilities or is it difficult to open an account with them?
I am undecided about closing my existing bank accounts and would appreciate any advice.
I am sorry to hear about your local bank but it is great to have the post office and the Credit Union available to you. An Post offers current accounts, debit cards, credit cards, loans and a range of bill paying services, so it may suit you well as an alternative to your bank. An Post already operates the agency to provide day to day services for AIB, Ulster Bank and more recently, Bank of Ireland customers, where there is no local branches nearby. Therefore, it will not be necessary for you to close your bank accounts as you can continue with your bank by using the An Post facilities, if you wish.
The Credit Union also offers current accounts, debit cards and online banking, as well as its savings and loans products, which may suit you. The charges on this current account could be higher than the bank. I assume you may have free banking already. The maintenance charge on a credit union current account is €48 per year, and you can only make five free ATM withdrawals per month, otherwise you will be charged 50c per transaction. The sheer volume of savings since COVID-19 pandemic has forced Credit Unions to put a limit on the deposits level they will accept.
Both N26 and Revolut are fintechs, which basically means they have no physical presence, and provide a digital offering with everything online. Tom, you will need to be comfortable with using apps to consider these options.
N26 is a German digital bank with over 200,000 customers in Ireland. It holds a full banking licence which it has “passported” to Ireland. This protects you under the Consumer Protection Code (CPC) and the Deposit Guarantee Scheme (DGS), which guarantees your money up to €100,000. When you open an account with N26 you can receive lodgements, make payments by direct debit and standing orders just like an Irish bank account. The N26 free version does not have any regular maintenance charges or day-to-day transaction fees (unless you exceed the allowed ATM withdrawals). The app is efficient and user friendly, but it will not suit someone who likes physical retail branches, or those who use cash and cheques a lot.
Revolut is a UK fintech company, with over one million customers in Ireland. It is considered a digital “e-money institution”. It operates a current account just like N26, except Revolut is currently licenced in Lithuania, and it hasn’t passported its licence, so your money is not guaranteed up to €100,000 under the DGS.
However, Irish customers with money in Revolut or other digital banks without a full banking licence are protected under the EU’s “safeguarding of funds” rules. This means fintech companies (such as Revolut), must keep consumer deposits in a special account with a European bank, separate from their own company’s operational funds. Revolut uses JP Morgan. If the fintech goes bust, the customers must be paid before any creditors – not quite as comforting as a guarantee.
Opening an account with a fintech
It is relatively easy to open an account online with either N26 or Revolut, using your phone. Download the app, fill in some personal details, take a photo of your passport and a selfie with your phone, and submit it all via the app. Once all is in order, your account will be set up and you will receive an IBAN and BIC number quickly. Your physical card will be sent in the post within a week. You will be able to use your phone to make payments immediately. This card will cost you €10 with N26 and €6 with Revolut.
Both these fintechs offer, largely, free day to day banking. However, taking out cash is different. N26 offers three free ATM withdrawals per month, after which you pay a €2 charge per withdrawal. Revolut allows you to take €200 per month or make five withdrawals, after which you are charged either €1 or 2% per withdrawal, whichever is higher.
I hope all of this helps you decide what to do.