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Fintech: Revolut is a large mobile bank, but also the proof that you have to moderate your enthusiasm with fintech

The fintech sector is boiling. The combination of finance and technology is a great idea and many companies are developing very useful and innovative products. Among this type of companies there are some that are betting on trying to revolutionize a sector that was not so much unthinkable that it could be changed: traditional banking.

Not long ago we explained what N26 and its online bank allowed to do, giving service from Germany to several countries of the European Union. A bank with great growth, few employees and basic services but very used by citizens, quite the opposite of traditional banking. Today we analyze a similar company, Revolut, which also recently announced that it has reached the break-even moment, that is, they start to be profitable.

Revolut currently has 1.5 million customers, which is quite spectacular for a company with two and a half years of life. Spain is the fifth country in volume of users and the third country that grows the most, with 60,000 clients.

Bank from an app, it is possible

Revolut, right now, is a mobile application that allows you to operate as if it were a bank. Registering is very simple, it takes only 60 seconds, and you can have accounts in different currencies, which, in some cases, is very interesting.

Regarding the services offered, apart from the current account, there is the credit card (with full control from the application) and purchase of cryptocurrencies. In the United Kingdom it also offers consumer loans but for the moment that is not available in Spain.

One of the advantages offered by your card is that you can withdraw money around the world without commissions. Yes, the monthly limit is 200 euros, which also applies to the country of residence. If you go over that limit you have to pay 2%. This is for the free service, if it happens to be Premium (and that costs 7.99 euros per month) then the limit is 400 euros per month.

The account offered by Revolut is not really yours, but the English bank Lloyds Bank. That is, Revolut does not have a bank card. This is how N26 started, but the latter already has a bank card and therefore offers its services directly. Revolut is in the process of achieving this European banking license, as confirmed by its press department, and therefore to migrate its users to its own bank.

Of course, at the moment the accounts (even those that are denominated in Euros) are located in the United Kingdom (IBAN that starts with GB) and this has three drawbacks. The first is that it could give problems with direct debits and receipts in some places (this in theory should not happen but in practice it is like that). The second is that if you have more than 50,000 euros outside Spain you have to make an informative declaration to the Treasury (although it is not very complicated). And the third thing is that it is a mystery what will happen after the Brexit.

In any case, as they inform us from the press department, when they obtain the European banking license these inconveniences will disappear, because in parallel they will offer accounts in euros located in Spain (IBAN that starts with ES).

For users who have Premium access, which, as we have said, costs 7.99 euros per month or 82 euros if an annual payment is made), the limit for extracting a credit card is raised to 400 euros per month and foreign currency transactions they expand. It also has some other advantage, such as medical insurance abroad, better support, more cards available …

Advantages compared to a traditional bank

The first thing that comes to mind when using Revolut is its simple interface, the usability of its application. From there everything is controlled and of course it offers us a control of monthly expenses directly from there, without the need to use third-party applications.

The two main advantages offered by Revolut is that we can withdraw money without commissions anywhere in the world. The drawback is that we are limited to 200 euros per month (or 400 in Premium mode) and this may be little for many people.

The second advantage is that it offers currency exchange without commissions, offering a very interesting market price. This can be good for businesses that want to export or for regular travelers. Each currency will have its independent bank account, and you can have open up to 26, the number of currencies that Revolut supports.

Another thing that can be done from the application is the purchase of cryptocurrencies, something that I have not yet seen in any traditional bank. If you think about investing in these types of assets, it might be better to do it through a bank than from an unregulated Exchange and with so many attacks received by hackers.

Disadvantages with respect to a traditional bank

If the bank had remained anchored in the 90s, Revolut would certainly be a very interesting option for all citizens. However, traditional banks have also put their batteries. They have web access, they have mobile applications (some very good ones) and in general it is not necessary to visit the offices very frequently.

Therefore we are facing a service that in many ways is equivalent to what many traditional banks offer, except for the exchange of currencies without commissions and the purchase of cryptocurrencies. It is true that traditional banks usually charge for withdrawing money abroad, but in the country itself there is usually no limit.

One drawback of Revolut is that it does not have web access. That is, the only way to interact is through the mobile application. Traditional banks, on the other hand, offer both possibilities, which is convenient.

Finally, traditional banking offers more services than Revolut. And is that these new fintech banks are being left alone with the most profitable part of banking: they do not offer deposits (only unpaid current account) credits and payments.

Worth?

In general Revolut seems an interesting approach to personal banking, but with some drawbacks. The free service is too limited and the payment service is too expensive. If a bank tried to charge these commissions (7.99 euros per month), surely more than one would scream in the sky and traditional banks offer many more services: debit cards without withdrawal limits, credit cards, deposits , access to purchase of shares, mortgages, different types of credits, checks, bank checks, payment of taxes, presentation of declarations to the Treasury and a long etcetera.

Personally I would only have an account in Revolut if I needed to use the currency exchange service or the purchase of cryptocurrencies in an intensive way. In any case we must be attentive to the services that are adding, since they have an approach to the banking service that if they continue to expand could be a serious alternative to a bank.


Also published on Medium.

Published inStartups

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