European Fintech Banks, to the Conquest of the New World

The British challenger bank Revolut, which last December received a banking license from the Central Bank of Lithuania that will allow it to operate throughout Europe, already has almost 100,000 people waiting for it to open its doors in the United States, whose entry is scheduled for the first quarter of 2019. Expectations are high in the American country and its waiting list proves it, as reported by the entity to the financial comparator

But the United States is not the only destination that aims to conquer Revolut during 2019. Australia, New Zealand, Canada and Singapore are also on the list and in all of them the intention is to open during the first three months of this year.

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In the Asia-Pacific region, more than 50,000 users have already signed up for the Revolut waiting list, in Australia more than 20,000 and in New Zealand more than 5,000, according to an interview conducted by HelpMyCash with Patricia Gómez, responsible for communication of Revolut in Spain. In our country, the entity already has more than 150,000 customers.

N26, which operates in 24 European markets (its last opening was in the United Kingdom last October) and which has more than 100,000 Spanish customers, has announced that it will enter the United States in the coming months, where it will operate through the subsidiary N26 Inc, whose headquarters are located in New York.

To achieve this, N26 has just closed a 300 million dollar series D financing round. “N26 will use revenues to boost its global expansion, beginning with the launch of its product in the United States during the first half of 2019,” the entity said in a press release. But the ambition of the German bank goes further: “the goal of the company is to exceed 100 million customers worldwide in the coming years”.

Another one that has signed up to the car is the British Monzo, who, according to what TechCrunch published at the beginning of January, is considering opening its doors in the United States: “the startup fintech has created a small team to begin laying the foundations for carrying a Monzo’s version to North America, which initially will be driven by a US banking partner, while Monzo works on the necessary licenses to go solo.”

They will not be alone

The great European players who decide to take the leap will have to compete with the American neo-banks. Chime, whose offices are in San Francisco and which according to the New York Times has already opened two million online accounts, Aspiration, with around one million customers, or Simple, owned by BBVA, are good examples of what awaits them. Revolut, N26 and Monzo. In the American fintech map there are also Go Bank or Bank Mobile.

Both in the United States and in Europe, fintech banks have bet, with exceptions such as bunq, to ​​offer current accounts without maintenance fees, at least in their most basic versions. From there, each one has moved in one direction.

In the case of Revolut and N26, the main references of the European fintech, the strategy has focused on a freemium model. They offer free current accounts and payment plans with added benefits, such as travel insurance, exclusive customer service, cards made of metal instead of plastic … In addition, European fintech banking has also based its strategy on offering all its customers commissionless payments in any currency and currency conversions with prices close to the real, free SEPA transfers, cheaper international transfers than in traditional banking and thousands of free ATMs throughout Europe or around the world.

The current account and the card, the two basic products, have been completed with other services such as virtual piggy banks or operative with cryptocurrencies. Some (rather few) have also launched additional products, such as Atom Bank that offers mortgages and savings products, or Ferratum Bank, which offers savings accounts, deposits and loans.

On the other hand, the Hipster banking of the United States has not followed a very homogenous line. Although all of them sell an online account without commissions, we find banks that only offer a specific network of free ATMs, with commissions of between 2.5 and 3 dollars per extraction in external cashiers, and others that apply commissions for outgoing transfers, such as Aspiration that charges $ 0.82 for the transfers sent and other 0.82 for the incomers, while Simple and Chime allow them to be made for free.

Nor is there a unified policy regarding the exchange of currency between the great North American fintech banks. Simple, for example, warns that the commission for the currency exchange can be up to 1% of the amount of the transaction and in Go Bank the commissions to buy in websites and foreign stores are 3%, while Chime does not charge for foreign transactions.

Fintech banking adds millions of followers

What three years ago was a simple anecdote, today has become a true rival of traditional banking.

The German N26 has doubled its customer base in just six months, from one million to 2.3 million between June and December 2018. After the close of its last round of financing, its valuation has been 2.7 billion dollars, but it is not the only unicorn of the European fintech sector.

“Revolut has more than three million users, a goal that has reached in just three and a half years, and grows at a rate of between 8,000 and 10,000 new current accounts per day. Its valuation exceeds 1.5 billion dollars, another mythological animal of finance.”

Monzo, which currently only operates in the United Kingdom, unlike previous ones that have expanded throughout most of Europe, already has more than one million customers, although this figure may be more impressive: at the close of the third quarter of Last year, Monzo attracted 20,000 new customers a week, equivalent to 15% of all new open accounts in the United Kingdom.

Revolut, Monzo and N26 compete with Monese, Atom Bank, Bunq or Ferratum Bank in Europe. And now that the Old Continent has run out small, they will also compete with heavyweights such as Simple or Chime when they enter the United States.