It’s safe to say that the banking industry has been irreversibly turned on its head over the past few years. Digital banking options have increased exponentially, and customers have been increasingly attracted to this new way of managing their money.
There has been a surge of activity in the digital banking and fintech world across Europe in particular, with new neo banks and challenger banks emerging, existing ones expanding, and customers flocking to their doors.
For example, London-based Revolut grew their customer base from 1.5 million to 10 million in just two years (February 2018 - February 2020), while Berlin-headquartered N26 also saw their customer base double to more than 5 million between June 2018 and February 2020.
Here at Veriff, we’re lucky enough to work with many digital banks from across Europe, helping to secure their online systems and provide robust identity verification. These online organizations are often very forward-thinking and tech-savvy in their approach to business.
So how do you choose which digital bank is right for you? There are so many different factors to consider and details to wade through and it is of course a very personal choice. However, keep reading for our advice on what to look for in a digital bank and our roundup of the 7 Best Digital Banks in Europe.
There are probably three main factors to look at in the first instance when choosing a digital bank. These are: ‘security’, ‘fees and charges’ and ‘practicality’.
Alongside these, it is also wise to choose a digital bank that has a good reputation within the market, strong customer satisfaction levels and of course FDIC coverage so your money is insured.
At its essence, creating a list of the 7 best digital banks in Europe is a difficult task. All the neo- and challenger banks that are out there have unique offerings and appeal to different customers from different countries. It's not easy to categorise them by number of customers, revenue figures and reach.
Instead, we've compiled a list of 7 digital banks which we believe bring something particularly interesting to the market or are leading the way for others to follow. This could be because of their size, unique features or reputation in the market.
So, without further delay, lets dive in…
Revolut is a Fintech organization that was founded in the UK and currently operates in 33 countries. They are easily the largest digital bank, with more than 25 million users.
Their popularity probably comes from the fact that they offer very low fees as well as extra services such as personal loans, fee-free currency exchange, free international transfers, phone insurance, travel insurance and cryptocurrency trading.
As one of the leading neobanks in the market they are also known for their forward-thinking approaches to banking, their determination to put their customers first and their ability to adapt to the market and be flexible in their technology and services.
Valyuz is registered and regulated in Lithuania and is known as being a leading electronic money institution. They have extremely fast and simple applications which are very user-friendly for their loyal users.
They are on our list thanks to their technical know-how and reputation for great customer service.
Banking with Valyuz allows users to:
Monzo – headquartered in the UK – is another one of the big digital banks and has more than 7 million customers.
Although based in the UK, the Mastercard that is issued with the bank account allows you to use their services anywhere that is accepted. To help with this, they also ensure that customers are faced with no fees for international spending. Its popularity comes from the many services they offer:
Starling Bank from the UK is often referred to as the ‘darling’ of the digital banking world. In 2019 their personal account won the Best British Bank and Best Current Account 2019, while their business account has also won awards.
They were founded by experienced banking chief Anne Boden in January 2014 and many analysts regularly sing Starling’s praises in terms of business model and approach to customers.
This time from Germany, N26 is a fully-fledged and licensed bank and is one of the big players in the digital banking world with more than 8 million users.
It gives its users free retail and business accounts with no hidden fees and even has a deposit insurance of up to €100,000. They are also known for their unique ‘Space’ feature that allows customers to create sub-accounts for whatever purpose they want. These ‘Spaces’ allow users to set financial goals and track their progress towards their target.
Hello Bank is the digital banking offering from Belgium and was created in 2013 by BNP Paribas to be their fully online bank. They are known for keeping up with the latest trends and technological innovations and have been applauded for their understanding of how to design a banking app around busy people.
Although not free, their basic banking current account costs just €1 per month and that gets you web, app and phone banking, a debit card and the ability to make standing orders and direct debits.
Their other services include:
The final inclusion on our list is Spanish neobank Rebellion. Although they only have around 280,000 users, we think Rebellion deserves a spot in the top 7 because of their targeted approach towards ‘Generation Z’ and their unwavering focus on their 16-25 customer base.
Further to this, they were the first challenger bank in Spain to gain a banking licence and offer International Bank Account Numbers (IBANs).
To keep its young users onboard, Rebellion works to stay one foot ahead of the game. The latest example of this is its offer of using Google Maps ‘Location Intelligence’ which allows users to take full advantage of merchant location technologies which represents a new and significant milestone in digital banking.
As well as being critical for assessing customer risk, KYC procedures are a legal requirement for banks and financial institutions that must comply with anti-money laundering (AML) laws.
From a cool-headed business perspective, you may think some level of fraud is acceptable in the quest for growth and conversions. But failing to prioritize your honest customers – and your reputation – is ultimately likely to be highly damaging to your business.