Digital Banks are the future. Today’s online banking services dominated big and outdated banks suck. Big banks’ mobile apps are like dinosaurs, and their fees and services quickly add up. Big banks also don’t give you any benefit for foreign diversification and travel unless you obtain a credit card. Good luck reading the fine print.
As we look towards the next decade, the Financial Tech industry has made great strides in creating successful digital banking services to provide foreign diversification and border-less banking.
In my previous post, I’ve been a big advocate of foreign diversification and travel. Anyone with travel experience knows that managing money overseas for spending can be a challenge.
You either open up a foreign transaction credit card, or exchange currency at a local bank or airport. But this is really inconvenient and expensive. If you have spontaneous travel plans, you may not have enough time to get approved for a credit card. You also wouldn’t want to deal with getting a pull on your credit history.
And It usually takes weeks for a typical card from a bank to arrive.
After all who wants to deal with big banks anymore? Many smaller, online banks provide easier access, and let you directly manage your foreign currency from your phone. Their apps are seamless, and user experience is awesome. They provide in app spending and budgeting features, as well as other services which big banks lack today.
These small digital banks provide control over your debit card directly on your phone. Since many of these banks are businesses located overseas, you can also exchange currencies all online.
Here are my top 3 choices of online banking services for foreign travel and banking.
Revolut officially launched in 2015 as a Financial Tech company with the backing of venture capital from investors behind tech companies. Revolut allows you to spend abroad at market foreign exchange rates.
It is an app driven account, that allows you to use your phone to connect your domestic bank account and transfer money. Your domestic funds can be transferred into your Revolut digital bank account into different currencies at favorable exchange rates.
When exchanging currency at traditional banks, the rate gets marked up so that the bank can make a profit. With digital banks such as Revolut, this doesn’t happen because of low operating costs and other sources of revenue.
Lastly, Revolut provides a physical card (Mastercard) and “virtual cards”. The virtual cards can be used for any online purchase, while the physical cards are a must for everyday spending.
The beauty of this is that virtual cards can be used to setup budgets for various categories. You can freeze/unfreeze these cards to give greater control of who can charge you to avoid wrongful transactions. This is a neat feature when dealing with online subscription services.
How Do I use It?
Download Revolut in the app store of your phone and register for an account.
*Note that I am not an affiliate with Revolut or any services mentioned in this article. I’m sharing to you the services I personally use when traveling abroad and managing foreign cash.
The app features things like
- Bill payment
- Money transfer overseas in another currency
- Load a balance with foreign currency
One neat feature of the MasterCard that Revolut provides is that regardless of your location, it’s guaranteed to arrive at your location in three working days. This is a dream for many nomads.
Cost and Features (Source)
I recommend starting out with the Standard (Free) account to experiment their services.
- Free US checking account
- Free Euro IBAN account
- Spend in over 150 currencies at the interbank exchange rate
- No fee exchange in 24 currencies up to £5000/€6,000 per month
- No fee ATM withdrawals up to $200 per month.
Revolut offers a “Premium” and “Metal” accounts (at $8.99 and $15.99 per month).
The Premium account offers more features such as travel medical insurance, customer support, and access to crypto exchanges (something I personally don’t care about). It’s targeted towards frequent travelers.
The Metal account offers even more features like a Metal version of the Mastercard, and cash back rewards.
Based out of Hong Kong, Neat is a digital bank that provides business and personal services. Its primary target is for small startups that are looking to get business banking services, but it has a personal banking branch.
Formerly a managing director of Citi Bank Asia, Co-founder and CEO David Rosa, says that the company has customers in over 100 countries. He asserts that users of Neat don’t need to be personal residents to qualify for HK based banking services.
Neat Personal Features
HK Based Account
Neat provides you with a local Hong Kong bank account number that allows you to receive direct deposit salary. Employers, clients or friends can make payments into this account from around the world.
All Online Service
Similar to Revolut, all features are online through mobile application. No paperwork, no hassle.
MasterCard and No Foreign Fees
Their website states that no annual fees or commissions are charged. No minimum deposit or spending is required.
No Annual fees
Neat Pricing and Caveats
*Prices are denoted in HK. As of this writing, HK $1.00 = USD $0.13
While the account opening and maintenance is free, there are some caveats to Neat’s service.
The mastercard they provide is free. However, there is a 1.5% foreign merchant fee which is a killer for anyone who spends regularly outside of Hong Kong
There is also a 2% fee for ATM withdrawals. Transaction refunds are $4. If you happen to lose your Mastercard, the replacement fee is $50.
From an American perspective, these fees are pretty small, but the main benefit of Neat personal is that you can open a Hong Kong based bank account entirely online – no residency required. It’s the easiest way to start with “offshore” banking. In today’s border-less digital age, opening such an account is as easy as downloading an app.
In comparison to Revolut, Neat isn’t the primary choice for travel. However, it is the easiest way to open a foreign bank account in Hong Kong without residency.
Based in Berlin, N26 offers its services throughout most of the Eurozone and in the UK. It will be available in the US in early 2019 (which is why I’m writing about it now).
N26 provides a basic checking account and a debit MasterCard. It’s similar to Revolut and Monzo. N26 provides basic banking features like overdraft protection, investment products, and premium accounts.
Unlike Revolut and Neat, N26 requires a bit more interaction when opening an account. In the European service, Registration takes 8 minutes via video chat to confirm the user’s identity. Depending on your personality, this may be a deal breaker. However, this may change when it comes to the US.
I don’t know about you but, I find a video chat preferable to driving and standing in line at a bank.
- Mobile payments: Apple Pay and Google Pay
- MasterCard with 3D secure and contactless payment
- In app security: Freeze or Unfreeze cards and set limits
- Moneybeam service support
- Transferwise international transfer support
N26 Pricing (prices denoted in EUR)
Note that the US service is available in early 2019. The pricing is from the European service which will be similar to US Customers.
Like most digital services, the standard account is FREE ($0.00 / mo). It provides Free ATM withdrawals in Euros, and Free payments in any currency.
However withdrawals do come at a price. N26 allows 3 – 5 ATM withdrawals per month depending on the country and profile in addition to a 2 Euro fee. Due to the Digital nature of these banks, withdrawing cash will carry some caveats.
N26 black is their “Premium” service at $9.99 / mo. In addition to the standard features, the premium service allows you to withdraw worldwide for free. It also provides an Allianz insurance package (travel insurance).
The three main Digital Banks I recommend are Revolut, Neat, and N26. Monzo is another Digital Bank which is very polished but is only available in the UK. These services offer borderless banking services.
Revolut and N26 are the go to for foreign travel and low to no fee foreign exchange in currencies. They provide great apps with awesome user experiences. Currency transfers are seamless and they provide great security and management by allowing you to freeze and unfreeze your debit cards all through the app.
Neat is the go to bank to open an offshore account in Hong Kong. It doesn’t have a residency requirement, and signup is all done through the App. It is the fastest bank to hold cash if you want to gain protection from an unstable and rapidly collapsing financial system (such as Venezuela).
These services are all provided by small companies that will cater to their customers. Without the heavy fines and operating expenses of big banks, these smaller guys can offer more features for less cost. The future is approaching us every day, and before you know it, you may see one of these banks featured in a commercial or on a freeway billboard.
Comment below, have you used these services? What do you think is the future in banking?
As always, Finance and Purpose is here to educate about and share about finance, lifestyle, and travel. I am personally not market affiliated with any of these services. I have used Revolut while traveling and I recommend you to checkout one of these services if interested. This is just me sharing what I think is the future, and recommend you to do the same.
Whenever you travel it is absolutely critical that you check each point of sale card terminal for suspiciously attached devices that attempt to swipe your card. In addition, protect yourself from RFID swiping by getting a metallic wallet. I used this on my recent travel to Brazil.
Check out this video of what I’m talking about: