Fintech bank account as an alternative to a Dutch bank account

"Fintech banks," also known as "neobanks" or "digital banks," are a relatively new phenomenon in the financial market. Examples of fintech banks include Revolut, N26, Wise, and Tide. These banks, with a "digital-first" approach, operate internationally and offer a wide range of functionalities. Now that it's becoming increasingly difficult for Dutch citizens abroad to maintain a Dutch bank account, let alone open a new one, these fintech banks are a potential good alternative.

In addition to being fully online, Fintech banks offer the following advantages:

• You open a Fintech bank account in the country where you live and approval for opening an account is easy and straightforward;

• Typically there are no monthly bank charges for a basic account;

• You can open additional accounts in foreign currencies. This is usually also possible in euros with a dedicated IBAN number, making them ideal for receiving payments (e.g., state pension) from the Netherlands without incurring fees.

• You can easily exchange money between currency accounts at relatively low transfer fees. Unlike traditional banks, the transfer is instant, and the actual transfer costs are made clear upfront.

• You can manage all your currency accounts with a single debit card. Depending on the currency to be settled, the corresponding currency account will be selected, provided there are sufficient funds on the card.

• The debit card is usually linked to a Mastercard or Visa, unlike a Dutch bank account. This makes online international payments possible.

• Most fintech banks are now also covered by the national Bank Guarantee or Financial Services Compensation Scheme, making them attractive for opening a savings account (often a virtual account, also known as a "space"), usually with attractive interest rates. Always pay close attention to the amount of the bank guarantee!

Besides having bank accounts in multiple currencies, Fintech banks offer many other options. For example, holding a joint account is usually possible. However, this is an additional account alongside your personal accounts. You both need to have a personal account at the same Fintech bank before you can open a joint account. A Euro account is also a personal account, so you'll quickly end up with five accounts if you both want a Euro account. Finally, most Fintech banks offer a considerable number of add-ons, such as:

- Money boxes

- Child account (also a kind of fund where you can put money with a bank card)

- Investment tools

- Savings accounts

- Expenses apps

When choosing a fintech bank, it's always wise to conduct thorough comparative research based on your requirements. There are quite a few websites available for this purpose. It's important to consider the following:

• Is the bank covered by your country's bank guarantee scheme?

• Is a EURO account available?

• What are the transfer costs between currency accounts?

• Can you withdraw money abroad and pay with your bank card?

• What are the monthly costs?

• Is payment with iDEAL supported?

• What additional services do I need?

Fintech Banking Experience

We've found a regional representative from the SNBN willing to share his Fintechbank experience with us. This is a personal experience, and no rights can be derived from it. The experience can and will vary from person to person, depending on their country of residence.

Opening the account

Opening the (GBP) account was done entirely online via the mobile app and was completed within four hours (registration, approval, and bank account number). The bank card arrived a week later.

A euro account could be opened immediately without further approval. This account has its own IBAN number. This is, however, a GB… IBAN number.

You can configure your debit card so that payments in euros are automatically debited from your euro account. This is very convenient when you're abroad, as it means you won't be charged any fees (transaction fees or currency conversion costs). You do, of course, need to ensure you have sufficient funds in your euro account.

Transfer money from a Dutch account

Payments from the Netherlands to a EURO account are smooth. There are no fees on either side (transfers to and from a Dutch account) because the account falls under SEPA (Single EURO Payments Area). The transfer is not instantaneous, and the recipient's details cannot be verified because it's still a cross-border transfer. The transfer is subject to checks by the receiving bank (for anti-money laundering purposes) and will arrive on the account the following day at the latest.

Once the money is in your euro account, you can easily transfer it to your GBP account. This does cost a bit, of course, but it's relatively inexpensive. For this bank, the fee is 0.4%.

For comparison, an example for transferring 1000 EURO at an exchange rate of (1 EUR = 0.85 GBP):

• From traditional NL bank account via Fintechbank EURO account to GBP account: £850 - £3.40 (0.4% transfer fee) = £846.60

• The following fees apply when transferring money directly from a traditional Dutch bank account to a traditional GBP bank account (this naturally varies by bank):

  • NL: Currency exchange fee: €0.0045 per EURO (varies by country)

  • NL: Exchange rate surcharge: €0.0062 per EURO (varies per country)

  • NL: Foreign payment costs: 1% with a minimum of €5 and a maximum of €50

  • UK: Foreign payment fee: £5

  If you include all these costs in the calculation, you will ultimately be left with £835.63

In the example above, transferring money through a Fintech bank is more advantageous. However, this is only the case until the Fintech bank's higher currency exchange fees (0.4% compared to 0.0107%) exceed the maximum payment fees charged by traditional banks (€50 and £5, respectively).

The cost of transferring money directly from your Dutch account to your foreign account is difficult to calculate. Besides fixed and variable costs that are settled on both sides, you also have the option to share the costs (or not) with the recipient, choose the currency (send in euros or pounds), whether to send outside SEPA or within SEPA, and so on. It's a real puzzle, and with large amounts, it can make a significant difference. Finally, the bank uses a daily exchange rate, unlike the current exchange rate typically used by fintech banks. With current rates, you know what to expect and can anticipate fluctuations.

Conclusion

Fintech banks are booming and have become an indispensable part of our society. They are generally more affordable, easy to onboard new clients, and offer significant flexibility and convenience for international banking.

For Dutch citizens living outside the Netherlands who no longer have or can open a bank account in the Netherlands, a Fintech bank is a solution for payments to or in the Netherlands, and for receiving money/benefits from the Netherlands.