With several hundred thousand Irish bank customers currently looking for a new bank account provider, many are likely to be considering a digital-only alternative.
Both Ulster Bank and KBC Bank will shortly depart the Irish market, while EBS has signalled that its future is up for discussion as it prepares to undertake a review of its operations – one that may mean it opts out of acting as a current account provider.
For the 1.7 million or so existing Irish customers of fintech Revolut, which has its headquarters in London, opting for that company as their main current account provider may seem like the easy option. Even more so perhaps since the financial services company, which operates as a bank in many countries across Europe, has announced its intention to significantly upgrade the service it offers its Irish customers.
But will these be enough to offer a real alternative to traditional current account providers? We take a look at what the changes will mean for Irish customers – and where they might still have some concerns.
WHAT YOU CAN DO
Guarantee on savings
For some, legal protection of your savings may not be their first thought when choosing a bank account. However, for those who lived through the dark days of the financial crisis, with the very real risk of a run on banks, this will be a key consideration.
And up until now, Revolut offered quite a different proposition to the main banks in the marketplace. This is because its Irish customers are regulated under an emoney licence with the Bank of Lithuania.
As part of this, Revolut is required to safeguard all the money it receives from customers (with no cap per customer). These customer funds are held in JP Morgan and the Bank of Lithuania and, in the event of default, the money in these accounts will be used to repay customers before anyone else.
While this all sounds good in theory, some customers fear how it might play out in practice.
This is now set to change. Like other current account providers in Ireland, Revolut customers will soon be able to avail of the EU-wide deposit guarantee scheme, which protects deposits up to €100,000 per customer per financial institution.
This is because the bank has decided to passport the full banking licence it received in December from the European Central Bank (ECB) to Irish customers. It means that the bank will soon start to operate in Ireland on a freedom of services basis, authorised by the ECB and the Bank of Lithuania, and regulated by the Central Bank of Ireland for conduct of business rules.
As a result, the firm has shelved plans for an Irish banking licence; instead Irish-based customers will soon be part of the deposit guarantee scheme operated by the Bank of Lithuania.
And this move is expected imminently.
The change of Revolut’s status to a bank in Ireland follows similar moves across Europe. Earlier this month, Revolut users in Germany, the Netherlands and Spain were offered the chance to upgrade to a full bank account, after the provider rolled out its Lithuanian licence across these and seven other markets.
Get a credit card or loan
Until now, Revolut offered a banking service focused on payments. Later this year, however, it will start lending through its app and will also introduce credit cards for the first time – two major omissions in its current offering from that of a full service bank.
The bank already offers credit cards in Lithuania, with an APR of 14.32 per cent, and loans of up to €25,000 with rates starting at 6.45 per cent.
It’s also possible that the bank will introduce a deposit product to the Irish market, as it has done in the UK and Poland. Of course, with interest rates at zero in the euro zone, the return on offer is likely to be considerably less than the 0.7 per cent paid in the UK.
Get an Irish Iban
Another issue with Revolut has been its use of Lithuanian Ibans. The Iban (international bank account number) is used to uniquely identify a personal bank account and, since the advent of the Single Euro Payments Area (Sepa) back in 2014, they have been used in domestic and international payment transactions. Sepa includes all 27 members of the EU as well as the UK and eight other countries.
The first two letters in an Iban will be the country where the account is based, so an Irish-based bank, for example, will offer an Iban that starts with IE. As Revolut currently operates in Ireland under a Lithuanian emoney licence, its customers are given a Lithuanian Iban, starting with LT.
It’s worth noting that, by law, there should be no issue when it comes to payments whether your Iban is registered in the UK, Lithuania or Ireland. As Revolut rightly states, its Iban starting with LT should be accepted everywhere in Sepa to either make or receive payments. However, this is not always the case.
“Iban discrimination” happens when a company refuses to accept an Iban for euro payments or direct debits because it isn’t an Irish one.
Bord Gáis was reported to have issues accepting non-Irish Ibans for customers setting up direct debits. According to a spokeswoman, it is now possible to do so; however, such customers will need to contact the customer care team to do it, while those with an Irish Iban can simply do it online themselves.
As the competent authority for regulating Sepa in Ireland on behalf of consumers, the Competition and Consumer Protection Commission (CCPC) says it has been contacted more than 100 times over the past year relating to Sepa issues within the its remit.
Subsequently, it says it has engaged with a number of businesses in Ireland to make them aware of their obligations under the Sepa regulations and to ensure that they comply.
So, Iban discrimination might not be right, but that doesn’t mean it doesn’t happen. While Revolut will passport its Lithuanian banking licence into Ireland, it says its Irish customers will shortly switch over to an Irish Iban, which should make this issue a concern of the past.
WHAT YOU STILL CAN’T DO
Cash a cheque
The use of cheques has plummeted. Latest figures from the Banking & Payments Federation of Ireland (BPFI) show that the volume of cheques written slumped from 11 million in the third quarter of 2016 to just 4.9 million in the same period in 2021, a decline of some 55 per cent.
Nonetheless, there are still moments when a cheque is either the best way to pay, or may just be the only way of getting money from a particular person/company.
As Revolut doesn’t accept cheques, this can put you in a pickle if you can’t cash it.
You might find a way around this; according to the BPFI, there may be circumstances in which a bank that has issued a cheque may cash that cheque on behalf of someone who isn’t a customer of the bank. However, this is not necessarily something that you can depend on.
Get an overdraft
One important aspect of everyday banking is access to an overdraft if required. It gives you flexibility if you run short from month to month. Revolut currently has no plans to introduce such a feature.
Daragh Cassidy, head of communications with switching site Bonkers.ie, says: "This would be a key requirement for many people when looking for a new current account provider, and I would hope this is something the bank will offer over the coming years."
The bank does offer other options, however, such as on-demand pay, which allows customers to withdraw a percentage of their income before they get paid, for a flat fee.
Visit a branch
The role of the local bank branch in our day-to-day lives has diminished in recent years, both in terms of the number of outlets and the services they deliver. However, it's still an important part of the banking services offered by many of the traditional players.
A branch still has its uses, but Revolut currently has no plans to open one.
If you’re buying a car, for example, or getting work done on your house, a visit to your local branch will allow you to withdraw significantly more cash than you can within the daily limit on an ATM – or even the daily limits on your online banking.
If you don’t want the sum in cash, you can also order a bank draft.
While large sums of cash may soon be a thing of the past – earlier this year the European Commission proposed banning cash payments over €10,000, as part of efforts to clamp down on money laundering – it's unlikely to disappear altogether.
And withdrawing significant sums of cash with Revolut does cost; with the Premium plan for example, which costs €96 a year, you can withdraw €400 a month for free but after that a 2 per cent fee applies. So a €5,000 cash withdrawal will cost you €92.
Moreover, sometimes you might need a personal touch to solve an issue, something you can get in your branch or on the phone. While this service may not always be up to a standard you would expect, it may still be easier than accessing customer support within an app, via live chat with agents, as is Revolut’s approach.