Biting The Hand That Feeds

Paul Gallagher

It looked legitimate, it had the MasterCard logo, it was the same shape and size of any other bank card. But it also looked too good to be true. A bank that didn’t charge for any online financial transactions? How did they make money? Where was the catch?

These were some of my first impressions upon seeing the Revolut debit bank card for the first time. Revolut is an online bank that was recommended to me by a friend who had begun using its services. He switched after his former bank began charging for cash and online transactions once he moved from a student account to a normal debit account.

Revolut is just one of two major fintech (financial technology) companies (N26 is the other) that have moved into Ireland in the last few years to make a big impact on the traditional banks that have long been a standard of Ireland’s financial services.

I remember opening my first bank account as a child. A bricks-and-mortar establishment, a family bank where your money was safe, a trusted institution.

Much of that sentiment was lost after the financial crash of 2008. Looking to recoup some of these losses, many banks began adding charges to accounts where none previously existed or increasing charges where they were already in place. This was adding insult to injury, as the bailout pinched the pockets of those account holders that were now being asked to pay charges to banks they helped save from financial ruin. The charges would appear on customers’ bank statements, seen monthly if they cared to go online, sort through a complicated verification and authorization process, and scroll through a PDF of the month’s transactions. Those not online would receive an update in the post every three months.

Fintech banks, although varying in offers, offer much more choice to the Irish market: Accounts with no costs for online transactions. The ability to store multiple currencies on one card. Mobile apps to complement their services, with user-friendly interfaces that showed every transaction. Analytics to show where you spent most of your money. Real-time information on the rates of exchange for currencies around the world. All of this for a one-time payment for the debit card; in some cases the card is free.

Other charges are clearly marked and often depend on your account plan. In addition, Revolut always admits any wrongdoings, learns from such mistakes, and highlights improvements to its service to reassure customers.

Such a refreshing approach to banking appears to be working, with the number of Irish account holders for Revolut exceeding the company’s own expectations. It had just over 50,000 customers at the end of November 2017 and projected it would 150,000 by the end of 2018. It now has 200,000 Irish customers, making Ireland Revolut’s fifth-biggest market.

Such success can be attributed to the fintech advantages already described. But there is one more noticeable difference: customer-centricity. With a view to maintaining customer satisfaction, fintech companies are gaining trust and customer satisfaction where traditional banks are losing it.

As the old powerhouses of banking in Ireland attempt to take on this new competition, they will invariably look to invest in some of the tools these successful companies have deployed. But such investment will amount to nothing if they continue to bite the hand that feeds them.

For more on how banking is transforming, see Five Forces Transforming Financial Institutions.


Paul Gallagher

About Paul Gallagher

Paul Gallagher is Partner Service Advisor at SAP. Outside of work Paul is a portrait painter, writer and has a great passion for conservation, volunteering for Birdwatch Ireland. Paul regularly blogs on his LinkedIn .