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App-Only Banks Rise in Europe and Aim at Traditional Lenders

146 points by extarial 8y ago

hs86 8y ago
With these app-only banks I am always considered about their security if their main forcus for the first years is to grow at a startup-like pace. This talk from 2016 shows how they cut corners when it comes to security in order to achieve this: https://media.ccc.de/v/33c3-7969-shut_up_and_take_my_money https://media.ccc.de/v/33c3-7969-shut_up_and_take_my_money
- TazeTSchnitzel 8y ago
  That talk makes N26 look utterly terrible. With a single command and a leaked email and password, the account could be compromised from anywhere in 5 minutes! D:
- usaphp 8y ago
  Many of the “big traditional banks” used to have this idiotic rule of not using more than 10-12 characters in your account password for many many years, many still do now. So I would not be so judgeful on the new app-only banks.
  - dogma1138 8y ago
    EU banks issue security tokens which are used for login and to authorize every transaction.
    - seszett 8y ago
      Some of the banks of some EU countries* Most French banks don't do that, for example.
      - dogma1138 8y ago
        French banks don’t use TAN codes? Isn’t it an EU directive at this point? It doesn’t have have to be a dedicated hardware token or a chip TAN, mTAN or soft tokens are also acceptable.
        seszett 8y ago
        Unless a 6-digit "password" that you choose and stays the same for as long as you wish counts as a soft token, no they don't. Well, most don't, although some do.
        dogma1138 8y ago
        How do they offer SEPA transactions without TAN codes?
        seszett 8y ago
        I don't actually know what are the TAN codes you are talking about, I guess, if they're some technical implementation detail I sure don't know about it. For a SEPA transfer, you input the code of the account you want to transfer money to, then the amount and various optional messages and transactions codes if you want, then click "submit" and it's done.
        dogma1138 8y ago
        These are the transaction authentication numbers which are unique for each new transaction: https://en.m.wikipedia.org/wiki/Transaction_authentication_number https://en.m.wikipedia.org/wiki/Transaction_authentication_n... For me in the UK to move money I need to generate a TAN using a SecureID token the TAN is generated by using the secret in the token and digits of the account number I need to transfer money too. The same SecureID also generates OTP for 2FA login. But there are other TAN schemes including pregenerated lists and TANs sent over SMS or TANs which are generated by using the smartcard in your debit card.
        kmmlng 8y ago
  - Semaphor 8y ago
    For the longest time, my old bank limited my password to 4 (!!) characters…
- CalRobert 8y ago
  Their security appears to be superior to at least some of the traditional banks, which is laughably poor. http://olivernash.org/2015/11/18/security-theatre-at-allied-irish-banks-act-2/index.html http://olivernash.org/2015/11/18/security-theatre-at-allied-...
- Rjevski 8y ago
  At least in the UK, by law you are not responsible for any fraud on your account, and even if the bank folds the government will bail them out up to 85k per account (FSCS protection), so I wouldn't be worried. Disclaimer: Monzo & Starling Bank customer.
  - blibble 8y ago
    if there's a serious fraud and the "app only bank" disagrees that you had 50k in your bank account: how do you prove it to a court without paper statements? this is the reasoning that prevents me storing any more than trivial amounts in these app only banks a magistrate understands a paper statement on company stationary
    - SideburnsOfDoom 8y ago
      > how do you prove it to a court without paper statements? The UK banking sector is not unregulated. You would expect, that when a company is certified by the relevant authority that they would have to comply with standards and reporting requirements. getting onto the FSCS protection is not trivial, if it was then Revolut would also be on it.
  - SideburnsOfDoom 8y ago
    Monzo and Starling are FSCS protected, Revolut is not. You can check here https://protected.fscs.org.uk/tools/check-your-money-is-protected/ https://protected.fscs.org.uk/tools/check-your-money-is-prot...
- slavoingilizov 8y ago
  Examples of better security than incumbents: https://monzo.com/blog/2018/06/28/ticketmaster-breach/ https://monzo.com/blog/2018/06/28/ticketmaster-breach/ https://monzo.com/blog/2018/09/07/ba-data-breach/ https://monzo.com/blog/2018/09/07/ba-data-breach/
- IshKebab 8y ago
  Practical security with these apps, at least Monzo is much better for the average consumer because I'll learn about fraudulent transactions immediately via a notification on my phone. With my high street bank (1st direct, which I only really keep for their free coin machines) I might learn about it... weeks later when I check my balance on their website... maybe. I don't have their app installed because it is shit. Btw another reason I kept 1st direct was to pay in cheques which the government still insists on using, but Monzo lets you do that with a photo of the cheque now I believe. Can you imagine 1st direct ever being that modern? Their website still opens in a popup and tells you no to use the back button!
incompatible 8y ago
Why app-only? Is it so hard to provide a website too?
- ur-whale 8y ago
  Is there any difference between the two these days?
  - incompatible 8y ago
    Because you can run Android apps in Chrome these days (I heard somewhere, I don't use it), and make websites run likes apps (webassembly)?
  - newnewpdro 8y ago
    There is a very important difference between the two. You can access a web site via ubiquitous, open-standards compliant software known as web browers. This means you can use the service from any operating system/computing platform you wish, existing or future, provided it implements said standards. It's obviously important that we resist transitioning to a world where core life activities like commerce and banking requires running proprietary software on a finite set of supported proprietary systems. This is fundamentally about our freedom.
    - dbbk 8y ago
      If someone doesn't have an iOS or Android device they have the freedom to bank with a traditional bank.
      - newnewpdro 8y ago
        So we're in agreement then that they would've lost the freedom to bank electronically using any computer and software of their choosing.
      - ttty 8y ago
        What about when 99pc of the banks will only offer iOS and Android. No or os will be able to compete with them because the backing apps don't work. Now OSes can stagnate and become worse because they know you'll sick to them because you have no choice. A new player would need to create a OS and a bank to compete. And probably more stuff.
rb808 8y ago
So Mr. Stevenson was frustrated when his previous retail bank's computers were down - so he moved to a computer only bank? Nice logic. I hate branches but its nice to know when everything is screwed up I can go into a physical place and talk to someone. The next crisis when your virtual bank app stops working - what are you going to do then?
- toomuchtodo 8y ago
  Having been a BankSimple Beta customer, and sticking with them until they were acquired by BBVA, you’re screwed when something goes wrong until customer service fixes it. Highly recommend a bank with branches over online only. There is value in being able to go into a branch and having an in-person complaint addressed.
- thewizardofaus 8y ago
  Yeah I don't really understand that statement in the article either. A computer fault can affect any company in the banking industry - irrespective of if they are "app" only.
- AutoPhill 8y ago
  If it's down for you, it'll be down for the branches. The point of these new banks are so that you can do anything inside the app without having to jump through endless hoops. An example, I'm using Monzo now (a new "challenger bank" in the UK). If I want an overdraft I can enable / disable that in the app. Same goes for if I want to disable my card, change the pin, order a new card. Everything's just easier. No need to spend ages on the phone going through menus and verifying who you are.
  - fpoling 8y ago
    The bank can disable your account by mistake or have any number of other bugs affecting only small number of customers. With physical bank it is so much easier to make enough noise so at least they spend some time on you. With phone support they can just promise to call you later.
orf 8y ago
This is an exciting time for banking startups like this, and I know several of the traditional players are looking to emulate this success via app-only onboarding and less reliance on branches. Security is a concern, so I wouldn't keep my life savings in it, but they are pretty on the ball compared to the established banks. I know of two absolutely massive banks that have absolutely no clue of what IP addresses they own, let alone what services they have running on them. I've also used both Monzo and Revolut, and I definitely prefer Revolut. I really recommend anyone in Europe tries them! The crypto integration is interesting, but day to day stuff like an automatic savings pot and interbank rate transfers are really good.
TazeTSchnitzel 8y ago
I used Monzo as my day-to-day bank for two months and have only stopped using it because I'm not in the UK and need to keep my money in local currency. It was a terrific experience. Having an instant push notification when money enters or leaves my account, treating card purchase reservations instantly as unconfirmed transactions and not as nebulous inaccessible money, having transaction information presented in a human-friendly format, showing foreign currency transactions in the foreign currency, not charging currency exchange fees, being able to add notes to transactions… it's such a stark contrast to the mobile banking efforts of mainstream banks. By the way, if you're in the EU, bunq is a similar mobile challenger bank but based in the Netherlands and serving all of SEPA (if you're in the Eurozone you can use them as your main bank; I live in a non-Euro EU country so hold an account just for the hell of it). Disclaimer: I have multiple friends who work at Monzo.
- nicoburns 8y ago
  I have a Monzo acocunt, and one with Starling who are similar. They are both great. Rumours I hear from developers are that they can't get management to take security seriously though, which is a little worrying...
  - davnicwil 8y ago
    That's worrying and also really surprising. If you have the time, would you mind giving more details either here or by email? (my email is in my profile) Disclaimer: I work for a cybersecurity startup. Also a Monzo customer.
  - slavoingilizov 8y ago
    They are still better than the incumbent banks on security though. An example is how they both issued new cards to their customers affected by recent Ticketmaster data breaches, or British Airways hacks. After those events, they just contacted anyone who's shopped with the affected retailers and sent them new cards. I don't think this is an example of "not taking security seriously". No incumbent bank has done this, because it's expensive to issue new cards.
- 8y ago
tormeh 8y ago
I'm using N26 right now, and this is obviously the future. It's just so smooth.
gerogerke 8y ago
I have been using N26 as my daily driver for the last year, and I really don't want to look back at any bank that is using branches. However, I feel N26, Revolut, Monzo, Tomorrow, and all of the others are driving customers away with very expensive "premium" plans. I recently opened an account with DKB, another German direct bank, but with a shitty app. They offer everything I paid N26 5,90€ month to month (which they raised to 9,90€, can you imagine that) and much more like overnight money and a stock depot, for the tradeoff of having a shitter app, which is basically a webview loading their webpage. The next thing Europe needs is a Robinhood-like app for fee-free trading.
- kamyarg 8y ago
  > The next thing Europe needs is a Robinhood-like app for fee-free trading. Revolut is working on this one I believe. :)
  - Rjevski 8y ago
    There is also Freetrade.
- YawningAngel 8y ago
  Neither Monzo nor Starling charges for a current account.
- egypturnash 8y ago
  > The next thing Europe needs is a Robinhood-like app for fee-free trading. Would it give a percentage of every transaction to assorted charities instead? Steal from the rich, give to the poor, after all.
  - dmos62 8y ago
    Only if you have too much money on your account. It would do a median and punish those with median*100 balances.
- richardknop 8y ago
flurdy 8y ago
What I love about my current app-only bank's approach, is that that also includes customer service. I had to speak to them a couple of times, and all the chat is handled inside the app. And dealt with quickly. Love it. With my old high street bank their app is ok, but often have to refer to the web based service for more extensive features. That made me anxious about using an app-only bank. 1 year in and I have never thought "hmmm wish I could do this on my laptop". You do everything via the app, and it is intuitive. Since the only time I go into a bank's branch is to open the initial account and then never again, I have no need for them anymore. App-only is fine for me. I do wonder how services like Curve affects the app-only banks though.
dfox 8y ago
I would like to see more banks /fintech startups with the same approach to things as Czech primordial fintech startup: Fio. It is combination of stock broker and credit union (nowadays full-fledged bank) that was founded by bunch of CS graduates. They had internet access to account from the start, originally supported by custom made authentication device and 20 line officially supported shellscript that emulated the device by means of bunch of few "openssl something" commands. They have rest API that really is REST (GET account movements, PUT bunch of payment orders, no bullshit) and when they didn't have API they docummented format of movement notification emails and officially acknowledged and supported machine parsing of such messages (to the order of providing example code). Somehow I think that EU's PTS2 and such things tries to force banks to do this, but solves the problem from the wrong end.
- TeMPOraL 8y ago
  You just described the bank I want. Why oh why we can't have this? For instance, right now I'm figuring out how to simply query my account balance in a non-interactive way, just to have it displayed on my machine. I basically have two options - try to drive a headless browser through full login process and scrap the main site, or reverse engineer whatever mechanism they have that lets their mobile app show my balance without logging in. Either way, I'm worried the bank will sack my account for breach of TOS, or "attempt at hacking", or some other bullshit. Really, why can't I just get a token and query some API?
  - lewilewilewi 8y ago
    Monzo have an API you can use: https://developers.monzo.com/ https://developers.monzo.com/
- runn1ng 8y ago
  I am Czech and I half-switched from Fio to Revolut and it is a night and a day. (I keep some funds in Fio for payments to tax office, but that's it.) Fio mobile app is terrible and it feels like it's from 2012.
- Markoff 8y ago
cabaalis 8y ago
> The systems failure in April, affecting nearly two million TSB customers, was a breaking point for Mr. Stevenson. He moved his money to Monzo, a British start-up that is among a growing number in Europe offering checking accounts and A.T.M. cards, but lack physical branches — everything is done through an app. I don't quite understand this logic. Sure there was a very inconvenient failure. But the reaction is the move your money away from established banks with thousands of employees to an app-based startup? No, not for me, thank you.
- YawningAngel 8y ago
  Bank accounts in the UK are required by law to insure deposits up to £85,000 so you aren't risking much unless you're very wealthy indeed.
- nmstoker 8y ago
  The key thing with TSB was that none of their thousands of employees could fix the problems for weeks in end, so it appears many customers have come to the realisation that they should not be with a bank that cannot rectify issues, and thus they are looking elsewhere. You seem to be trying to signal that you're conservative. Thus in this scenario, you would leave TSB and go to another established bank with thousands of employees - and maybe, despite their legacy systems, you'd be fine. The original person in the example though has reached the point where they're leaving and they're willing to try something new. They won't actually be at greater risk of loss, since there's a well established ombudsman and UK banks have a guarantee (FSCS), so then it becomes a matter of inconvenience from any bank mistakes (until they're rectified) and the level of features - with modern systems, it's entirely likely the startup app-only bank will do better on both these points. So it's not the sort of gamble you seem to think it is after all...
- SmellyGeekBoy 8y ago
  I'd love to see what TSB's tech stack looks like now. I've worked on data migration projects with financial institutions in the past and the mountains of technical debt are truly terrifying. If TSB have gone through all of this pain and emerged at the other end as a truly modern bank without all the historical cruft I'd be seriously tempted to move over to them. Don't get me wrong - I'm firmly in the "don't fix it if it ain't broke" camp and have no problem at all with 40-year-old COBOL code handling my transactions. But in my experience plenty of this code is broke and the amount of manual intervention to make things work would have a lot of people keeping their money under their mattress if they saw it first hand. Food for thought.
richardknop 8y ago
I've been using Monzo for some while but since I've moved away from London for a while, I couldn't give them a UK address for the new checking bank account. I have been using the original Monzo prepaid debit card and was happy with it but that was discontinued. Funny enough, I am also a long time TSB customer which is a bank mentioned in the article. Ignoring their huge mess around migrating users to new platform (made by Spanish bank that owns them now), their mobile app is surprisingly good. Given I travel a lot and have lived in multiple countries, I have several bank accounts so I don't rely on any single one.
mdekkers 8y ago
I use N26, Revolut, and Revolut for Business. All are amazing.
markvdb 8y ago
Call me underwhelmed by all of this. I've never paid a cent for my EU € banking needs for twenty years. Decent web based banking. Real people in a branch a 5 minute walk away. Free SEPA € transactions, free debit and credit card.
- karambahh 8y ago
  I don't know in which country your bank is but my anecdotal experience of banks in France are that monthly fees are common ?
  - arkh 8y ago
    Brick and mortar banks yes. But you can easily open an online account with Boursorama, ING, Fortuneo and lot of others with no fee (some require specific income or assets tho).
- CalRobert 8y ago
  Where are you? Where I live the banks are pretty much a cartel that haven't had to handle competition for decades and view their customers with infantilizing condescension. And there are loads of fees, as well as absurd interest rates on mortgages. Oh, and they destroyed the country, at least for a while.
  - markvdb 8y ago
    Belgium. Banking is one of the only services price competitive with other EU countries here.
- maccard 8y ago
  These traits certainly aren't found in all EU countries. > Real people in a branch a 5 minute walk away. None of the major banks in the UK meet this critetia (well, maybe in London). Most of the banks are located in city centres, manned 9-to5 Mon to Friday (which is when im working of course), and most of them tell you to do your banking online/using the in-branch machines. > free debit and credit card. Again,country specific. Ireland used to charge 2.50/cadx, and now charges 0.12c a transaction, up to 2.50 per year.
fastbeef 8y ago
While the apps look nice, I can’t say I see anything that major banks in Sweden haven’t offered already for the past 5 years or so. Are we so far ahead or is online banking in such a shitty state?
- rjst01 8y ago
  How do I, as a resident in Sweden, open an account that can receive a payment in Euros, then spend those euros without having to convert them to Swedish crowns and back, and pay conversion fees each way? Revolut does this. It also works out 2-3% cheaper for converting SEK to Euros than either SEB or Nordea. Unfortunately, as it's UK based, it's not at all clear if Revolut will continue to exist in its current form after brexit.
  - thesimon 8y ago
    >Unfortunately, as it's UK based, it's not at all clear if Revolut will continue to exist in its current form after brexit. They recently applied for a banking license in Belgium.
    - rjst01 8y ago
      Ah, I was not aware. Hopefully they're successful and it just keeps working seamlessly.
  - swift532 8y ago
    It's probably the same in Sweden, in Croatia you can have a foreign currency account that holds, well, foreign currencies. They can hold multiple kinds of foreign currency. As long as the payment receiver is receiving a currency you already posesss, nothing gets converted.
    - rjst01 8y ago
      I haven't found anything like this offered by a Swedish bank and available to individuals.
TeMPOraL 8y ago
I have one question, and one question only. Which of those providers offer an API - one that I can use as an individual to automate my finances? That's really the only thing I need over traditional banking. I can handle the rest for myself from there. Even a read-only API would do.
- Deathmax 8y ago
  Monzo: https://docs.monzo.com https://docs.monzo.com Starling: https://developer.starlingbank.com/ https://developer.starlingbank.com/
- slavoingilizov 8y ago
  Monzo also offer out of the box integration with IFTTT: https://monzo.com/features/ifttt/ https://monzo.com/features/ifttt/
- SmellyGeekBoy 8y ago
  I've found that Xero (a cloud accounting platform) can integrate with pretty much any bank. Turns out they do this via a service called Yodlee - and it seems they can provide a read-only API to most banks, if that's what you're after.
rahimnathwani 8y ago
The title mentioned lending, but the article says almost nothing about it. As other commenters have noted, these new banks often have great customer experience. But they don't do much lending. For example, as of February this year, Monzo's loan book totalled 160,000 GBP [0] Disclosure: I co-founded a UK-based fintech lending business (www.oakam.com). We're hiring PMs, Data Scientists and Software Engineers. Message me if you might want to work on expanding access to credit, and increasing financial inclusion. [0] https://monzo.com/annual-report/2018/ https://monzo.com/annual-report/2018/ (ctrl+F 'Loans and advances to customers')
- tomblomfield 8y ago
  Monzo loan book is currently about £10m. But it's true that we're intending to stay relatively balance-sheet light - the aim is to offer a "financial hub", plugging in third-party products to a central current account (or "checking account" for our US friends). (I'm the CEO of Monzo)
  - Sholmesy 8y ago
    I like this approach; feels very unix-y in philosophy. I am in the position where I'm undoubtably going to need to become an adult soon, and the prospect of going back to traditional banks makes me ill.
wprapido 8y ago
Using Monzo, Monese, N26, TransferWise Borderless, Revolut, for both personal and business purposes, and am a happy camper. EUR and non-EUR accounts.
- akvadrako 8y ago
  I've tried several of those and TransferWise Borderless is definitely the best. Free debit card, US ACH numbers, good rates.
  - wprapido 8y ago
    Low rate international transfers is how they started out, before becoming a bank
danielecook 8y ago
Does anyone have experience using these in the UK as an expat (US)?
- dagw 8y ago
  Not in the UK specifically, but as a US citizen living in the EU I've had small online only banks close my account or refuse my business because dealing with the paperwork that comes with having US citizens as customers just isn't worth their time and effort.
- amaccuish 8y ago
  I'm a customer of transferwise and not a US citizen, but I remember seeing that they don't currently serve US citizens due to the tax laws.
- rurounijones 8y ago
  All of them that I have looked at require you to be resident in the UK or EU unfortunately. I have found "Expat" specific banks but they all seem to be of the "You have to be this rich to use" type.
supergilbert 8y ago
Anyone knows how PTS2 will affect these apps, and traditional banks? It's a topic that isn't discussed a lot but I'm sure many startups are already working on awesome projects with the PTS2 API spec.
rusk 8y ago
N26 all the way! Instant account update on purchases (I mean instant, I get a little ding on my phone before the tx has even gone thru at pos). No charges. Can use throughout Europe with no additional cost. No branches no bricks and mortar to subsidise. In case anyone is interested, the EU has been taking an active interest in disrupting banking monopolies. Check out PSD2! [1] [0] https://n26.com/en-eu/ https://n26.com/en-eu/ [1] https://en.wikipedia.org/wiki/Payment_Services_Directive#Revised_Directive_on_Payment_Services_(PSD2) https://en.wikipedia.org/wiki/Payment_Services_Directive#Rev...
- s_dev 8y ago
  I use N26 as well. I have concerns about using UK mobile banking apps like Monzo, Revolut and Monese because Brexit and I trust the EU more than the UK regarding privacy. Theres the added advantage that because N26 are German all savings up to €100k are insured by the German government.
  - rusk 8y ago
    > Monzo, Revolut and Monese I heard it said that these aren't actual "banks" per se ... whereas N26 is, and is regulated as such. Just another reason to feel a bit more secure. Though the additional services Revolut offer have piqued my interest. In particular crypto payments. The -ve with N26 is that they don't offer much beyond standard current a/c services. No loans or savings for instance, or overdraft, which is all totally fine for what I used it for. I'll fall back on the B&M bitches for the harder stuff.
    - hocuspocus 8y ago
      > No loans or savings for instance, or overdraft They offer all of these in Germany. Afaik extending credit lines is regulated differently across the EU and it might take time to scale it out. I don't understand why they don't offer savings and investments in more countries though, given they are only an intermediary.
    - SideburnsOfDoom 8y ago
dharma1 8y ago
What are your experiences of neobanks for business accounts in the UK? I'm looking for something that will make managing expenses/VAT returns automatic, hopefully connects to Zero or Wave via a real API (and not Yodlee) and is FCSC protected. Which one is the best? -Starling -TransferWise Borderless Business account -Revolution Business Do any of them offer interest on cash balances on business account?
SideburnsOfDoom 8y ago
With the mentioned services, you have to be aware that there is a real sense in which, while Monzo and Starling are Banks, Revolut is not a bank. The other two are FSCS protected (1), guaranteeing your deposit up to £85K, but Revolut is not. You can check here https://protected.fscs.org.uk/tools/check-your-money-is-protected/ https://protected.fscs.org.uk/tools/check-your-money-is-prot... Revolut is still a useful foreign exchange service - I find it great for holiday money, but it's not the same kind of account as a bank's current account, and it would be a mistake to use it as if it was. 1) https://en.wikipedia.org/wiki/Financial_Services_Compensation_Scheme https://en.wikipedia.org/wiki/Financial_Services_Compensatio...

146 points by extarial 8y ago

hs86 8y ago

With these app-only banks I am always considered about their security if their main forcus for the first years is to grow at a startup-like pace. This talk from 2016 shows how they cut corners when it comes to security in order to achieve this: https://media.ccc.de/v/33c3-7969-shut_up_and_take_my_money https://media.ccc.de/v/33c3-7969-shut_up_and_take_my_money

TazeTSchnitzel 8y ago
That talk makes N26 look utterly terrible. With a single command and a leaked email and password, the account could be compromised from anywhere in 5 minutes! D:
usaphp 8y ago
Many of the “big traditional banks” used to have this idiotic rule of not using more than 10-12 characters in your account password for many many years, many still do now. So I would not be so judgeful on the new app-only banks.
- dogma1138 8y ago
  EU banks issue security tokens which are used for login and to authorize every transaction.
  - seszett 8y ago
    Some of the banks of some EU countries* Most French banks don't do that, for example.
    - dogma1138 8y ago
      French banks don’t use TAN codes? Isn’t it an EU directive at this point? It doesn’t have have to be a dedicated hardware token or a chip TAN, mTAN or soft tokens are also acceptable.
      - seszett 8y ago
        Unless a 6-digit "password" that you choose and stays the same for as long as you wish counts as a soft token, no they don't. Well, most don't, although some do.
        dogma1138 8y ago
        How do they offer SEPA transactions without TAN codes?
        seszett 8y ago
        I don't actually know what are the TAN codes you are talking about, I guess, if they're some technical implementation detail I sure don't know about it. For a SEPA transfer, you input the code of the account you want to transfer money to, then the amount and various optional messages and transactions codes if you want, then click "submit" and it's done.
        dogma1138 8y ago
        These are the transaction authentication numbers which are unique for each new transaction: https://en.m.wikipedia.org/wiki/Transaction_authentication_number https://en.m.wikipedia.org/wiki/Transaction_authentication_n... For me in the UK to move money I need to generate a TAN using a SecureID token the TAN is generated by using the secret in the token and digits of the account number I need to transfer money too. The same SecureID also generates OTP for 2FA login. But there are other TAN schemes including pregenerated lists and TANs sent over SMS or TANs which are generated by using the smartcard in your debit card.
      - kmmlng 8y ago
- Semaphor 8y ago
  For the longest time, my old bank limited my password to 4 (!!) characters…
CalRobert 8y ago
Their security appears to be superior to at least some of the traditional banks, which is laughably poor. http://olivernash.org/2015/11/18/security-theatre-at-allied-irish-banks-act-2/index.html http://olivernash.org/2015/11/18/security-theatre-at-allied-...
Rjevski 8y ago
At least in the UK, by law you are not responsible for any fraud on your account, and even if the bank folds the government will bail them out up to 85k per account (FSCS protection), so I wouldn't be worried. Disclaimer: Monzo & Starling Bank customer.
- blibble 8y ago
  if there's a serious fraud and the "app only bank" disagrees that you had 50k in your bank account: how do you prove it to a court without paper statements? this is the reasoning that prevents me storing any more than trivial amounts in these app only banks a magistrate understands a paper statement on company stationary
  - SideburnsOfDoom 8y ago
    > how do you prove it to a court without paper statements? The UK banking sector is not unregulated. You would expect, that when a company is certified by the relevant authority that they would have to comply with standards and reporting requirements. getting onto the FSCS protection is not trivial, if it was then Revolut would also be on it.
- SideburnsOfDoom 8y ago
  Monzo and Starling are FSCS protected, Revolut is not. You can check here https://protected.fscs.org.uk/tools/check-your-money-is-protected/ https://protected.fscs.org.uk/tools/check-your-money-is-prot...
slavoingilizov 8y ago
Examples of better security than incumbents: https://monzo.com/blog/2018/06/28/ticketmaster-breach/ https://monzo.com/blog/2018/06/28/ticketmaster-breach/ https://monzo.com/blog/2018/09/07/ba-data-breach/ https://monzo.com/blog/2018/09/07/ba-data-breach/
IshKebab 8y ago
Practical security with these apps, at least Monzo is much better for the average consumer because I'll learn about fraudulent transactions immediately via a notification on my phone. With my high street bank (1st direct, which I only really keep for their free coin machines) I might learn about it... weeks later when I check my balance on their website... maybe. I don't have their app installed because it is shit. Btw another reason I kept 1st direct was to pay in cheques which the government still insists on using, but Monzo lets you do that with a photo of the cheque now I believe. Can you imagine 1st direct ever being that modern? Their website still opens in a popup and tells you no to use the back button!

incompatible 8y ago

Why app-only? Is it so hard to provide a website too?

ur-whale 8y ago
Is there any difference between the two these days?
- incompatible 8y ago
  Because you can run Android apps in Chrome these days (I heard somewhere, I don't use it), and make websites run likes apps (webassembly)?
- newnewpdro 8y ago
  There is a very important difference between the two. You can access a web site via ubiquitous, open-standards compliant software known as web browers. This means you can use the service from any operating system/computing platform you wish, existing or future, provided it implements said standards. It's obviously important that we resist transitioning to a world where core life activities like commerce and banking requires running proprietary software on a finite set of supported proprietary systems. This is fundamentally about our freedom.
  - dbbk 8y ago
    If someone doesn't have an iOS or Android device they have the freedom to bank with a traditional bank.
    - newnewpdro 8y ago
      So we're in agreement then that they would've lost the freedom to bank electronically using any computer and software of their choosing.
    - ttty 8y ago
      What about when 99pc of the banks will only offer iOS and Android. No or os will be able to compete with them because the backing apps don't work. Now OSes can stagnate and become worse because they know you'll sick to them because you have no choice. A new player would need to create a OS and a bank to compete. And probably more stuff.

rb808 8y ago

So Mr. Stevenson was frustrated when his previous retail bank's computers were down - so he moved to a computer only bank? Nice logic. I hate branches but its nice to know when everything is screwed up I can go into a physical place and talk to someone. The next crisis when your virtual bank app stops working - what are you going to do then?

toomuchtodo 8y ago
Having been a BankSimple Beta customer, and sticking with them until they were acquired by BBVA, you’re screwed when something goes wrong until customer service fixes it. Highly recommend a bank with branches over online only. There is value in being able to go into a branch and having an in-person complaint addressed.
thewizardofaus 8y ago
Yeah I don't really understand that statement in the article either. A computer fault can affect any company in the banking industry - irrespective of if they are "app" only.
AutoPhill 8y ago
If it's down for you, it'll be down for the branches. The point of these new banks are so that you can do anything inside the app without having to jump through endless hoops. An example, I'm using Monzo now (a new "challenger bank" in the UK). If I want an overdraft I can enable / disable that in the app. Same goes for if I want to disable my card, change the pin, order a new card. Everything's just easier. No need to spend ages on the phone going through menus and verifying who you are.
- fpoling 8y ago
  The bank can disable your account by mistake or have any number of other bugs affecting only small number of customers. With physical bank it is so much easier to make enough noise so at least they spend some time on you. With phone support they can just promise to call you later.

orf 8y ago

This is an exciting time for banking startups like this, and I know several of the traditional players are looking to emulate this success via app-only onboarding and less reliance on branches. Security is a concern, so I wouldn't keep my life savings in it, but they are pretty on the ball compared to the established banks. I know of two absolutely massive banks that have absolutely no clue of what IP addresses they own, let alone what services they have running on them. I've also used both Monzo and Revolut, and I definitely prefer Revolut. I really recommend anyone in Europe tries them! The crypto integration is interesting, but day to day stuff like an automatic savings pot and interbank rate transfers are really good.

TazeTSchnitzel 8y ago

I used Monzo as my day-to-day bank for two months and have only stopped using it because I'm not in the UK and need to keep my money in local currency. It was a terrific experience. Having an instant push notification when money enters or leaves my account, treating card purchase reservations instantly as unconfirmed transactions and not as nebulous inaccessible money, having transaction information presented in a human-friendly format, showing foreign currency transactions in the foreign currency, not charging currency exchange fees, being able to add notes to transactions… it's such a stark contrast to the mobile banking efforts of mainstream banks. By the way, if you're in the EU, bunq is a similar mobile challenger bank but based in the Netherlands and serving all of SEPA (if you're in the Eurozone you can use them as your main bank; I live in a non-Euro EU country so hold an account just for the hell of it). Disclaimer: I have multiple friends who work at Monzo.

nicoburns 8y ago
I have a Monzo acocunt, and one with Starling who are similar. They are both great. Rumours I hear from developers are that they can't get management to take security seriously though, which is a little worrying...
- davnicwil 8y ago
  That's worrying and also really surprising. If you have the time, would you mind giving more details either here or by email? (my email is in my profile) Disclaimer: I work for a cybersecurity startup. Also a Monzo customer.
- slavoingilizov 8y ago
  They are still better than the incumbent banks on security though. An example is how they both issued new cards to their customers affected by recent Ticketmaster data breaches, or British Airways hacks. After those events, they just contacted anyone who's shopped with the affected retailers and sent them new cards. I don't think this is an example of "not taking security seriously". No incumbent bank has done this, because it's expensive to issue new cards.
8y ago

tormeh 8y ago

I'm using N26 right now, and this is obviously the future. It's just so smooth.

gerogerke 8y ago

I have been using N26 as my daily driver for the last year, and I really don't want to look back at any bank that is using branches. However, I feel N26, Revolut, Monzo, Tomorrow, and all of the others are driving customers away with very expensive "premium" plans. I recently opened an account with DKB, another German direct bank, but with a shitty app. They offer everything I paid N26 5,90€ month to month (which they raised to 9,90€, can you imagine that) and much more like overnight money and a stock depot, for the tradeoff of having a shitter app, which is basically a webview loading their webpage. The next thing Europe needs is a Robinhood-like app for fee-free trading.

kamyarg 8y ago
> The next thing Europe needs is a Robinhood-like app for fee-free trading. Revolut is working on this one I believe. :)
- Rjevski 8y ago
  There is also Freetrade.
YawningAngel 8y ago
Neither Monzo nor Starling charges for a current account.
egypturnash 8y ago
> The next thing Europe needs is a Robinhood-like app for fee-free trading. Would it give a percentage of every transaction to assorted charities instead? Steal from the rich, give to the poor, after all.
- dmos62 8y ago
  Only if you have too much money on your account. It would do a median and punish those with median*100 balances.
richardknop 8y ago

flurdy 8y ago

What I love about my current app-only bank's approach, is that that also includes customer service. I had to speak to them a couple of times, and all the chat is handled inside the app. And dealt with quickly. Love it. With my old high street bank their app is ok, but often have to refer to the web based service for more extensive features. That made me anxious about using an app-only bank. 1 year in and I have never thought "hmmm wish I could do this on my laptop". You do everything via the app, and it is intuitive. Since the only time I go into a bank's branch is to open the initial account and then never again, I have no need for them anymore. App-only is fine for me. I do wonder how services like Curve affects the app-only banks though.

dfox 8y ago

I would like to see more banks /fintech startups with the same approach to things as Czech primordial fintech startup: Fio. It is combination of stock broker and credit union (nowadays full-fledged bank) that was founded by bunch of CS graduates. They had internet access to account from the start, originally supported by custom made authentication device and 20 line officially supported shellscript that emulated the device by means of bunch of few "openssl something" commands. They have rest API that really is REST (GET account movements, PUT bunch of payment orders, no bullshit) and when they didn't have API they docummented format of movement notification emails and officially acknowledged and supported machine parsing of such messages (to the order of providing example code). Somehow I think that EU's PTS2 and such things tries to force banks to do this, but solves the problem from the wrong end.

TeMPOraL 8y ago
You just described the bank I want. Why oh why we can't have this? For instance, right now I'm figuring out how to simply query my account balance in a non-interactive way, just to have it displayed on my machine. I basically have two options - try to drive a headless browser through full login process and scrap the main site, or reverse engineer whatever mechanism they have that lets their mobile app show my balance without logging in. Either way, I'm worried the bank will sack my account for breach of TOS, or "attempt at hacking", or some other bullshit. Really, why can't I just get a token and query some API?
- lewilewilewi 8y ago
  Monzo have an API you can use: https://developers.monzo.com/ https://developers.monzo.com/
runn1ng 8y ago
I am Czech and I half-switched from Fio to Revolut and it is a night and a day. (I keep some funds in Fio for payments to tax office, but that's it.) Fio mobile app is terrible and it feels like it's from 2012.
Markoff 8y ago

cabaalis 8y ago

> The systems failure in April, affecting nearly two million TSB customers, was a breaking point for Mr. Stevenson. He moved his money to Monzo, a British start-up that is among a growing number in Europe offering checking accounts and A.T.M. cards, but lack physical branches — everything is done through an app. I don't quite understand this logic. Sure there was a very inconvenient failure. But the reaction is the move your money away from established banks with thousands of employees to an app-based startup? No, not for me, thank you.

YawningAngel 8y ago
Bank accounts in the UK are required by law to insure deposits up to £85,000 so you aren't risking much unless you're very wealthy indeed.
nmstoker 8y ago
The key thing with TSB was that none of their thousands of employees could fix the problems for weeks in end, so it appears many customers have come to the realisation that they should not be with a bank that cannot rectify issues, and thus they are looking elsewhere. You seem to be trying to signal that you're conservative. Thus in this scenario, you would leave TSB and go to another established bank with thousands of employees - and maybe, despite their legacy systems, you'd be fine. The original person in the example though has reached the point where they're leaving and they're willing to try something new. They won't actually be at greater risk of loss, since there's a well established ombudsman and UK banks have a guarantee (FSCS), so then it becomes a matter of inconvenience from any bank mistakes (until they're rectified) and the level of features - with modern systems, it's entirely likely the startup app-only bank will do better on both these points. So it's not the sort of gamble you seem to think it is after all...
SmellyGeekBoy 8y ago
I'd love to see what TSB's tech stack looks like now. I've worked on data migration projects with financial institutions in the past and the mountains of technical debt are truly terrifying. If TSB have gone through all of this pain and emerged at the other end as a truly modern bank without all the historical cruft I'd be seriously tempted to move over to them. Don't get me wrong - I'm firmly in the "don't fix it if it ain't broke" camp and have no problem at all with 40-year-old COBOL code handling my transactions. But in my experience plenty of this code is broke and the amount of manual intervention to make things work would have a lot of people keeping their money under their mattress if they saw it first hand. Food for thought.

richardknop 8y ago

I've been using Monzo for some while but since I've moved away from London for a while, I couldn't give them a UK address for the new checking bank account. I have been using the original Monzo prepaid debit card and was happy with it but that was discontinued. Funny enough, I am also a long time TSB customer which is a bank mentioned in the article. Ignoring their huge mess around migrating users to new platform (made by Spanish bank that owns them now), their mobile app is surprisingly good. Given I travel a lot and have lived in multiple countries, I have several bank accounts so I don't rely on any single one.

mdekkers 8y ago

I use N26, Revolut, and Revolut for Business. All are amazing.

markvdb 8y ago

Call me underwhelmed by all of this. I've never paid a cent for my EU € banking needs for twenty years. Decent web based banking. Real people in a branch a 5 minute walk away. Free SEPA € transactions, free debit and credit card.

karambahh 8y ago
I don't know in which country your bank is but my anecdotal experience of banks in France are that monthly fees are common ?
- arkh 8y ago
  Brick and mortar banks yes. But you can easily open an online account with Boursorama, ING, Fortuneo and lot of others with no fee (some require specific income or assets tho).
CalRobert 8y ago
Where are you? Where I live the banks are pretty much a cartel that haven't had to handle competition for decades and view their customers with infantilizing condescension. And there are loads of fees, as well as absurd interest rates on mortgages. Oh, and they destroyed the country, at least for a while.
- markvdb 8y ago
  Belgium. Banking is one of the only services price competitive with other EU countries here.
maccard 8y ago
These traits certainly aren't found in all EU countries. > Real people in a branch a 5 minute walk away. None of the major banks in the UK meet this critetia (well, maybe in London). Most of the banks are located in city centres, manned 9-to5 Mon to Friday (which is when im working of course), and most of them tell you to do your banking online/using the in-branch machines. > free debit and credit card. Again,country specific. Ireland used to charge 2.50/cadx, and now charges 0.12c a transaction, up to 2.50 per year.

fastbeef 8y ago

While the apps look nice, I can’t say I see anything that major banks in Sweden haven’t offered already for the past 5 years or so. Are we so far ahead or is online banking in such a shitty state?

rjst01 8y ago
How do I, as a resident in Sweden, open an account that can receive a payment in Euros, then spend those euros without having to convert them to Swedish crowns and back, and pay conversion fees each way? Revolut does this. It also works out 2-3% cheaper for converting SEK to Euros than either SEB or Nordea. Unfortunately, as it's UK based, it's not at all clear if Revolut will continue to exist in its current form after brexit.
- thesimon 8y ago
  >Unfortunately, as it's UK based, it's not at all clear if Revolut will continue to exist in its current form after brexit. They recently applied for a banking license in Belgium.
  - rjst01 8y ago
    Ah, I was not aware. Hopefully they're successful and it just keeps working seamlessly.
- swift532 8y ago
  It's probably the same in Sweden, in Croatia you can have a foreign currency account that holds, well, foreign currencies. They can hold multiple kinds of foreign currency. As long as the payment receiver is receiving a currency you already posesss, nothing gets converted.
  - rjst01 8y ago
    I haven't found anything like this offered by a Swedish bank and available to individuals.

TeMPOraL 8y ago

I have one question, and one question only. Which of those providers offer an API - one that I can use as an individual to automate my finances? That's really the only thing I need over traditional banking. I can handle the rest for myself from there. Even a read-only API would do.

Deathmax 8y ago
Monzo: https://docs.monzo.com https://docs.monzo.com Starling: https://developer.starlingbank.com/ https://developer.starlingbank.com/
slavoingilizov 8y ago
Monzo also offer out of the box integration with IFTTT: https://monzo.com/features/ifttt/ https://monzo.com/features/ifttt/
SmellyGeekBoy 8y ago
I've found that Xero (a cloud accounting platform) can integrate with pretty much any bank. Turns out they do this via a service called Yodlee - and it seems they can provide a read-only API to most banks, if that's what you're after.

rahimnathwani 8y ago

The title mentioned lending, but the article says almost nothing about it. As other commenters have noted, these new banks often have great customer experience. But they don't do much lending. For example, as of February this year, Monzo's loan book totalled 160,000 GBP [0] Disclosure: I co-founded a UK-based fintech lending business (www.oakam.com). We're hiring PMs, Data Scientists and Software Engineers. Message me if you might want to work on expanding access to credit, and increasing financial inclusion. [0] https://monzo.com/annual-report/2018/ https://monzo.com/annual-report/2018/ (ctrl+F 'Loans and advances to customers')

tomblomfield 8y ago
Monzo loan book is currently about £10m. But it's true that we're intending to stay relatively balance-sheet light - the aim is to offer a "financial hub", plugging in third-party products to a central current account (or "checking account" for our US friends). (I'm the CEO of Monzo)
- Sholmesy 8y ago
  I like this approach; feels very unix-y in philosophy. I am in the position where I'm undoubtably going to need to become an adult soon, and the prospect of going back to traditional banks makes me ill.

wprapido 8y ago

Using Monzo, Monese, N26, TransferWise Borderless, Revolut, for both personal and business purposes, and am a happy camper. EUR and non-EUR accounts.

akvadrako 8y ago
I've tried several of those and TransferWise Borderless is definitely the best. Free debit card, US ACH numbers, good rates.
- wprapido 8y ago
  Low rate international transfers is how they started out, before becoming a bank

danielecook 8y ago

Does anyone have experience using these in the UK as an expat (US)?

dagw 8y ago
Not in the UK specifically, but as a US citizen living in the EU I've had small online only banks close my account or refuse my business because dealing with the paperwork that comes with having US citizens as customers just isn't worth their time and effort.
amaccuish 8y ago
I'm a customer of transferwise and not a US citizen, but I remember seeing that they don't currently serve US citizens due to the tax laws.
rurounijones 8y ago
All of them that I have looked at require you to be resident in the UK or EU unfortunately. I have found "Expat" specific banks but they all seem to be of the "You have to be this rich to use" type.

supergilbert 8y ago

Anyone knows how PTS2 will affect these apps, and traditional banks? It's a topic that isn't discussed a lot but I'm sure many startups are already working on awesome projects with the PTS2 API spec.

rusk 8y ago

N26 all the way! Instant account update on purchases (I mean instant, I get a little ding on my phone before the tx has even gone thru at pos). No charges. Can use throughout Europe with no additional cost. No branches no bricks and mortar to subsidise. In case anyone is interested, the EU has been taking an active interest in disrupting banking monopolies. Check out PSD2! [1] [0] https://n26.com/en-eu/ https://n26.com/en-eu/ [1] https://en.wikipedia.org/wiki/Payment_Services_Directive#Revised_Directive_on_Payment_Services_(PSD2) https://en.wikipedia.org/wiki/Payment_Services_Directive#Rev...

s_dev 8y ago
I use N26 as well. I have concerns about using UK mobile banking apps like Monzo, Revolut and Monese because Brexit and I trust the EU more than the UK regarding privacy. Theres the added advantage that because N26 are German all savings up to €100k are insured by the German government.
- rusk 8y ago
  > Monzo, Revolut and Monese I heard it said that these aren't actual "banks" per se ... whereas N26 is, and is regulated as such. Just another reason to feel a bit more secure. Though the additional services Revolut offer have piqued my interest. In particular crypto payments. The -ve with N26 is that they don't offer much beyond standard current a/c services. No loans or savings for instance, or overdraft, which is all totally fine for what I used it for. I'll fall back on the B&M bitches for the harder stuff.
  - hocuspocus 8y ago
    > No loans or savings for instance, or overdraft They offer all of these in Germany. Afaik extending credit lines is regulated differently across the EU and it might take time to scale it out. I don't understand why they don't offer savings and investments in more countries though, given they are only an intermediary.
  - SideburnsOfDoom 8y ago

dharma1 8y ago

What are your experiences of neobanks for business accounts in the UK? I'm looking for something that will make managing expenses/VAT returns automatic, hopefully connects to Zero or Wave via a real API (and not Yodlee) and is FCSC protected. Which one is the best? -Starling -TransferWise Borderless Business account -Revolution Business Do any of them offer interest on cash balances on business account?

SideburnsOfDoom 8y ago

With the mentioned services, you have to be aware that there is a real sense in which, while Monzo and Starling are Banks, Revolut is not a bank. The other two are FSCS protected (1), guaranteeing your deposit up to £85K, but Revolut is not. You can check here https://protected.fscs.org.uk/tools/check-your-money-is-protected/ https://protected.fscs.org.uk/tools/check-your-money-is-prot... Revolut is still a useful foreign exchange service - I find it great for holiday money, but it's not the same kind of account as a bank's current account, and it would be a mistake to use it as if it was. 1) https://en.wikipedia.org/wiki/Financial_Services_Compensation_Scheme https://en.wikipedia.org/wiki/Financial_Services_Compensatio...