
App-Only Banks Rise in Europe and Aim at Traditional Lenders - extarial
https://www.nytimes.com/2018/09/23/technology/online-banking-monzo.html
======
TazeTSchnitzel
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.

~~~
7ewis
I've been using Monzo for a few years now and also have some friends there.

I have to say the app is just amazing, none of the traditional banks even come
close to what Monzo provide. There is nothing overly complex to it - but it
just works. Shows you things you would expect a bank to be able to show you,
for example the name of the shop where you made a purchase and it's location.
Rather than some random name of a parent company.

Sending money to friends has also become so easy now, I make Monzo to Monzo
payments on a weekly basis it just works.

I've heard they're great to work for too. Would be interested in working there
myself one day.

~~~
chii
> name of the shop where you made a purchase and it's location.

i would hope that this data can be obfuscated or hidden if the end user
desires it.

~~~
landryraccoon
Hidden from who though? The bank obviously needs to know the exact business
because what if a dispute opens over the charge. And the end user presumably
would like to check that they actually made the purchase so they will need to
see the details.

~~~
yardstick
I’m guessing they were considering the possibility of a curious spouse/partner
looking at your records. Which to me seems far, far less likely to happen with
an app-based transaction history than a traditional paper statement posted out
to you.

~~~
SmellyGeekBoy
If your spouse is checking your bank statements you're probably in an abusive
relationship. Hiding things from them seems like a huge red flag in this
respect, too (though I'll admit that perhaps gifts are a valid exception
here).

------
dfox
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
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
Monzo have an API you can use:
[https://developers.monzo.com/](https://developers.monzo.com/)

------
gerogerke
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.

~~~
richardknop
> The next thing Europe needs is a Robinhood-like app for fee-free trading.

Definitely. For generic Europeans wanting to invest in stock market you don't
have much choice. There are couple of archaic and/or dodgy brokers with shitty
apps (or no apps at all, just some bad websites built decade ago an never
upgraded).

~~~
akvadrako
You can use Interactive Brokers UK even if not based there. It's the best
consumer-oriented broker available anywhere.

~~~
dmos62
I've looked at a lot of brokers and the choice is overwhelming. Interactive
Brokers UK didn't stand out, except for using branding that gives deceiving
impressions on who it's regulated by. A more common example is falsely
posturing to be regulated by Swiss. I'm not sure why present yourself as a UK
brokerage, when in fact you're US regulated.

Anyway, why do you hold IB to be best consumer-oriented broker available
anywhere?

Edit: Actually I was looking at forex brokers, stocks is probably different in
that a lot of people want access to the US market.

~~~
akvadrako
IB is the largest retail broker with access to most global exchanges. I'm not
sure there are any competitors in the same league so it's hard to compare.

~~~
SmellyGeekBoy
Do you work for them?

------
markvdb
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.

~~~
CalRobert
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
Belgium. Banking is one of the only services price competitive with other EU
countries here.

------
rusk
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#Rev...](https://en.wikipedia.org/wiki/Payment_Services_Directive#Revised_Directive_on_Payment_Services_\(PSD2\))

~~~
krn
Nobody in his right mind should be using N26, if he cares about his account
security. It's beyond my mind, how an online-first bank can be built by hiring
dozens of software engineers, but not a single security expert, leaving
hundreds of thousands of customers vulnerable to multiple attack vectors[1].

[1]
[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)

~~~
rusk
gosh, 30 mins.. care to post a TLDR?

I'm not too concerned by this to be honest. Since the last 10 years banking is
regulated to such a painful degree that such concerns are _minutiae_.

This isn't bitcoin or a stage coach hurtling through the wild west. The only
way money is leaving my account is by way of my chip & pin card, which is no
easier or difficult than any other, and subject to the same protections, or by
wire transfer which is easily detected and reversed.

Beyond that, it's the bank's problem, ergo their underwriters and if they
weren't happy they wouldnt be underwriting. Even then, if the bank does go
tits up my deposits are guaranteed.

That said, of course there may be risks of bad actors within the bank itself,
but even in that regard I'm _at least as safe_ as I am with any other bank.

~~~
krn
TLDR: A German security researcher was able to take over any N26 account, even
though that theoretically required having an access to customer's email
address, phone number, and MasterCard ID. He was then able not only to
transfer the money from the account, but also to take a credit on customer's
behalf.

~~~
rusk
Thanks. As I said, both of these actions are both easily traceable and
reversible. Some inconvenience to me certainly but I am covered, and the the
thief is most probably in jail.

This does affect N26's own risk-profile and they'd do well to address it as
such it would affect their bottom line but as a customer I have little more to
fear than I have with any other bank.

I'd expect they have a lot of latitude to play with on the risk side though vs
B&M banks because they don't have any actual physical exposure.

~~~
krn
> As I said, both of these actions are both easily traceable and reversible.
> Some inconvenience to me certainly but I am covered, and the the thief is
> most probably in jail.

That's only true, if the bank itself was aware of its security issues, which
N26 was not. From the bank's point of view, you had just started using its
mobile app on a new device after successfully proving your identity without
any suspicious activity in the logs.

~~~
rusk
Yeah a mobile device that I don't own, in a location I haven't been in, buying
things I didn't buy. Most of this is easily provable, and I make such
assertions based on fear of prosecution for fraud if I'm lying.

Obviously if this is the case it's an issue for them to address and to not do
so puts them at risk of negligence.

So I reckon I'm safe enough!

~~~
krn
You probably would have been safe, unless you lived in Germany and used
CASH26[1], like many N26 users do. In that case, a hacker could have just
taken all the money out at the place you frequent using any device. Good luck
trying to prove to the app-only bank that you didn't give your credentials to
anybody, when the bank is not aware of any security breaches.

[1] [https://n26.com/en-de/cash26](https://n26.com/en-de/cash26)

~~~
rusk
That’s a cool feature!

I wonder is there a waiver in the T&C that says you’re responsible for any
losses of that kind ...

Would make for an interesting court case if not!

I still think any such losses are on the bank itself. It would be incumbent
upon them to refund, especially given that the details of such an attack are
in the public domain!

------
TeMPOraL
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
Monzo: [https://docs.monzo.com](https://docs.monzo.com)

Starling:
[https://developer.starlingbank.com/](https://developer.starlingbank.com/)

------
flurdy
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.

------
rahimnathwani
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
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
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.

------
richardknop
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.

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

~~~
BerislavLopac
I seriously expect, in the near future, only people with highly specialist
needs like software developers, video/audio professionals and the like to
still use some kind of laptop or desktop -- everyone else will pretty much
move to some kind of tablet of various sizes (including mobile "phones").

~~~
richardknop
Don't think so. 90% of office jobs in service economy are still basically
about entering numbers into Excel spreadsheets and making documents,
powerpoint presentations etc. I just don't see any way to make spreadsheet
application like Excel work on a touchscreen at an acceptable level for
generic office employees.

Furthermore, I am going to make a crazy prediction. I think we will see a
substantial revival of PCs in the coming decade as people start finding out
there are some things mobile phones or tables will just never be able to do.
Only thing needed is an open source operating system with good UI because
Windows is obviously not a way forward.

~~~
BerislavLopac
"Entering numbers into Excel spreadsheets" is being replaced by automated
processes as we speak.

~~~
richardknop
So what will all those people do? It would be politically impossible to allow
automation to replace all these jobs. I think these jobs will be kept around
just to make the electorate happy.

~~~
SmellyGeekBoy
I suppose that view makes sense if you conveniently ignore _everything that 's
happened since the industrial revolution_.

------
hs86
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)

~~~
usaphp
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
EU banks issue security tokens which are used for login and to authorize every
transaction.

~~~
seszett
Some of the banks of some EU countries*

Most French banks don't do that, for example.

~~~
dogma1138
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.

~~~
kmmlng
Not French, but German here. TANs are obviously used for transactions, but
I've never seen them used for login purposes. To add insult to injury, the
_only_ permissible password length for my bank was 5 (five!) characters.

Looking to make a switch right now..

~~~
wink
Sounds like Sparkasse, but hey, you can change your _username_ to a longer,
unguessable bunch of alphanumeric characters ;)

------
rb808
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?

~~~
AutoPhill
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
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.

~~~
nicoburns
My experience with message based support from challenger banks has been very
good. Much better than I get from my traditional bank.

~~~
acct1771
Devil's advocate: when that new market settles (app-only is the norm and not a
"challenger"), will the effort/cost expended on effort be as high?

~~~
TeMPOraL
Unfortunately, it won't. So let's enjoy things while they last - when a market
matures, quality always goes down the drain.

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

~~~
akvadrako
I've tried several of those and TransferWise Borderless is definitely the
best. Free debit card, US ACH numbers, good rates.

~~~
wprapido
Low rate international transfers is how they started out, before becoming a
bank

------
orf
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.

------
fastbeef
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
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
>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
Ah, I was not aware. Hopefully they're successful and it just keeps working
seamlessly.

------
SideburnsOfDoom
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-
prot...](https://protected.fscs.org.uk/tools/check-your-money-is-protected/)

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_Compensatio...](https://en.wikipedia.org/wiki/Financial_Services_Compensation_Scheme)

------
dharma1
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?

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

------
cabaalis
> 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.

~~~
SmellyGeekBoy
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.

~~~
tonyedgecombe
_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_

They haven't eliminated it, they just moved from Lloyds cruft to Sabadell
cruft.

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

~~~
dagw
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.

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

------
supergilbert
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.

