N26 and Revolut among others represent the new age digital-only banks that are popularly known as the 'challenger' banks or neobanks. These banks are entirely cloud-based that make use of mobile applications and web platforms to provide financial services and more to their customers.
The use of digital innovations and a focus on enhancing customer experience in the banking world is what sets them apart from traditional banks. It is safe to say that these mobile banks have changed banking for frequent travelers and digital nomads by giving them access to banking services at their fingertips while abroad.
No longer new to the banking space, these challenger banks are gradually acquiring significant market share in the banking sector.
As Europe's two leading digital banks, let's understand how N26 and Revolut compare against each other. Let's first get to know these banks in brief.
N26 is a Berlin-based fintech startup launched in 2013 by Valentin Stalf and Maximilian Tayenthal, as Europe's first digital bank. You can get access to N26 accounts via its smartphone app or from a web browser through laptops and desktop computers.
It operates in more than 20 European countries and has recently expanded into the United States as well. There are over 6 million N26 customers worldwide.
It is licensed by the German Central Bank and deposits up to 100,000 in N26 bank accounts are insured under the German Deposit Guarantee Scheme.
The company now stands at a $3.5 billion valuation after its series D round of fundraising in May 2020.
N26 closed its operations in the UK in 2020 following Brexit.
Revolut is a London based fintech company founded in 2015 by Nik Storonsky and Vlad Yatsenko. It operates as a mobile-only bank, accessible only through its mobile app.
The fintech firm has a banking license backed by the Bank of Lithuania. Unlike N26, Revolut is yet to offer customer deposit protection. For the time being, the deposits are safeguarded at Lloyd's or Barclays under the current e-money regulations.
Revolut has reached more than 12 million customers in over 30 countries.
As of February 2020, Revolut is valued at 4.2 billion following a funding round and thus, became the UK's most valuable fintech startup.
Here is our comparison of N26 and Revolut.
Opening an Account
To open an N26 or Revolut account, all you need is a smartphone. You have to download the app, have a video chat, fill up the required personal information, or take pictures of your documents and it is done. If the process all goes well, it only takes minutes and you will get your prepaid debit card in a few days.
The standard checking account is free for both however, Revolut charges a fee (6.00) for the delivery of your first card.
N26 uses the Mastercard exchange rate with zero mark-ups for all foreign transactions and ATM withdrawals while Revolut uses the Interbank exchange rate with a 1% markup at weekends.
Though the Interbank currency exchange rate is slightly better than the Mastercard rate, the 1% markup by Revolut makes no significant difference between the two. Both the rates are far better than what traditional banks offer.
Set up exchange rate alerts to be notified when it reaches your desired rate.
Foreign Transaction Fees
N26 charges no foreign transaction fees.
With Revolut, you can use the interbank exchange rate for transactions over 140 currencies wherever Mastercard or Visa is accepted. There will be a 0.5% fee when the expenditure exceeds 1,000 a month.
PayPal is a good alternative.
International Money Transfers
N26 offers free money transfers within the Eurozone through the Single Euro Payments Area (SEPA).
To send money to non-Euro accounts or cross-currency transfers, N26 employs TransferWise to carry out the transactions in over 30 currencies which are way cheaper than the normal bank transfer. The transfer fees will depend on the foreign currency used and the amount.
Similarly, Revolut offers international money transfers service to customers. Although the fee structure is different from N26. There might be additional bank charges for wire transfers in the non-Euro zone or cross-currency transactions.
There are limitations to neobanks when it comes to international money transfers. Money transfer specialists such as Remitly, Xoom, WorldRemit, etc are a cheaper, faster, and convenient way to transfer money.
N26 standard account holders are allowed 5 free ATM withdrawals in a month or unlimited free ATM withdrawals within the Eurozone.
Exceeding above 5 free withdrawals will incur 2.00 for each withdrawal afterward. For all non-Euro countries, N26 charges a 1.7% withdrawal fee.
Standard account holders at Revolut can withdraw up to 200 with no fee every month. Exceeding the limit will incur a charge of 2% fee for any withdrawals.
Both banks have real-time push notifications that inform you about any fraudulent transactions and allows their customers to freeze and unfreeze their cards and disable online transactions. Another layer of security is the fingerprint login.
Transactions with N26 are protected with 3D Secure. Additionally, the N26 app is paired to your phone, which means people cannot gain access to your accounts using the app or other device.
Revolut uses location-based security to track the phone and monitor transactions that come from locations that are different from the customers.
Another feature exclusive to Revolut is the disposable virtual cards that exist in the app and after each transaction, a new card number gets generated automatically.
Revolut allows its customers to trade cryptocurrencies amongst the Revolut users. It supports five cryptocurrencies-Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Ripple. This feature is not available for N26 users.
N26 and Revolut cardholders are offered travel insurance that is included in the card.
N26 emergency medical insurance can go up to an unlimited amount and also covers luggage delay, flight delay, trip cancellation, etc. and as an added bonus, it covers the first 90 days of the trip.
The insurance coverage is not available to the standard account holders but is included in the other upgraded products such as N26 You and N26 Metal. However, these are available only for Germans as of now.
Budgeting and Saving
With N26, you can have a look at your spendings for each month in various spending areas like eating out, shopping, travel, donations, etc. Though you cannot set a monthly budget with N26.
Saving with N26 is easy with 'Spaces'. You can create sub-accounts where you can set aside money for future expenses or just save up money.
With Revolut, you can set up a monthly budget and set your spending limit based on it. The app shows your spending for each month and gives you where you spent your money in various spending categories including the merchants where you have bought or the country.
Revolut has 'Vaults' to keep your savings. You can even keep your cryptocurrency in Vaults. Vaults round up your spending or any spare change to be deposited into your vault.
The N26 app or website has a full customer support center with all relevant queries being answered in the FAQs sections, blogs, and tutorials.
You can reach out to N26 customer support via email, phone, or live chat. Some customers have reported slow responses but most of the time, the representatives are quick to respond and solve customer issues.
To solve any banking related queries with Revolut, the 'Help' section within the app is one sure way to get your doubts resolved. You can ask the existing users for any clarification in the community section.You can also speak with the Revolut chatbot called Rita and opt for a 'live agent' to speak with a representative. Or get in touch with them via their social media links that are available within the app itself.
Despite having similar features, there are unique strengths and weaknesses for each of the banks. What it comes down to ultimately are the customers' preferences. These banks are constantly evolving to cater to the needs of their customers and the changing landscape of the banking sector in the digital age.
Digital-only banks may be relatively new with their own set of challenges but these banks are here to stay and can possibly be the future of banking.