5 Banks and FinTech Companies I Wish I Could Use in the U.S.

Over the past few years, regulatory and technological developments in other regions have allowed some interesting and unique companies to flourish. FinTech companies are taking advantage of modern tech to create strong cultural shifts in the way that their clients interact with money every day. Here are 5 companies that I’ve been keeping a close eye on:

Swish (Sweden)

In the United States, P2P payment services like Venmo are favored among younger users (see The Venmo Line) but lack a strong bond to your actual bank account. Venmo keeps a balance that you must manually transfer back to a checking account. Square Cash, also popular, takes advantage of the way refunds are processed to clear payments faster than others.

The Swedish government has been trending towards producing less cash for some time now. As physical currency is becoming less popular, banks have banded together to build out a strong network to facilitate lightning-fast person-to person and person-to-merchant payments.

Unlike payment apps like Venmo or even newcomers like US-based Zelle, Sweden’s largest payment platform exists as a stand-alone app. Despite this, Swish still allows instantaneous transfers. Their mass adoption (close to 50% of the population of Sweden!) can be attributed to a few key features working in sync:

  • A focus on a strong interbank infrastructure (BankID)
  • Cooperation between the major banks in Sweden (Swish was a joint venture)
  • Strong cultural pressure to move away from cash (a 2016 WIRED article notes that more than 50% of bank branches in Sweden no longer conduct cash transactions).

N26 (Many Countries in Europe)

Over in Berlin, N26 has spent many years rebuilding the entire bank stack from scratch, with a modern touch.

You get a few advantages with building a bank in the modern age, such as being able to drastically reduce sign up time (the N26 website claims 8 minutes) and a great unified brand.

Image Courtesy N26.com

My favorite features, though, lie in their approach to offering a strong debit card product. In the US, debit card experiences are very lackluster: sure, you can withdraw money, use as payment wherever Visa or MasterCard are accepted, but the feature set basically ends there. Most of the “benefits” offered to consumers in the US (price protection, travel protections, waivers of foreign fees, etc.) are reserved for credit cards (where banks can collect revenue from interest and fees).

N26 offers a basic banking package free of charge, but for a $7/mo fee ($84 a year, which is a massive saving on the average American’s $290 in bank fees) N26 Black clients can take advantage of some pretty amazing benefits:

  • All ATM and Foreign Transaction fees waived
  • Unlimited medical insurance while traveling
  • Reimbursement for stolen cash if you get mugged up to 4 hours after withdrawing cash, up to a maximum of €500

N26 is setting a new bar for the basic banking experience: modern, world-friendly and feature-rich. It’s currently available in 17 countries within the EU.

Moneytree (Japan and Australia)

Popular personal financial aggregator Mint is only available for users that have bank accounts in the US and Canada. What about everyone else? Paul Chapman and the Moneytree team have been working hard at creating mint-like tools in Japan, a traditionally conservative country when it comes to internet-based banking. Just like Mint, Moneytree allows users to link and aggregate their banks by connecting to their online accounts. As opposed to the digital-friendly population in Sweden we saw earlier, Japan is still facing a low adoption rate (20–40% amongst some digital banking products) and still has strong cultural pressure on the use of cash.

Moneytree has recently expanded to the founder’s home country of Australia, and offers a strong approach to keeping track of your finances on your phone. I’ve personally had some mixed experiences using Mint to keep track of my own finances, and improvements to the app have been slow. Moneytree, however, offers a few nice improvements on the basic bank account tracking experience:

  • Fast raw data export: if you frequently expense purchases for business, you can create expense reports right within the app and send off a spreadsheet. (Some US-Based apps improve on this and have integrations with expense-tracking services like Concur and Expensify)
  • Reward points tracking: airline and credit card points can be worth a lot- and should be factored into your budget. They can be useful when setting goals for higher-spend occasions like vacations. It makes sense to be able to see your point balances along side your expenses.
Image Courtesy https://www.getmoneytree.com/au/

Ant Financial (China)

If you think Uber’s valuation is high, Ant Financial is right up there with them. With an approximately $60B pre-IPO valuation, one of the largest startups in China is also a finance-based one. Spun out of Alibaba, Ant Financial (and its primary product Alipay) has become one of the largest payment systems available in China, with over 450 million users.

As China has gone through rapid development, the country seems to have skipped the introduction of other traditional payment systems. As such, the World Bank estimates that only $16% of consumers in China have a credit card, relying heavily on direct debit systems or cash. Despite this, online shopping is huge. Sales on Alibaba’s “Single’s Day” (11/11) exceeds the combined sales of any major one-day shopping event in the United States. Alipay has become the leader among payment systems that swooped in to help support the burgeoning e-commerce infrastructure.

Ant Financial and other payment infrastructures (Such as Tencent’s Tenpay) have also broken out of the virtual world and into the physical. It seems that the sprawling urban culture is embracing the use of Alipay- from the smallest food vendors to restaurants. It’s simply just faster to scan a QR code over counting out cash and receiving change.

Starling Bank (UK)

In the UK, a Current Account is very similar to a US Checking Account- it’s designed for daily transactions (deposits and withdrawals)

Starling Bank is a digital-only “challenger bank” that’s making waves in the UK. From launching their app a few months ago, the bank has been quick to lay on great features that leverage their bank’s modern and agile tech stack.

They have plans to integrate gamification-style savings plan features (a la Qapital or Digit) and introduce granular card controls (like disabling contactless payments but still allowing chip payments)

Image Courtesy https://www.starlingbank.com/the-starling-bank-roadmap/

One of my favorite features, though, is Starling’s “Switch Service”, which allows you cut ties with your current bank without having to interact with them. It’s well known that ‘assets are sticky’ — with so much of your financial life tied to a bank, the switching costs are high. Allowing clients to sign up by entering in their old bank info removes some of the pressure on having to ‘break up’ with your bank.

Tune in next time when we discuss 5 great financial technologies that are unique to the United States!