Online banks in the Netherlands

What are online banks?

Online banks, also called digital banks and challenger banks, are a new type of online financial institution that offers banking services designed to be managed entirely from a smartphone or web app. A digital bank account isn’t only convenient, but also often cheaper with fewer fees for travelling and foreign currency fees. You can also access other handy features such as budgeting tools, savings function, push notifications and other in-app functionalities.

Why should you switch to a challenger bank?

There are quite a few advantages to signing up with a digital bank:

• Fast sign-up. You can usually open an app-based account within minutes. You’ll need to reside in the Netherlands and provide proof of identity (a passport or driver’s licence will do).
• Banking access in your pocket. Your entire bank account is built to live on your smartphone. You can send money, budget and save all within the digital bank app.
• Fast and cheap international transfers and spending. A big advantage of app-based banks is they often have no fees for foreign currency transactions. This will help you save when online shopping from a site overseas, when you’re travelling and sending money across the border.
• 24/7 support. If you need help you don’t need to visit a bank branch to get support. Access online support within your app.
• Instant spending notifications. Know how much you’ve spent as you’re spending. Many apps tell you the time, place, location and amount of your transactions to help you keep track. You can also get notifications for your balance and other useful need-to-knows.
• Spending and saving features. Digital bank apps offer useful budget tracking features and tools designed to get you in control of your money. This includes automatically dividing your spending into categories, making sure you have enough money to pay bills and helping you save for your goals.
• Automatic savings. Some apps can look at your spending habits and income and identify how much you can reasonably save each month, then help you to set up a direct debit to a savings account for this amount.

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Are there any disadvantages to an online account?

If you’re planning to open a current account online, it’s important to be aware that there may be certain features which aren’t available to you. Many digital banks don’t offer mortgages or business accounts. By not being able to bundle together such financial products with your current account, you could miss out on lower rates of interest in the future. Be sure to check if there are any account restrictions, such as how many ATM withdrawals you can make a month. Cheque facilities are not usually offered with these types of accounts.

When comparing online bank accounts, be aware that your money might not have the same protection as it would with a traditional bank in the Netherlands. That’s because not every digital bank is licenced in the same way. A good starting point could be to check if a bank has been granted a European banking licence. If you’re unsure, look for information on the bank’s website or ask the bank directly about how your money will be protected.

6 things to know about digital banks

Here are a few things that you may not know about using your smartphone as your main point of contact with your bank, rather than having a traditional bank account:

1. There are fewer fees

Most of the big traditional banks in the Netherlands charge admin or transaction fees on current accounts that can start from €5 per quarter. There are sometimes ways to avoid these fees, such as maintaining a minimum balance in your account or lodging above a certain amount each month, but the fees may still be quite high. Traditional banks can also charge fees for ATM withdrawals, card transactions and direct debit/standing orders.

However, digital banks generally charge fewer fees. You will find that most will come with a “free” account option that charges €0 per month. Then, if you want to unlock more features you can upgrade and pay a monthly fee. There are sometimes ATM fees but you will not pay fees for card transactions and there are no annual fees. You can also avoid some of the smaller charges by switching to a paid account.

2. Cash and cheques usually aren’t supported

Unlike traditional banks, digital banks in the Netherlands usually have a limit on how many ATM withdrawals you can make a month. The number of free withdrawals will vary depending on the level of the account. Expect more free withdrawals with the top level accounts. Digital banks also tend not to offer cheque facilities. With prepaid cards, you have to load your account digitally through a bank transfer.

3. Managing multiple currencies is easier

Digital banks tend to have better services in terms of foreign currency. Some let you hold multiple currencies in your account while others let you make international transfers faster and cheaper than standard banks. No foreign currency fees also let you shop from websites abroad without paying too much for your purchase.

4. Your money may not be protected the same way it is with traditional banks

Not every digital bank is licenced in the same way. Revolut now operates as a fully licenced bank. Your funds will also be protected by the Lithuanian State Company “Deposit and Investment Insurance” up to €100,000. N26 holds a German banking licence, which means consumer deposits up to €100,000 are protected. Similarly, bunq is a fully licenced EU bank and money is covered by the Dutch National Bank guarantee scheme up to €100,000. Monese, however, does not have a banking licence. It operates as an e-money institution.

5. Everything is managed on your smartphone

Traditional banks in the Netherlands let you sign up for an account in a branch or online. With digital banks in the Netherlands, you can usually only sign up on your smartphone. You also might not get access to Internet banking on your computer with digital banks.

6. There are great security features

A benefit of an app-based bank is having full access to your account at all times through your digital banking smartphone app. Lots of digital banks allow temporary freezing of your account if you lose your card, so if you find it again it’s not as much hassle to get a replacement. If you forget your pin, digital banks also have access to a pin reminder after you complete a couple of security questions.

If you lose your phone or it’s stolen, you will still be able to secure your account. Just contact the digital bank (contact details will be on the website) and your account will be able to be locked from your smartphone. If you get your phone back, the bank will be able to set access back up again. If not, you can set up your app on your new phone.

Which are the digital banks available in the Netherlands?

There are a number of mobile banks available in the Netherlands. These include:

• Revolut. Revolut is a global banking app that offers budgeting tools, international currency exchange, travel insurance, cryptocurrency facilities, virtual cards and more.
• N26. N26 gives you a digital bank account that lets you save and budget. It also lets you transfer money to other N26 users plus gives you optional travel insurance and cashback.
• bunq.bunq is a bank account designed for global citizens offering up to 25 bank accounts with unique IBANS, savings and budgeting tools, money transfers through Transferwise and no foreign exchange fees.
• Vivid Money.Choose between a standard and premium account and enjoy a number of benefits, including cashback.
• Monese. Digital bank Monese lets you set up a UK current account and manage it from anywhere in the world and get a secondary IBAN account. But it doesn’t have a full banking licence and instead, operates as an e-money institution. You can use the app in multiple languages and make foreign transfers in up to eight currencies.
• Openbank. The Openbank Open Payment Account offers free domestic transfers, free cash withdrawals and more, all for no monthly fee.

How to get started with a digital bank

You can sign up with a digital bank in the Netherlands by downloading your chosen bank’s app onto your smartphone. You will need a few of your personal details to sign up, including your full name, date of birth, address and email address. You will need to confirm your identity and may need to deposit funds into your account to make it active. Then, your bank account will be created.

The bottom line

Digital bank accounts come with a number of useful features that can suit anyone banking in the Netherlands. If you’re looking for budgeting tools, a cheap way to access multiple currencies or a bank account to buy and manage cryptocurrencies, then you may want to consider a digital bank. Make sure you compare digital banks so you can find the right one for you.