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It seems that the future is digital and mobile. With the apparent successes of Android Pay, Apple Pay, Google Pay, Paypal, and Venmo, it is no surprise that smart banks are the future. However, many of us like the availability of having a physical card that we can use at restaurants and shops. Thankfully, smart banking seems to be the wave of the future—and the travelers best friend.
SMART BANKING IS SO MUCH MORE THAN A PREPAID CARD:
Typical prepaid currency cards have been marketed to travelers for decades, however they have generally been associated with hefty charges and pesky decisions as to what currency you have to upload onto them as you travel. Many people have just stuck to the idea that you’re likely better off just paying the ATM fees to have fluidity with your currency, while using your credit card as much as possible. However, you’re always left with some amount of currency that you have to exchange for poor rates at the airport, or stash in a drawer somewhere.
Not any longer. Smart banking ditches the brick and mortar locations and paper checking in favour of basing the whole banking system around a smartphone app. Many smart banks partner with credit card companies to facilitate an easy user experience—and here’s the best part: there’s no international fees.
MONZO – THE MOST PROMINENT SMART BANK:
The most famous smart banking system is Monzo. This international banking system operates through the vast international network of Mastercard—and thus it is accepted at almost any restaurant or ATM around the globe. It is attached to a smart app that you download to your phone, which help to streamline all the tedious bits that come with traditional banks. The app will display your balance with notifications after each transaction and through the app, you can freeze a card instantly if you lose your card, and then unfreeze it if you find the card again. You can also transfer and request money with the push of a button as easily as Paypal.
Taking money out of an ATM is generally cheaper than a traditional bank because Monzo doesn’t make a profit from exchange rates or needless charges. Their exchange rates are what they call “near-perfect”, and Monzo has stated that this will remain a huge part of their business model. Instead, they look to make their money on other services such as overdraft fees due to Monzo having recently been granted an unrestricted banking license. Instead of the money on your card being protected by a government Financial Services Compensation Scheme, it will be held by a third-party bank which decreases the risk of loss. Also, their savings accounts—known as “pots”—offer no interest so saving has no long-term benefits.
ALTERNATIVES TO MONZO:
– Revolut –
Revolut is another option for those who are trying to avoid fees. This is app won’t charge you if you use your card abroad, and you can transfer funds to bank accounts in 130 other countries entirely for free. Also, Revolut manages cryptocurrencies such as Bitcoin, Ether, and Litecoin buy letting you buy and hold these currencies in your Revolut account. Revolut will help you to manage your finances with automatic breakdowns of your spending, freezing and unfreezing an account, and tools for sending and requesting money.
The downside to Revolut is that you have to buy your debit card for $5, and you have no support for Direct Debits. Also, because Revolut is classed as an E-Money Institution, it is not backed by the Financial Services Compensation Scheme—however they are ring-fenced in a Lloyds bank account, so if something happens to the company your money should be safe.
– First Direct –
First Direct is another competitor to Monzo, however because it was formed in 1989, it feels much more like a traditional bank than Monzo. This branchless, internet-only bank has a 24/7 phone system, and the bank will offer you $100 for joining. Your first account comes with a $250 interest-free overdraft policy with no fees as long as you deposit $1,000.
Unlike Monzo’s pots, First Direct offers a Regular Saver Account with a 5% annual equivalent rate that is fixed for 12 months. If you ever need to pay in cash or by check you can do so at any Post Office or HSBC, and First Direct is fully compatible with Android Pay, Samsung Pay, and Apple Pay—so you can make contactless payments from any smartwatch or phone.
However, First Direct doesn’t offer the automatic spending breakdown that you get from Monzo, though they do allow you to manage some finances from your phone. Requesting money from friends isn’t as easy as with the other platforms. And perhaps least convenient, transactions aren’t free—you have to pay for an extra 2.75% on top of most conversions.
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