Mobile-based prepaid cards are changing the way Millennials bank. Although still starting in Spain, the UK acts as an example of the changes that could come in the mid term.
App-only banks, which give you full control over your finances have emerged as a very attractive product for the Millennial clientele that FinTech companies are targeting. These accounts are inherently easy to set up, and easy to manage. Notifications on spending and the capacity to block the card add security. This is compared to the apps of traditional financial institutions, that have slow transaction processing times and poor functionality in their apps.
Within the Spanish ecosystem, a small but growing offering provides a viable alternative. Globalcard by MasterCard allows you to apply for a card within 2 minutes, and while it does not offer an app, it reduces currency fluctuations and charges by being able to hold money in five different currencies. Correos provides a more complete service, with all the functionalities that are attributed to this FinTech service. BNext not only offers a free prepaid card but also a range of services from loans and microloans, to investing your savings. Launching their service in the Summer this year, Rebellion plans to provide another free service in Spain that intends to revolutionize the way banking is conducted in this country, supported by a clear and functional app that provides the means to control your card with blocking ability and real-time notifications on transactions.
While almost all the Spanish banks offer a similar service, many require you to be a client of the bank, often a long and slow process, and innovative and high-quality apps are not at the forefront of the bank agenda, providing a limited change to what there was previously, essentially sugar-coating and then reoffering their previous products.
This sector has mostly stemmed from the UK, considered the main hub of FinTech. The UK benefits from an atmosphere where regulators are seeking to encourage the industry as opposed to the US, where it is almost impossible to gain a charter and offer this service. Previously mentioned Revolut and Monzo are the stand-outs here, especially Revolut who has just gained unicorn-status. The London-based company is looking to expand its app to the USA, having constantly expanded in Europe, with over 30 countries’ citizens having the ability to open an account.
Spain’s FinTech Payments ecosystem is young. However, based on the UK’s success, a clear indication of the benefits these companies provide to customers, and Revolut’s $1 billion growing valuation, a path to success seems to be underway.