As of 31 January 2021, the UK is no longer a member of the European Union. The lengthy and legally painful process that started at the beginning of 2020, has finally settled. However, many people still experience the consequences of it every day.
Thousands, if not millions, of people were forced to search for alternative banking solutions as traditional banks such as Lloyds, Barclays, and Coutts didn’t have the necessary licenses. Some have found their solution, but some are still searching. More attention is now spent on finding a banking solution that provides stability and security.
The issue with the traditional banks
As we saw from the Brexit process, traditional banks like Lloyds, Cotts, and others are not as stable as perceived. Many of those institutions lacked licenses from other countries in the EU.
For example, countries like the Netherlands and Liechtenstein require a financial institution to have a national banking license to be able to provide financial services. Ultimately, it ended with many lost clients. It just goes to show that traditional banks are also vulnerable to external factors — maybe even more so than Fintech companies.
Fintech companies differ in several ways, even not taking into account the different catalog of services and solutions that they offer. Within the fintech world, it is often that the general model is different between companies. Most Fintech companies in the EU hold a license that covers the EEA region, making them less vulnerable to problems like Brexit. So what should you look at as a customer when making a decision?
Is it easy to open a new bank account?
First, people should be looking at whether the particular bank is even accepting individuals with a non-UK address. While many expats have found their home in a particular country and can provide their address, it is not the only challenge that they are encountering. The ability to open a bank account now is limited to stricter rules and regulations regarding credit score, visa, citizenship, and other factors.
Safety and Stability of Your Funds Post-Brexit
As Brexit has ended and all seems to be “normal” again, it is clear that there is a lack of post-Brexit laws and regulations.
Many UK citizens living in the EU are seeing their bank accounts being closed. Many banks are coming across new issues with the law of other countries. Having no fast and direct solution these banks are forced to comply and terminate some of their customer accounts.
For many people, it is a matter of business survival so they are paying close attention to whether their accounts will be affected. With many unanswered questions, a certain stability and security of their funds cannot be guaranteed.
Is Fintech the Solution?
While many Fintech companies have the necessary licensing to provide banking services internationally, there is still a long way to go for Fintech to fully reach its potential. The development and usage of digital financial services are only growing.
Moreover, society’s view of Fintech is also changing. Before, many saw them as one-service-focused providers or untrustworthy entities. However at the moment many Fintech companies have advanced and acquired many different services for their portfolio.
Take a look at PayPugs. In just a matter of few months, they can offer IBAN bank accounts, fully support SEPA and SWIFT payments, and additionally provide cryptocurrency transactions. The collaboration opportunities for Fintech companies are only increasing with the government and other institutions adapting their laws in favor of Fintech.
The growing interest and adoption of Fintech services have proved that this concept can replace the traditional banks that are more vulnerable than perceived.
Be sure to contact one of our sales representatives to find out more about your possibilities to obtain a trusted digital financial services provider.