With Revolut Bank another neobank enters the Liechtenstein market. Competition is good for business, and choice is good for consumers

Lithuania-based banking provider Revolut is now offering its services in Liechtenstein. The company has expanded its European specialized banking license to 10 European markets. Besides Liechtenstein, those are Belgium, Denmark, Finland, Germany, Iceland, Lichtenstein, Luxembourg, Netherlands, Spain, and Sweden.

Having a banking license in another EEA country (such as Lithuania) does not automatically enable companies to offer their services throughout Europe. But they can apply with national regulators to passport their license. That’s also one reason why many international businesses set up shop in Liechtenstein, rather than Switzerland, which is not an EEA member.

What does it give to Liechtenstein?

First, customers in Liechtenstein can now upgrade to Revolut Bank from within the app – that takes a few minutes.

Second, it means customers using Revolut Bank for additional services enjoy deposit protection under the deposit guarantee scheme. The Lithuanian State company Deposit and Investment Insurance scheme protects deposits up to EUR 100,000.

Deposit insurance matters. A Revolut survey found that more than 50% of respondents would only deposit their salary if it fell under deposit insurance. They would also spend more via the app if deposits were insured.

Many fintechs offer no deposit insurance. Even PayPal is not officially a bank and does not offer FDIC-insured accounts. Customer should be aware of that when dealing with fintechs, especially if they don’t have a banking license.

Some fintechs offer “segregated accounts,” meaning they don’t hold customers’ deposits themselves but keep them in a designated account at an insured bank. But whether your money is protected depends on the fine print. For example, if all customers’ money is pooled in just one account, that account will be way above the insurance limit. Therefore, your money will effectively still not be protected. Also, it depends on where those segregated accounts are held, at which bank, and in which jurisdiction.

Competitive landscape

Entering more markets puts Revolut in a position to become a serious competitor to domestic neobanks and fintechs. Revolut has built a customer base of more than 18 million customers worldwide in six years, so customers like their offering.

With those ten new markets, Revolut Bank now operates in 28 EU markers. The license allows it to provide limited banking services and products offered by other Revolut Group companies through the app.

“Launching the bank in ten new European markets will provide an even greater level of security and confidence for our customers and will enable us to launch a host of new products and services in the near future,” said Joe Heneghan, Chief Executive Officer of Revolut Bank.

In Liechtenstein, there is certainly no shortage of Fintech banking providers. Likewise, traditional banks have recently stepped up their efforts to digitize their services. But another player in the ring can’t hurt; competition is good for business – it certainly is for the consumer.

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