February was a month of great significance. Open banking passed 5 million users and neobanks, like Revolut and Zopa, took measures to help the people of Ukraine. In an extraordinary move, Switzerland adopted EU sanctions against Russia.
Revolut’s efforts to help the people of Ukraine
As February ended, Revolut announced that it will provide emergency logistical support for its Ukraine-based employees. The bank is also supporting customers in Ukraine by waiving transfer fees for sending money to a Ukrainian bank account.
The bank’s Ukrainian co-founder and Chief Technology Officer, Vladyslav Yatsenko addressed the ‘misinformation that’s being spread on social media’ in a LinkedIn post. He also shared the company’s latest blog. Yatsenko stressed that Revolut is a British FinTech with financial services in the UK and EU. The bank operates under EMI or banking licences with ‘client funds either safeguarded or covered by respective deposit protection scheme. Revolut Bank UAB is regulated by the same regulation as any other bank in EU.’
Nikolay Storonsky’s heartfelt letter
At the beginning of March, Revolut’s co-founder and CEO, Nikolay Storonsky published a heartfelt personal letter outlining his feelings and the company’s efforts, announcing that every donation made to the Red Cross Ukraine appeal will be matched by Revolut. He explained, ‘For every pound or euro or złoty or franc donated by a Revolut customer to the appeal, Revolut will donate the same again, from today for the next 7 days, up to £1.5m.’
Zopa sponsors up to 50 working visas for Ukrainian candidates
Revolut wasn’t the only bank making headlines for its efforts to support Ukraine. According to AltFi, Zopa confirmed with immediate effect that it will sponsor up to 50 working visas for eligible applicants in the UK. It will also fast-track the relocation of Ukrainians wishing to join their family members in the UK. Furthermore, it will provide a relocation allowance of one month’s salary for citizens who have received the right to work in the UK.
What other FinTechs are helping Ukraine?
At the beginning of March, AltFi covered all the Financial Service providers and FinTechs supporting the people of Ukraine. Visas, donations, and industry coordination are ramping up. Managing Editor, Oliver Smith said he would update the page regularly. To view the current list of FinTechs and banks, which includes Santander, click the link here.
Switzerland adopts EU sanctions against Russia
In an extraordinary move, Switzerland froze Russian assets. The country’s Federal Council adopted the packages of sanctions imposed by the EU. In the official press release, it also announced that it would be delivering relief supplies for people who fled to Poland.
According to The New York Times, Swiss National Bank (SNB) data showed that Russian companies and individuals held assets worth more than $11 billion in Swiss banks in 2020. Additionally, the country is a global trade hub, hosting several companies that trade Russian oil and other commodities.
Open banking passes 5 million users
In February, the Open Banking Implementation Entity (OBIE) announced that it passed 5 million users. The official news article outlined its continued goals for the year ahead, which include:
- Drive competition and innovation by further increasing FinTech participation in the ecosystem.
- Bring new and exciting propositions to the market.
- Strengthen corporate governance and the culture of the organisation.
- Finally, ensure that ‘the collective effort, hard work and investment that has already gone into establishing open banking in the UK is extended to other sectors.’
Citigroup will eliminate overdraft fees
Citigroup will join a number of banks that are eliminating overdraft fees in the US. It aims to lift overdraft fees and charges on overdraft-protection services and returned items by this summer. While some banks have taken measures to curb clients’ overdraft fees, Citibank is one of the only top-five US banks to eliminate these fees.
The bank’s overdraft fee revenues are low in comparison to rivals. As a result, these decisions will not significantly impact the bank’s revenue.
Unarranged overdraft fees: Could open banking help?
According to this 2019 report by Fingleton and the Open Data Institute, unauthorised overdraft borrowing is expensive:
- 1.5% of customers pay unarranged overdraft charges.
- Customers pay around £450 per year in fees and charges on average.
- Allowing overdrafts to be provided automatically by another cheaper lender could significantly reduce costs for these customers.
In this scenario, open banking data API could trigger an automatic short-term loan from a cheaper, pre-agreed lender which is then deposited into the customer’s current account.
The uses of open banking are growing
Undoubtedly, open banking has many use cases. HMRC made headlines in November as it became the first tax authority in the world to integrate open banking into its systems.
Additionally, its open banking partner, Ecospend made a compelling case for open banking to combat fraud. The National Audit Office discovered that institutions that handed out loans, totalling £47 billion, could have used a simple open banking consent to validate applicants. This would have prevented COVID-19 loan fraud, offering a cheap and quick solution to verify if an account was genuine before issuing a loan.
February was a challenging month for people across Europe. It’s reassuring to see the support of FinTech and Financial Service providers for the people of Ukraine. Together with Switzerland’s sanctions, these collective efforts show the value of cooperation in difficult moments.
In conclusion, our thoughts are with anyone who has family or friends affected by the conflict. We hope peace can be restored quickly to the region and that people can begin to heal and recover.