How online banks could change the mortgage game
In the face of Ireland's shrinking bank sector, fintechs are hoping to make major inroads with consumers, not least in the area of mortgages
Without a doubt, the withdrawal of Ulster Bank and, to a lesser extent, KBC from the Irish market have changed the face of Irish banking, and not for the better.
Having already lost the likes of Danske Bank and Rabo Bank, Irish consumers were left with AIB, Bank of Ireland and Permanent TSB as the only choices among banks.
But as nature abhors a vacuum, so does the market. Stepping into the space left behind, credit unions and a new range of online banks, notably N26 and Revolut, now offer many of the functions of a traditional bank.
This is certainly good news for consumers and has long been the main argument in favour of the development of consumer products and services by financial technology, or ‘fintech’, companies.
Indeed, an ‘explainer’ published by the Central Bank of Ireland noted several benefits that fintechs can bring for consumers, including speed and convenience, greater choice, cheaper deals and more personalised products.
However, it also cautioned that fintechs could pose risks, including technology-based risks and increase the chance of consumers rashly purchasing financial services.
Nevertheless, with the Irish bank marketplace much-reduced and, so far at least, little sign of traditional banks from other EU countries showing any interest in entering the market, fintechs have become an attractive option for many.
For its part, Revolut seems to want to rise to the challenge.
Saying it planned to “revolutionise mortgages and provide customers with seamless digital solutions”, Revolut last year announced it was hiring in advance of entering the mortgage market.
Whether or not a wave of fintechs will appear to introduce real competition to the Irish mortgage market remains to be seen, but, no doubt, would-be homebuyers are hoping so.
