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How to Open a Business Bank Account in Europe — The Difference Between Traditional Banks and Fintech Providers

May 20, 2021 · 6 min read

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In the modern world, you can incorporate your company in one country but operate in another one. If incorporation itself appears to be a quite simple task, opening a bank account (without which your company can't operate properly) might be a challenge in some EU countries. That's why there is a second option — opening a bank account in one of the fintech providers.

Furthermore, fintech providers might be a perfect solution for those that can easily open a corporate bank account in one of the traditional banks. In this article we will clear up the meaning of these words, find the best solution, compare the traditional banks and fintech providers, and genuinely provide you with a quick overview of banking options for an EU company.
Why Opening a Business Bank Account in a Traditional EU Bank is Such a Pain
There are a lot of different traditional banks in the European Union and everyone knows them. But opening a bank account for your company may become a comprehensive challenge.
So why is it so hard to open a traditional corporate bank account? The main reason lies in strict AML, anti-fraud, and other EU laws that aim to prevent illegal activities. That's why banks might just choose to avoid working with out-of-region companies: they often focus on working with local clients or those companies which have proven their performance in a certain country.

That is why you have to go through thick and thin to open a corporate bank account. Specifically, you have to provide a bank with a pile of documents, pay high-cost fees, and in most cases must visit a bank personally (yeah, we know how easy it might be). The pain probably won't end here: after the visit, a client will also have to wait for a decision from the bank. Yes, modern banks are quite regulated structures, they mostly aim to work with nearby companies to secure themselves from financial risks.

That's where fintech providers come into play — a far more flexible and client-friendly option for those that aim to open a bank account in the EU! Some might be able to work with companies that operate with cryptocurrencies, while this might be a gigantic issue with traditional banks, too. Let's take a look at the fintech providers!

Fintech Providers — Pros and Cons of Using Them

Fintech providers have made an appearance during the online revolution and became a new concept of financial flow transition. Your basic purpose for obtaining a corporate bank account is to get an IBAN number and freely handle your payments. Both fintech providers and traditional banks have licenses and can provide you with IBAN that's why there is no big difference in how to get it.

However, if you would like to go further, there are minor limits to fintech providers' e-money license in comparison with traditional banks:
  • you won't be able to get an overdraft or loan;
  • you won't earn interest on your account

As you may see, there are no crucial losses using fintech providers rather than traditional ones. Otherwise, we can find a great number of benefits:
  • you won't be charged international transaction fees or outrageous exchange rates;
  • the process of opening an account is much more simple and quicker than in traditional banks;
  • operations with fintech providers are as secure as with traditional banks because of the usage of SWIFT or IBAN;
  • for some entrepreneurs, the usage of a fintech business account provider is the easiest way to receive and send payments in the EU.

Choosing the Best Fintech Provider

So how one should choose the most suitable fintech provider with a wide variety of options on the market?

First, we advise you to find out whether fintech solutions suit your company's needs. Each fintech provider has its own requirements based on directors' and shareholders' residence, the company's business model and country of origin, and whether the company has a physical presence (rented office). For example, Wise doesn't work with businesses that operate with crypto, but Bankera is open to such companies; it is free (in some cases) to open an account in Wise, while Bankera will charge a €200 application fee which can be non-refundable and so on. It will be quite a challenge to find the best fintech provider all by yourself because you have to visit dozens of websites to collect whole characteristics and compare providers.

Also, the difference between each provider is quite huge. It depends on the parameters, such as the cost of bank account opening, transaction fees, currency exchange rates, countries to which you can send money and receive money, number, and size of transactions that are allowed, etc. Another complexity is that a certain fintech provider might have its own list of banned countries and industries with which it doesn't work. What an intimidating list, yup?

Even if you decided to cooperate with one of the fintech providers, it might be quite hard to choose the most proper one. It is Enty's turn to help you! Our team has scooped a lot of documents regarding each provider's list of banned countries, industries, and other data and created an easy-to-use tool that finds the best banking service for your company. Fast, easy, and, of course, free of charge. Answer a few simple questions and get your result in a blink of an eye.
What Documents Might Be Required by a Fintech Provider?
The list of documents needed to open a bank account in a fintech provider is generally much shorter than in traditional banks but varies from one fintech provider to another. Generally, you will need to provide:
  • Certificate of Incorporation or Extract from your local Register of Commerce (not older than 6 months)
  • Memorandum and Articles of Association
  • Company's register of shareholders and directors (not older than 6 months)
  • and might be required others

Summary: Comparing Traditional Banks and Fintech Providers

How Enty Can Help You With Banking?
To summarize, Fintech banking has a lot of advantages. Also, it is crucial to select the proper Fintech provider that will suit your requirements the most. Enty's team has created the aforementioned tool that will help you choose the best Fintech provider that would be the best for your business. Answer several simple questions and find your solution.
Our Open Banking feature will help you with company maintenance when your business bank account has been opened. Just connect your bank account directly to Enty and get all banking data reflected right in our interface. Such integration will also help to ease up accounting. As the data from your bank statement will be automatically reflected in accounting reports. In the nearest future, we will upgrade our Open Banking with advanced statistics and filters of transactions.
Finishing Up
Actually, it's not a challenge to open a business bank with any of the fintech providers by yourself. But there are other legal processes where you might need our help: company incorporation, tedious accounting and so much more. Enty can help you with any of these issues with ease! Just visit our website to explore all solutions.
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