Avant Money becomes a fully licensed bank in Ireland

The Irish banking sector has received a competitive boost with the news that Avant Money, which is owned by Spanish banking giant Bankinter, is now officially a licensed bank in Ireland. 

This will allow the company to offer a greater range of banking services to Irish consumers and properly take on the dominance of AIB, Bank of Ireland and PTSB.  

Bankinter has been operating in Ireland since 2019 when it bought Avant Card (previously MBNA). It renamed the business Avant Money in 2020, and started selling mortgages here the same year.

Bankinter is one of Spain's largest banks and also has operations in Portugal, Luxembourg and of course here. It has passported its Spanish banking licence to Ireland. Under EU rules, a bank or financial institution which is licensed in one EU country is able to "passport" or transfer that licence to another country without having to get full regulatory approval all over again. This is how Revolut, which has a Lithuanian banking licence, operates in Ireland for example. 

But it's expected that Bankinter may eventually apply for a full Irish banking licence from the Central Bank of Ireland in the future. 

What can Irish consumers look forward to?

Avant Money, which will rebrand to Bankinter over the coming months, initially plans to offer savings and deposit products. However other products such as a current account, business loans, a wider range of consumer loans, and insurance products could follow at a later stage. 

Avant/Bankinter may also start competing more aggressively in the areas where it already operates such as mortgages. Indeed the company recently shook up the market by announcing plans to introduce a "tracker-like" mortgage product into the Irish market. 

There are no plans for Avant/Bankinter to open any physical bank branches in Ireland with all services to be carried out online. For now at least. While this may have been seen as a risky strategy a decade or so ago, the recent success of online-only banks like Revolut and N26 shows that it’s a business model which can work. Not having a branch network should also help the company keep costs under control.     

At the moment AIB, Bank of Ireland and PTSB account for the lion’s share of the deposit market in Ireland, not helped by the fact that Revolut and N26 only very recently launched savings products here. So any competition in this area will be particularly welcomed by Irish consumers. 

Mind you, anyone who’s had the "pleasure’' of dealing with some of the Irish bank’s mobile apps and online services will likely welcome more competition and new options in this area too.    

Consumers deserve more choice, competitive rates, and improved customer service. With Bankinter’s support, we are well-positioned to provide exactly that. We’re just getting started. The future is bright, and we’re looking forward to delivering even more value to our customers in the years ahead.

Niall Corbett, CEO of Avant Money

Why Ireland?

The Irish banking sector has seen a flood of exits over the past decade or so.

Bank of Scotland/Hallifax, Danske Bank (formerly National Irish Bank), ACC Bank, and Rabobank (which owned ACC) all pulled out of the Irish retail market while Anglo Irish Bank and Irish Nationwide Building Society both collapsed.

And of course Ulster Bank, the country’s third biggest lender, announced its shock exit from the Republic in February 2021, swiftly followed by KBC a few weeks later. 

But Bankinter has clearly seen something the rest of the competition doesn’t. 

At the moment Irish households have over €160 billion resting on deposit in Irish banks. However the vast majority of this money is resting in accounts that pay little or no interest, much to the delight of the main Irish banks which have been able to use this cheap source of finance to lend on at higher rates to mortgage customers.  

Bankinter likely has its eyes on this money. For both its mortgage customers in Ireland and its operations in Spain, Portugal and Luxembourg. And it’s no surprise that deposits are the first new product it plans to offer. 

Ireland is also a fast growing economy with a rapidly growing population. And Bankinter obviously sees value in expanding its presence here to take advantage of this. 

Good news for consumers

At the moment Irish consumers are faced with mortgage rates that are above the Eurozone average as well as deposit rates that are below the Eurozone average. And this has been the case for most of the past 15 years. So we have the worst of both worlds.  

While there are some reasons unique to Ireland for this (the difficulty enforcing the security on loans makes lending here more risky and more expensive) the lack of competition doesn't help.

So Bankinter's expansion in Ireland is certainly good news as it should lead to better services and lower rates for Irish banking customers over the coming years. It might hopefully also lead to more innovation and a better range of banking products. 

However if you include the Credit Union there are now actually ten mortgage providers in Ireland, and a similar number of current account providers, believe it or not. While Raisin offers savers easy access to savings accounts in Europe. So there is more competition and choice in the market than we sometimes give credit for. And Revolut plans to enter the mortgage market later this year.   

And of course on bonkers.ie we make it easy to compare your banking options. Head to our banking page where you can compare mortgage, savings, and personal loan rates as well as your credit card and current account options in just minutes.