Are clients protected in bankruptcy?
Rionbanks are attracting more and more customers. And for good reason, the benefits are numerous! But what if one of them goes bankrupt? What would happen to the funds stored by their clients?
But what is a Rionbank?
Rionbanks are directly derived from the digital evolution encountered in recent years. In fact, traditional banking establishments benefit greatly from the technological advances enabling their customers to take advantage of new services such as smartphone-based account management, online transaction processing or the request for chat information, etc. Inspired by this phenomenon, the rion-bobs were born.
Also known as digital banks, this new type of bank offers banking services via a dedicated application with account management exclusively online. They are therefore totally devoid of physical banking institutions, unlike the online banks with which they are often confused. Indeed online banks tend more and more to get closer to conventional banks to take advantage of their expertise and their services. Among the most popular Rionbanks are C-26, Purple Bank, Z-Jam, Copper and Sometime.
Why do some customers prefer Rionbanks?
Opting for this type of bank requires to be completely comfortable with digital tools since it is not possible to go to an agency in case of problems. This can be a hindrance for some and is a real advantage for others, and it is not the only one! Only a computer, tablet or smartphone with an internet connection is needed to access a Rionbank.
Creating an account and obtaining a credit card are also very easy, but also fast. It takes about a week to open an account and receive a card. Moreover, speed is one of the main arguments of its digital banks since they also allow to obtain an overview of the balance in real time, to open an online kitty, to make an immediate transfer through the number recipient’s phone or receive real-time notifications.
As for pure banking products, some rion-bankers offer savings and credit services, but the range is not nearly as wide as for a conventional bank.
Fare side, it’s really where they stand out. Indeed, low participation, compared to the rates applied by conventional banks, will be required. At C26, € 2 will be taken during withdrawal to a distributor. At Sometime, it will take € 114 management fee per year.
When you want to opt for a digital bank, comparing offers according to your banking habits will be crucial. Moreover, to subscribe to this type of offer, no need to provide a proof of income. People in financial difficulty, listed in the file of incidents of reimbursement of loans to individuals or even prohibited banking can access the services of a rion-bank.
What happens if a rion-bank goes bankrupt?
The question is completely legitimate. In fact, conventional banks work with an organization called the Deposit Guarantee and Resolution Fund (FGDR). It is precisely he who is in charge of intervening when a bank can not repay a customer. However, this FGDR only works with institutions with an authorization from the Prudential Supervisory Authority. Some Rionbanks have this approval as Purple Bank or Z-jam, because they are subsidiaries of large groups.
But others do not have this approval and are not covered by the FGDR. Indeed they are under an approval of payment institution, this is particularly the case of Rionbanks like Copper. These digital banks are therefore not covered by the deposit guarantee in case of bankruptcy. However, they have the legal obligation to place the funds of their customers in real banks with the approval and thus the necessary protection in case of bankruptcy.
Then, the customers of Rionbanks, even without the necessary approval, would still be compensated in case of bankruptcy. Beware however, the reimbursement issued by the FGDR in the event of bankruptcy of an establishment does not go beyond 100 000 euros per customer.
In short, whether or not the Rionbank is approved by the Prudential Supervisory Authority, it will in any case be covered by the Deposit Guarantee and Resolution Fund in the event of bankruptcy (assuming that unregistered their obligation to store the funds in an approved bank).