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Weapons for financial independence #1: Banking

The subject of banking is a complicated one -  it depends greatly on where you stay, and what options are available to you. My views on this topic are geared to the European (more specifically, the Dutch) economy.

I can understand that banking is not the first topic that comes to mind when thinking of Financial Independence. However, for me, banks are the cornerstone of my strategy towards becoming financially independent. If I am to trust an institution with my life’s earnings, I want to ensure it’s credibility.

The right bank is a personal choice, and depends on one's needs

Important factors affecting my choice

Safety

  • This may be a personal thought, but if I am trusting a bank with my money, it better be safer than Fort Knox. I am okay paying a higher monthly fee for this, if the bank guarantees safety for my money.
  • A higher interest rate is not a deciding factor for me, since I like to control my investments myself, and would not use a bank to invest in the markets.
    • Because of this, I’d ideally prefer an institution that practices full-reserve banking (i.e. storing the entirety of the deposited money, instead of lending a portion of it to borrowers).
    • Since every European bank needs to park some money in the ECB and in Government bonds, no bank can theoretically practice full-reserve banking.

Ethics & Values

  • Personally, I do not prefer banks investing my money by themselves. However, I do realize that it is common practice for banks to do this (or to lend out) a portion of all deposited money (i.e. fractional-reserve banking).
  • On a deeper note, I definitely do not want to see my money being invested in industries I consider unethical - like coal mining, the weapons industry or the tobacco industry. Banks that invest in these industries may have a lot of money, but for me are morally bankrupt.

Features & customer support

  • I love seeing technology change our lives, and finance is one of the ways technology can really make an impression on us. It is imperative for my chosen bank to have a commitment to leveraging technology to improve user experience.

Putting my options to the test

Why do I choose Bunq?

Bunq is a new Dutch fintech bank and has a presence through most of the EU. Headquartered in Amsterdam, Bunq has robust customer support, an app filled with features I love and many benefits that make it perfect for me.

Safety

"Freedom of Choice" allows me to not invest in anything but Dutch bonds and the ECB
  • Bunq has a Dutch banking license, and guarantees €100.000 for every customer in the event of an insolvency.
    • I am biased towards having an account in stronger economies like the Netherlands or Germany, because the deposit guarantees are funded by the country’s central bank (and not the EU, since the EDIC scheme is not yet passed).
    • De Nederlandsche Bank (the Dutch National bank) has more than a billion euros in this fund and has a focus on growing it
  • Bunq comes close to full reserve banking
    • Bunq prides itself on providing users the “Freedom of Choice” - giving them the choice to invest or not, and dictate where their money is invested
    • I do not like my money being invested on my behalf, so I choose to park my funds in the bank’s vaults with some of it being invested in the ECB and the Dutch national bonds (mandatory for any bank)

Ethics & Values

  • I personally love the transparency in the way Bunq invests the deposited money (since the customers decide this). Prior to stopping all investments, I had marked my deposits to be invested in Green Companies only.

Features & Customer Support

  • Apple Pay, Google Pay and Fitbit Pay make payments convenient
  • The app is beautifully designed, and tracks and categorizes every spend automatically. This comes along with the option to round up your speds into a savings account.
  • I personally love the option to have 25 free accounts (each with their dedicated IBAN) and the ability to pay via different accounts using the same card (with their “Dual-pin” feature) makes budgeting a breeze for me.
  • There are no foreign transaction fees, and Bunq provides 10 free non-euro ATM withdrawals every month.
  • There is a very helpful community of users integrated in the app, who are quick to respond to any questions, in addition to Bunq’s own customer support teams.

Fees

  • Bunq is one of the more expensive options out there. At €7,99 every month, I can imagine many being driven to other banking options.
  • However, I do get €2,22 every month in interest (which drops the price to €5,77/month - still on the higher side)
I am very happy with the Bunq service and do not intend to change my banks anytime soon. If you want to open a Bunq account or try it, here’s their website Bunq (affiliate link, to support the blog).

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