banking-mobilityToday’s post is the second in our series, published in partnership with ING, looking at the future of banking services in Europe. The topic we’ll be covering today is the ease of banking across borders, which is (as some of our readers have pointed out) an important element in creating a more effective European Single Market.

This is also an issue currently under debate among EU policy makers, and this week the European Commission adopted a proposal for a Directive on bank accounts, focusing on the “transparency and comparability of bank account fees, bank account switching and access to a basic bank account“.

We kicked things off by taking some of your comments from our previous post in this series to Hans van der Noordaa, Chief Executive Officer (CEO) of ING Retail Banking in the Benelux countries (Belgium, the Netherlands and Luxembourg). First up, David sent us in a comment asking: “Is anybody having any difficulty setting up bank accounts in countries that they have had to move to get a job?”

This is a familiar complaint amongst our readers, but how would ING respond? Does Hans van der Noordaa agree that it is currently too difficult to set up a new account when moving to a new European country?

van-der-noordaa-speaksWhen opening a payment account a bank has to follow certain national legal procedures to identify a customer. These procedures unfortunately differ per country and I realize that this can sometimes be burdensome and confusing for European citizens, for instance when opening a bank account in a foreign country. We do our best to make things as easy as possible, but, regrettably, it is not that simple. I am afraid more European harmonization is needed, taking into account local circumstances and different banking models.

We also took David’s comment to Guido Ravoet, the Secretary General of the European Banking Federation, who disagreed that it was much more difficult (though he did admit that the process was perhaps a little bit more “cumbersome” because banks ask for extra details to check the identities of non-residents when opening an account).

Whilst this is an issue that affects many of our users on Debating Europe, Mr Ravoet made the important point that the banking sector in Europe is actually fairly fractured along national lines:

The consumer demand for financial services abroad is very low. A Commission study shows that, actually, 80% of consumers are not interested in buying financial services or opening an account outside of their home country. And only 5% really respond that they would consider eventually opening a bank account outside their home country. And for other services, like buying bonds, insurance, or investment funds or whatever, it’s less than 5%.

We also asked for the input of Dirk Haubrich, Head of Consumer Protection at the European Banking Authority. How would he respond to David’s comment?

I think that’s a very good question. I can sympathise with David’s experience; but I agree with him only to some extent. From my own experience, having lived in five different member states, I can confirm that there are certainly banks that refuse to let people open bank accounts if they don’t live in a country, but there are also banks that offer accounts specially designed for students, non-residents, expats and so on. So, it would be worthwhile for David and others to shop around in the country they want to move to, to compare what is available

It is generally true, though, that any refusal would have to be based on commercial reason. David does have a right to the same treatment as a national of the country he’s trying to open an account in. So, if he is refused an account, he can ask for a statement explaining the refusal, and if it’s not on commercial grounds but rather on grounds of nationality, then he can take a complaint to a Consumer Protection organisation, such as the European out-of-court complaints network for financial services (FIN-NET).

The Commission is aware of the issue and is in the process of proposing a long-term solution. As an EU authority, the EBA is bound by legislation and the mandate given to it by the Commission. The Commission consulted last year on access to basic bank accounts that firms will be required to grant, irrespective of whether a person is a resident of a country or not.

Next, we had a comment from Iuliun, who said he would like to see greater transparency around bank charges, so that it’s easier to compare costs in the rest of Europe. This is one of the issues that the Commission aims to address in its proposed directive. How would Hans van der Noordaa from ING respond to Iuliun’s comment?

I believe banks have a responsibility to be completely transparent about their fees. Only then a customer is able to easily compare fees from one bank to another. But I also think that it is even more crucial for a customer to understand what services are provided for the fees. For instance, your overall costs on an annual basis will depend on the way you want to use your account: e.g. it can make a difference if you make lots of transactions or if you use ATMs in various countries. This full comparison is not easy at the moment as hidden fees do still exist with some banks. Although banks have made progress,  more efforts must be made to increase transparency.

We also wanted a reaction from somebody from the European Parliament, so we took Iuliun’s comment to Evelyne Gebhardt, a German MEP with the  Social Democrats and a member of the Committee on the Internal Market and Consumer Protection. How would she respond?

Finally, how about getting the opinion of some actual consumers of banking services? Students, especially participants in the Erasmus programme, are some of the most mobile citizens in Europe. We contacted Emanuel Alfranseder, President of the Erasmus Student Network, and asked him to respond to Iuliun’s comment.

What do YOU think? Do we need better transparency and comparability of bank account fees in the EU? Should it be easier to open a new account or switch bank accounts in Europe? And should the process of identity checks for new bank accounts be harmonised across the EU? Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts for their reactions.

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43 comments Post a commentcomment

  1. avatar
    Paul X

    “I realize that this can sometimes be burdensome and confusing for European citizens, for instance when opening a bank account in a foreign country. We do our best to make things as easy as possible, but, regrettably, it is not that simple. I am afraid more European harmonization is needed”

    and exactly what percentage of European citizens find the need to open a bank account in a different country???
    Just another example of people trying to justify their job by creating unnecessary legislation….. He’s “afraid” more EU harmonization is needed? not half as afraid as the EU taxpayers are of this never ending train of political verbage

  2. avatar
    eusebio manuel vestias pecurto

    Eu acredito que ainda existe muita burocracia dentro dos Bancos se eu abrir uma conta num Banco fora do meu pais na minha opinião aparece sempre um travão os Bancos Europeus têm que ser mais transparentes com os seus clientes porque não faz sentido nenhum os Bancos andarem com truques de taxas para isto e taxas para aquilo

  3. avatar

    There is no need for any directives from the EU on banking . People working in different countries just need to open overseas accounts with their host bank.

  4. avatar

    I would add that opening bank accounts in countries within the euro zone now comes with a risk of your funds being stolen to assist in bailouts . All funds should be removed from accounts in Spain which is in imminent danger of bankruptcy

  5. avatar
    Georgi Hrisstof

    Когато се определи формула за определяне на нерезиденти в либерален режим , унифицират правилата , консолидира (ЕС) в държавна структура с характерните за това задължения , съвременни , по нови схеми на договаряне отношения …
    Не бих търсил услуга от Българска банка , при Европейски избор и разнообразие!
    Вие сте запознати със примерни схеми ,за бързи печалби, преливане , генериране на свръх задължени клиенти ..
    Вие сте запознати , че можеш да ползваш студентски кредит само , ако покриваш определени категории ,да си до определен брой години , възраст !
    Не бих ползвал ,ограничени права , зависимост , хитри селяни .., за компания дори , ако ми е наложено !!!
    Европейския Съюз , трябва , либерално да позиционира правилата , но консервативно да следи изпълнението , редовно да води диалог и информира!!

  6. avatar
    Fer Nandinho

    In Portugal I have had so many problems its unbeliavable, first you need a contract to open an account, of course when you arrive and look for a job you dont have one, second they charge you for everything and in particular Santander have showed the biggest incompetence I have ever seen in my life (and I work in finance for 10 years and have lived in 4 different european countries before) so yes too many problems, please someone do something about this!!! I know so many horror histories about them (caklled Totta in Portugal)!!! Not that the rest are better but its clear that banks do not understand that they are to provide services and not to rob everytime you look around.

  7. avatar
    Karel Van Isacker

    Maybe would be better alltogether if Atos Origin were no longer handling VISA transfers in Europe as they are amateurish, and lack professionalism.

  8. avatar
    Eric David Bosne

    Yes! How can homeless work if they can’t open a bank account? In several countries you can only get paid if you have a bank account.

  9. avatar
    Jude De Froissard

    banks should be at our service…..not the opposite…after is our money

  10. avatar
    Poyi Liu

    I agree with Daniel. Both should be easier. Especially now that many people are migrating between EU countries. Eric is right… in some countries you can only get paid if you have a bank account. I know that for some companies in Portugal (I cannot speak for all), you would need a Portuguese bank account to receive payment. Otherwise, they wouldn’t pay you.

    • avatar

      That is equal in all country you need one account to revive the payment

  11. avatar
    Joe DaSilva

    What’s so difficult about it. I apologize for being ignorent, but what kind of question is that? Unless of course Europe is a totalitarium system, I don’t see the relevancy of the question. In the US, we change banks and open accounts at will, as long as we’re law-abiding citizens and the proceeds have been acquired legally. I don’t understand why in Europe, this is an issue

  12. avatar
    Luis Filipe Freire

    Both, since we have high mobility …

  13. avatar

    I think the additional regulation is necessary as there is no incentive for banks to actually synchronize their rules in this particular respect. The inconvenience is obvious however little is done, at least as far as the public is aware, to mitigate it.

    Opening overseas accounts with your banks may be an option, however fees will no doubt apply and this is simply a waste for the consumer. Why should a person waste money on transaction costs? It is healthier for the economy if those percents spent on taking money out of ATM are instead funneled into the economy.

    I agree with Vassilis Papadolias. The setup of unified norms helps to get your bearing no matter which EU country you are in and regardless of your nationality.

  14. avatar
    Chris Morrison

    I would say that as there is sadly now much more capacity to commit fraud across borders there is a definite need to guard against this, particularly where organised frauds are often planned with the back up of elaborate money laundering schemes. Any state system which lacks the capacity to deal with this effectively is going to be at a disadvantage to the criminals who do this. Having said that, ease of capital movement is fundamental to any free market and is one of the planks the original EEC was and should continue to be built on. It does strike me that it is possible to think of a system that would guard the one and also guarantee the other. I don’t think we need more laws on this. It may be we need better ones. A bad and clumsy system introduced across the EU would potentially do far more damage than just leaving the individual nations to rule themselves. A better one which encourages free movement of honest capital would increase the general prosperity.

  15. avatar
    Malina Yaneva

    well let see my friends from england have open accounds in Bulgaria some one talk for non competetive well in Bulgaria this is not all you also will be a victome of robery of teh people work in the baks and amazing this is not only plce where you will be under thire non competetive and gready servicess and coruptione this is a EU country well welcome to Bulgaria any one want join it

  16. avatar
    George Yiannitsiotis

    1. The EU Directives are obsolete regarding the failure of the “european project” since May 2010.
    2. The West European Usurers’ Corporation (disguised as “European Union”) has more urgent tasks to deal with like the following:
    a) how to loot the savings of hard working people epsecially in the Periphery (Cyprus was the first victim, setting the pattern for all eurozone members);
    b) how to save the private banks of the hegemonic powers (i.e. the 4th Reich) via the destruction of the periphery;
    c) how to loot the public and private property of the peripheral countries.

    Therefore, dealing with the obsolete institution for the majority of the peripheral peoples (i.e. the banks) is a waste of time. Better to start thinking the future in terms of peaceful dissolution of the EMU in order to avoid the worst: another War in Europe caused by the neonazionalist German political-economic elite.

  17. avatar
    Paul X

    Well I still think the people who need to open bank accounts in foreign countries are in a minority compared to those millions of people who quite happily bank in their own country

    I see the issue here as with all EU legislation it will cost somebody money, and that somebody will no doubt the banking public

  18. avatar
    catherine benning

    International banking is not a problem for those with a great deal of cash. Corporation do not suffer from banking problems as it is transferred from one domain to another with little more than a flick of a button.

    It is the ordinary guy who has to put up with difficulty of one sort or another, so there it has to be addressed. So, on the simple plain all this bank changing can be made easy by simply having a method of transferring account details from your existing bank to the bank of choice in another state. You are a banking customer, say, in Holland, and you receive your salary or benefit into that account. You are an established citizen of the EU and all your documentation is in order and has been cleared by your existing bank.

    Once you have decided you are leaving your state of residence, you find out about banks in the state you are moving to and decide which one you will use. This has to be done at least two months before you leave in order to make all the necessary arrangements. You notify the bank of your choice in the new state giving them your present banking details and at the same time you notify your present bank telling them what they need to know and giving them the details of your new account that you have set up in the new state. The new bank then checks with the present bank, funds are transferred from one account to the other, and they check you are who you say you are on arrival with your ID in their state. By which time you must have an address. Which you should have prior to leaving your own state if you are sensible.

    I did this many times when leaving my country and going to another country the other side of the world. It was a simple matter of communication of intention. The address you have in the new country need only be a temporary or interim address, and by doing it in an organized way, it simply means you pick up where you left off in your present state, without any interference in your banking facility. They may make a small charge for doing this.

    And I cannot see the need for EU regulation in this matter. Surely banks are smart enough to expand their business this way without requiring legislation to do it.

    The other way around it would be for some mutual or other to set themselves up throughout all states offering this and other services for the ordinary individual who does not have a lot of money and cater for these millions who would need the facilities of a less monolithic organisation than a big banking concern.

    I know that if I wanted to transfer my funds from my bank to another, in a safe European country today, or, even outside of it, my bank would do it within twenty four hours. I cannot see the difficulty. But then I have had my account a long time and they know who I am. My cards can do all I need as long as I have advised them of my intention before hand and they are not attacked by something unexpected as they are afraid of fraud, in not only their interest but also in mine.

    This is a nonsense question in the modern world.

  19. avatar
    Chris Morrison

    I agree Catherine that since many banks have multi national operations they can do much internally. I would imagine it would pay them to try and do so.But that is not if itself an answer to the issue of how to combat large scale fraud. Nor is the fact of the Cypriot appropriation made more or less possible by the absence of any standard procedure such as the one under discussion. These are separate issues entirely. This is concerned with the question of harmonisation of banking procedures, and as such raises a different question set to those matters. And it is clearly possible to xreate a system with uniformity, transparency and robustness which would improve on the current mish mash and encourage the free circulation of capital.

  20. avatar
    catherine benning

    It appears to me, Chris, that it is you that is missing the gist here. Fraud is perpetrated by those who are inside the bank, or, whatever firm is in the money business of concern. Information is passed via those in the know and those in the game. Human greed. Whilst you have people manning this empire of the giants you will have those either willing to pay for the knowledge they seek in order to perpetrate the fraud, or, those who feel they as individuals can run away with a truck load of the stuff they are playing with.

    And that is another entire matter. Do banks and financiers really believe they can destroy what they promote and sell, by having a belief that those they employ want less than they themselves advocate as necessity? I would call that a naive starting point.

    If you are suggesting regulation will change this fact, then, I feel that is a flawed analysis.

  21. avatar
    Chris Morrison

    I m sorry Catherine but fraud is usually committed by others and often with the use of and via the banking system. These gangs are becoming increasingly sophisticated and the reach of their operations ever more cross border.Detecting this is hard enough as it is, and it costs Europe (ie all of us) BILLIONS a year. If a standard system helps and makes it easier to detect then this has to be an improvement. And I m afraid banking secrecy laws have been actively used by organised crime to attempt to avoid detection. Money gets channelled to countries where is is harder to find and recapture it. This cannot be good for Europe.

  22. avatar
    catherine benning

    Chris, banking in and of itself is fraudulent on every level. Which level you are referring to? The crime in the street, or, the banking elite.

    The EU have a very coherent knowledge of banking fraud at the top, middle and bottom. And from my point of view, the fraud banks commit against their customer far outweighs the small gang who manage to help themselves, through their contacts with those who work on the ground level and feed information to them for small cash.

    The first priority of all governments, across the globe, is to thwart thieving or fraud from the top. Because they are the untouchables. As we are told repeatedly, by those who rule, it trickles down dear. Therefore, if they stop the fraud against us, that will enable those in the middle and on the ground floor to be exposed easier. It will also make it less easy to penetrate the system. It is the system itself that creates the desire to cheat, as the system works from a level of deception. This in turn breeds a swindling culture that is rewarded internally and once the psyche is led into the idea it is good to defraud on the one hand, but, to be discouraged and despised when the shoe is on the other foot, that becomes, as now, unsustainable in the real world.

    So, as I wrote above, the problem of banking fraud lies within its own ethos. Therefore, it can prevent the problem it finds itself with, by cleaning up its own act. Even if that has to be forced on them by severe measures.

  23. avatar
    Chris Morrison

    Catherine, love em or hate em, we all need them. Much as I d love to explore that issue with you, the fact that you might regard them as inherrantly fraudulent is outside the scope of this debate. The fact is they do provide and facilitate the flow of the lifeblood of the economy, namely capital. This fact clearly means that in protecting the security of the banking system we are protecting the security of the economy. That is clearly a good thing.

    • avatar

      Hear hear. Totally agree. Banks are vital to the modern economy and protecting banking is a good thing. However in the same way that banks thrive in a credit economy I think we should be a bit careful regarding having banks that are so large they destabilise the system instead of facilitate it. Out of the scope of this debate I know as currently it isn’t retail banking that’s going to do the damage!

  24. avatar
    Markus Petz

    The commenters in part seem confused between CORPORATE banking and PERSONAL banking. There also seem to be some UKIP trolls here, that oppose automatically everything that is EU related on principle and have no interest in debating the praxis of EU legislation.
    I think that motor racing is not very environmentally friendly, but I do not go on Motor racing fora and start posting about how we should have no cars and fossil fuels are pollutants. In a similar way I would rather that people who do not like the EU or any pan European movements do not come and post such simplistic rhetoric that effectively runs the list for those that want to see some democratic discussions about what the EU is actually and could actually do.

    I also saw that some people still talk about banking for those with jobs or moving for job regions and not as in my case (my partner) the unmarried partners of an eu citizen that is moving to study in another EU country. I also see this nice idea of having a place to live BEFORE moving and arranging with the banks to transfer accounts. That is not really practical for many of us that are poor and in precarious economic situations. We as unemployed people supposedly have the right to seek work in another member state for upto 6months and recieve benefit in that state. DOes anyone really want to take that right away?? Well it is effectively removed if you cannot have a bank account to pay that money into or have enourmous cahrges that swallow up all the money to access it.

    These are some basic needs that vulberable people want to keep their money secure and not have to carry cash with them at all times. To these things can be added a bankomat card. NOt a card that gives you credit, but one that allows you to buy goods and services. A simple example if that everytime you go to another EU country you can only get a visa electron (and sometimes not that) which stops you buying online transport tickets, so people have to pay more money or not buy some services. Making a mandatory transfer of credit ratings between member states and also giving the right to purchase with a debit card on websites coudl extend the consumer power in a way that only benefits businesses and consumers.

    Such transfer of credit ratings also can be good for companies as they can be assured that the customers have not been problematic in one EU member state and then just moved elsewhere to get easy credit access. THis rewards those of us that are careful with our money.

    I am sure that there are many other ideas that can be impelmented in a banking directive both for consumers and also banks. The major aim is often stated to cut down fraud – but a complex and poorly functioning system actually encourages people to be fraudulent – for example sharing bank card details, transfers of money to help people out and money laundering for what seem all to plausible reasons would be reduced if easily accessible systems are in place.

  25. avatar

    The day you in the eu can look into my account is the day i empty it.
    No wonder everybody in the netherlands is buying a safe, now i will to.

  26. avatar
    Hans van der Noordaa, ING

    In response to a comment from Ivan on banks being more locally-oriented:

    Indeed, there should be banks that are oriented more locally but this does not mean all banks should do the same. We need different banks for different needs. For example, ING is present in local national markets, offering local products under local regulation and making investments in local communities. I strongly believe that a bank should be close to the consumer to understand its needs, regardless of its international, national or local orientation.

    At the same time I think there should be room for local banks which only have the ambition to run a sustainable local banking business; investing in international IT systems does not necessarily benefit the majority of consumers. I think ultimately diversity of small local and bigger national and international players will benefit consumers; most of whom – by the way – will most of time only have demand for local and national banking services. So we have to be careful when we consider regulation that enforces cross border services regardless of the ambition level of the various banks.

  27. avatar
    peter verhaar

    the first we need is the possibility to keep your accountnumber when moving to another bank; in the netherlands that’s impossible, one of the reasons why banks are not moving towards clients; if telecom-providers can do it, why not banks?

    • avatar
      Sébastien de Brouwer

      Portability of payment account numbers is unrealistic: we believe that the consideration of an EU-wide portability of payment account numbers is unrealistic and could compromise all the efforts undertaken to implement SEPA Regulation. It is important to understand that EU-wide portability of payment account numbers could be easily comparable with the idea of keeping the postal address information while moving from one town to another (and cannot be compared to portability of mobile phone numbers).

      The introduction of portable bank account numbers would mean that the current International Bank Account Number (IBAN) – on which the entire International banking system is based – would have to be replaced. The IBAN consists of up to 34 alphanumeric characters: which the length is different from one country to another. These characters are composed of first the two-letter ISO 3166-1 alpha-2 country code, then two check digits, and finally a country-specific Basic Bank Account Number (BBAN). The check digits enable a sanity check of the bank account number to confirm its integrity even before submitting a transaction. It includes the domestic bank account number, branch identifier, and potential routing information.

      The realisation of Union-wide portability of payment account numbers would impose the complete reorganisation of the system of payment accounts number which will be extremely difficult to implement and very costly (a study conducted in 2007 already mentioned that it would release costs for the European banking sector of estimated EUR 14.7 billion). This would impose an unacceptable burden on both banks and customers (complete conversion of customer databases at banks, all other commercial undertakings and public administrations, replacement of all payment cards, alteration of customer letterheads containing account numbers, etc.).

      It could also create difficulties for banks to carry out anti-money laundering identification requirements on new customers and branded products. In addition, it could increase the risk of fraud.

  28. avatar
    Nikolaos Sotirelis

    Dear admin, I would like to propose to put on a debate the serious events that take place in Greece these days. It’s not enough that three and a half years now, they humiliate, povertize, and depress Greek people, they now even want to shut down our voice, our right to information, the conduct to our culture. They don’t want us just poor. They want us slaves! This is our limit line.
    It’s now time for the Europeans to take a stand, one way or another. They must think that all this period, Greeks have been treated like experimental animals, for new inhuman economic theories and policies. They must think that they will be probably the next!

  29. avatar
    Santiago Molares

    Yes, I believe so. Also I don’t understand why interest rates are different all over Europe, when there is a free circulation of currency, so it doesn’t appears like some countries are profiting or living at the account of others. It is very wrong the states having to ask for financial resources to private banks. Banks shouldn’t be allowed to dictate anything. They are members of society not its owners. Bank accounts secrecy should be relieved, as a mean to fight corruption back and fiscal justice be effective.

  30. avatar
    Tarquin Farquhar

    Hans van der Noordaa…
    500 million people and you want to harmonize for those that have foreign accounts circa 20 milllion? What about the the tens of millions of Northern Europeans (paying for club med et al) that don’t want to be in the EU?!?!?!

  31. avatar

    One thing I don’t understand is why retail banking is still different in each country (particularly within the EU where given the common market you’d think there should be the best retail banking initiatives would be offered in all markets?) Case in point with ATMs, in the UK the usage of most of these of free, regardless which bank you use. This is not the case when living abroad, and travelling abroad makes these ATM fees seem like roaming charges (which the EU is full gung-ho on).
    I suppose what I’d like to see more harmonisation of European wide (non-local) retail banks across the territory if it means that all citizens can take advantage of any ingenious innovation. Perhaps we’d see more tangible competition between banks also?

  32. avatar

    Do we need an EU directive on bank accounts?

    Absolutely. All banking activity in EU has to be regulated. And disregard so called “Free Enterprise” argument of bankers. It’s a well known fact that they don’t play fair game. They are using sensitive financial market info in their advantage, blackmail governments and make secret alliances serving their only purpose: “Get rich yesterday” or “Ripping the sucker” . EU should impose bankers “No sucker left behind” policy.

  33. avatar

    If i had one account on one bank that exist in another country , why should i have to give one address to prove that i’m living in that country if is the same bank?
    They can ask History to my bank that is the same and see if i’m a good cliente or not? if i pay taxes that the bank want why is need to live on the country to open one account?because if the bank is the same so the Money will go to the same bank .
    We should can open account on other country

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