This post will focus on opening an Icelandic bank account.
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Banking in Iceland
When Iceland‘s banking sector collapsed during the 2008 financial crisis, the government chose to let the banks fail rather than bail them out, securing a loan from the International Monetary Fund in the process (IMF).
Furthermore, the government guaranteed all deposits in Iceland and requested that deposits in Icelandic bank branches be insured in Belgium, Luxembourg, and the United Kingdom.
Three new state-owned banks, slandsbanki, Landsbankinn, and Arion Bank, were established to take over domestic banking activity after the three Icelandic cross-border banks were closed down. All three banks’ websites provide an English-language interface. Each of the three banks offers online banking and has its own mobile app.
Kvika, a privately owned company with operations in Iceland and the United Kingdom, providing fund management and investment services in addition to the three state-owned Icelandic banks.
The government-owned Central Bank of Iceland is overseen by an independent administration, and its mission is to promote price and financial stability as well as safe financial transactions. It is in charge of preserving international reserves and ensuring the smooth operation of the financial system, which includes domestic and cross-border payments.
Iceland’s local currency is the króna (£0.0055, $0.0068), and even in rural areas, financial transactions are generally cashless. Although there are no international banks with branches in Iceland, ATMs abound, allowing you to withdraw money from foreign bank accounts. There’s no reason you shouldn’t keep your home bank account, especially if you have bills to pay in the future.
If you live in Iceland, you must apply for an Icelandic identification number (kennitala). This is your official identification for paying taxes, banking, legal paperwork, and even gym memberships. Foreign residents must apply in person to the Registers Iceland (jóskrá) for a kennitala, which is automatically assigned to Icelanders.
You will need your passport and your registered residence in Iceland to apply for your kennitala. Expats from outside the EU must register their address and apply for the kennitala through the Immigration Directorate.
Iceland is committed to internet technology, and most government and financial institutions offer online services that may be accessed using an electronic ID saved on your phone’s SIM card. Banks and mobile phone companies give electronic IDs, and you must ensure that you have a compatible SIM card.
What To Look For When Picking An Icelandic Bank Account
While some countries have a plethora of banking options, Iceland’s banking system is surprisingly straightforward. Rather than bailing out the banks during the 2008 financial crisis, Iceland’s government chose to borrow money from the International Monetary Fund.
They then established three new state-owned banks, each with a comparable scope. There’s also one international bank and a few online banks, but that’s about it.
When choosing a bank, think about what services you want and compare banking expenses, ATM fees, and foreign transaction fees.
Iceland’s Largest Banks
Arion Banki
Landsbanki
Íslandsbanki
Visiting a bank in person is the most convenient approach to open an account. You’ll need to carry your passport and a kennitala. Make sure you have an internet banking account.
For your first year in Iceland, it’s doubtful that you’ll be able to obtain a credit card or any loans.
What Are The Requirements For Opening A Bank Account In Iceland?
The first thing you should do when you arrive in Iceland is apply for your kennitala, or Icelandic ID number. This number is required for daily activities such as tax filing, vehicle registration, health insurance, gym memberships, and, of course, banking.
Citizens of the European Economic Area and the European Free Trade Association can apply for a kennitala directly with the Icelandic National Registry. All other countries’ citizens must apply in person.
To learn how to apply, go to the Directorate of Immigration’s website, and allow 10 days for processing.
You can apply for an electronic ID once you have your kennitala. This ID, which is stored on your phone’s SIM card, allows you to undertake a variety of formal acts online, such as opening a bank account.
Cell phone companies and banks will be able to activate your electronic ID. It’s frequently easier to go through a cell phone carrier because you’ll need an Icelandic SIM card for the electronic ID to work.
What Is The Minimum Age To Create A Bank Account In Iceland?
In Iceland, there is no minimum age restriction for opening a bank account. To open an account, minors, like adults, will require an electronic ID. On the Aukenni website, parents or guardians can apply for an electronic ID for their children. Children must be at least nine years old to apply for a debit card.
How To Start An Icelandic Bank Account
You can open a bank account online in a matter of minutes after you have your electronic ID. If you don’t have an electronic ID yet, you can open an account in person with your kennitala, passport, and residency permission.
The procedure is straightforward, and your account will be activated right away. If you choose to start an account with a debit card, you should receive the card in the mail in around five days.
Getting A Debit Card
You will need to register an account because all salaries in Iceland are paid into a local bank. You can apply for an account with any of Iceland’s three banks online, but you must sign the account agreement in person.
Once you have a kennitala, you can accomplish this. If you already have an electronic ID, you can begin the application process online; however, if you do not, you will need to visit the bank in person. As part of the account application process, the branch will arrange for your electronic ID.
You’ll need your kennitala, passport, and, if you’re from outside the EU/EEA, your residence permit, whether you apply online or in person. You can choose whether or not you want a debit card sent to your registered address. Although you can open an account right away, debit cards can take up to five days to arrive at your house.
Foreign payment and receipt processing is available at all three institutions. Service charges, on the other hand, are applied to all transactions, so you should analyse the charging structure of each bank when picking which one to open an account with.
Credit Cards
All Icelandic banks provide a variety of credit cards, each with a different annual fee that varies depending on the card’s features and perks. Every bank has a prepaid plan that is secured by an initial deposit. In general, the cardholder is given a spending restriction and is expected to make monthly payments in addition to the initial deposit.
Applications are subject to a credit check, and foreign nationals may be subject to additional terms. Islandsbanki, for example, would only issue basic cards to expats who have maintained an active debit account for at least a year. Expats from countries outside of the EU/EEA must also produce proof of residency. Prepaid card applications, on the other hand, will be approved.
Investments And Savings
Savings and investment accounts are available from slandsbanki, Landsbankinn, and Arion Bank. Instant access and longer-term schemes are available, as well as non-index and index-linked alternatives with monthly or annual interest possibilities. Lanksbankinn also offers a foreign exchange investment scheme, in which foreign currency is used to pay interest on money.
You can apply online by transferring dollars from your debit account if you already have an account. If you want to start a savings account with a different bank, you can still do so using your electronic ID and an online application.
Kvika offers financial services to both individual and corporate clients if you’re thinking about expanding your investment portfolio. Capital markets, corporate finance, banking, and asset management are among them.
Hours Of Operation
Prior to the COVID-19 outbreak, typical branch hours were 9 a.m. to 4 p.m. Monday through Friday, with the exception of Landsbankinn’s Keflavik airport branch, which was open everyday from 6.30 a.m. to 6.30 p.m. Customer service is typically accessible for telephone banking and support between the hours of 9 a.m. and 4 p.m. on weekdays, with weekend coverage added during the epidemic.
Is It Possible To Open A Bank Account In Iceland Online
Yes, after you have your electronic ID, you can open an account with an Icelandic bank online. You may not be able to begin the process until you arrive in Iceland because non-EEA/EFTA nationals must apply for an ID number in person.
Consider opening an online bank account if you want to have a bank account before you move to Iceland. This way, as soon as you settle into your new house, you can start enjoying the Icelandic lifestyle. One key caveat: if you want all of the protection and services of a regular bank, stay away from e-money firms and go with a properly regulated bank instead.
Money Transfers
The following is an example of an Icelandic bank account: 323-26-12026.
The following are the definitions for each part:
This is the bank and branch number 323. The branch is traditionally indicated by the final two digits, albeit with online banking, this number is no longer relevant. 3XX, 5XX, and 1XX for Arion Banki, Slandsbanki, and Landsbanki.
The account type is 26. A checking account has a balance of 26, whereas a savings account has a balance of 13.
Account no. 12026. If they are not taken, many individuals choose their own.
It takes seconds to move money around. Simply enter the account number and kennitala from your online bank or app.
Banking vs E-Money License
Simple banking services, such as currency exchange and money transfers, are available online from most FinTech and e-money companies.
If you want more sophisticated banking services, such as managing deposits in your personal and company accounts, as well as more advanced activities such as lending, you’ll need to choose a bank with a banking license.
A banking license is a legal requirement for any business that wants to call itself a bank. Licensed banks must adhere to all European Central Bank laws, assuring the safety of their clients’ funds.
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