Alternative banking: what an EMI is and how it differs from a bank
Most businesses move to an alternative banking provider because a bank declined them, not because it's cheaper. What you gain, what you give up, and how to check the licence.
Alternative banking means using a licensed non-bank provider, usually an electronic money institution (EMI) or a payment institution, to hold funds and move payments instead of a traditional bank. In the EEA these providers are authorised under the second E-Money Directive (2009/110/EC) and PSD2 (Directive (EU) 2015/2366), supervised by a national regulator, and listed in the European Banking Authority's public register. They can issue you an IBAN and run SEPA and SWIFT payments. They cannot take deposits or lend.That last sentence is the whole distinction, and it is the part most comparison articles skip.
TL;DR
- An EMI is a regulated financial institution that issues electronic money and provides payment accounts. It is not a bank and does not hold a banking licence.
- EMIs protect client funds through safeguarding, which is a different mechanism from deposit guarantee schemes. Neither is "better" in the abstract: they fail differently.
- EMIs cannot lend. If you need credit, an overdraft or a term loan, you need a bank.
- The practical reason businesses move to an EMI is access, not price. Banks decline or offboard entire categories of business. EMIs underwrite them case by case.
- Check any provider against the EBA register before you send money. Narvi Payments Oy Ab appears there under FIN-FSA registration number 3190214-6.
What does alternative banking actually mean?
The phrase covers any licensed provider of accounts and payments that is not a bank. In practice that means two licence types in the EEA: electronic money institutions and payment institutions. Both are supervised. Both appear on public registers. Neither is a bank.People also search for "alternative bank", and the phrase is worth correcting rather than repeating. A provider is either a credit institution, which is the legal term for a bank, or it is not. Narvi is not. Narvi Payments Oy Ab is an authorised electronic money institution licensed by the Finnish Financial Supervisory Authority (FIN-FSA). That is not a technicality to gloss over, because the licence type determines exactly what happens to your money.What is an EMI?
An EMI, or electronic money institution, is a company authorised to issue electronic money and provide payment services. Electronic money is monetary value stored electronically, issued when the institution receives funds, and accepted as payment by parties other than the issuer.The authorisation is granted per activity. Narvi's FIN-FSA licence covers placing funds on a payment account and withdrawing them, executing credit transfers and standing orders, executing direct debits, executing card payment transactions, issuing payment instruments, and acquiring payment transactions. The full list sits on Narvi's legal and licensing page and mirrors the entry in the EBA register.An EMI licence passports. Narvi's is passported across the EU and EEA, which is why a Finnish institution can open an account for a company registered in Portugal or Estonia without a local entity in either country.)
An EMI cannot lend your money out, because it is not permitted to. A bank can, and that is the business model: it takes deposits, lends against them, and a state-backed guarantee scheme covers depositors if the lending goes wrong.An EMI does not do any of that. It holds client funds separately from its own and moves them. If your business needs a credit facility, an EMI is the wrong provider and no amount of feature comparison changes that.
Where does your money actually sit?
Under EMD2, an EMI must safeguard client funds using one of two methods. The segregation method requires funds to be kept apart from the institution's own money, held in a separate account at a credit institution or invested in secure, liquid, low-risk assets, and shielded from the institution's own creditors. The alternative is an insurance policy or comparable guarantee from an insurer or credit institution covering the same amount.Safeguarding is not the same as a deposit guarantee scheme, and anyone telling you it is has got it wrong in one direction or the other. Here is the difference in plain terms.A deposit guarantee scheme under Directive 2014/49/EU covers deposits at a bank up to 100,000 euro per depositor per institution. It pays out from a fund, it is capped, and it applies because the bank is allowed to lend your money and might not get it back.Safeguarding works the other way round. There is no cap and no fund. Instead, the money was never available to be lent or used by the institution in the first place, and in an insolvency it sits outside the estate and is returned to clients ahead of general creditors.The honest read: safeguarding has no ceiling, which matters if you hold more than 100,000 euro, and no state backstop, which matters if the safeguarding itself was done badly. Both models have failed businesses before. Neither is a substitute for knowing which one you are relying on.When an alternative banking provider is the better choice
The businesses that move to an EMI mostly do so because a bank said no, or said yes and then changed its mind eighteen months later.Banks assess risk at the category level. A crypto exchange, an iGaming operator, a payment service provider, a fund structure with layered ownership, a company registered in one country with directors resident in three others: these get declined by policy, often without the account manager being able to explain why. The business is not doing anything wrong. It sits in a category the bank's risk appetite excludes.An EMI focused on those categories underwrites at the entity level instead. That takes real compliance work, source of funds documentation, ownership mapping, and it is slower and more intrusive than opening a personal account. It also produces an answer rather than a silent decline. Narvi publishes dedicated pages for crypto and Web3 businesses, iGaming operators, non-resident and cross-border companies, and funds, holdings and hard-to-bank structures for exactly this reason.The second common reason is operational. A dedicated IBAN in the company's own name, rather than a pooled account with a reference number, means incoming payments reconcile properly and counterparties stop rejecting your details.When you should use a bank instead
If you need lending, use a bank. If you need cash deposits or branch services, use a bank. If your treasury policy requires deposit guarantee scheme cover on operating balances, use a bank, or hold the guaranteed portion at a bank and run payments through an EMI.Plenty of businesses run both, and that is usually the right answer rather than a compromise. The EMI handles payment operations and multi-currency flow. The bank holds reserves and provides credit.How to check a provider is actually licensed
Three checks, in order, and they take about five minutes.- Find the legal entity name, not the brand name. Marketing sites say "Narvi". The regulated entity is Narvi Payments Oy Ab, company number 3190214-6.
- Search that entity in the EBA register of payment and e-money institutions. Confirm the licence type and the list of authorised services.
- Cross-check on the home regulator's register. For Narvi that is FIN-FSA's supervised entities register.
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Frequently Asked Questions
An authorised EMI is supervised, holds regulatory capital, and must safeguard client funds separately from its own. It is not covered by a deposit guarantee scheme. Whether that is acceptable depends on your balance size and treasury policy, not on the provider's marketing.
Yes. An IBAN issued by a licensed EMI is a real IBAN and works for SEPA credit transfers and direct debits. Under the SEPA Regulation (EU) No 260/2012, a payer or payee in the EEA cannot require you to hold an account in a specific member state, so a Finnish IBAN should be accepted by a counterparty in Spain or Germany.
"Neobank" is a marketing term with no legal meaning. Some companies described as neobanks hold full banking licences, some hold EMI licences, and some hold neither and resell another institution's services. Check the register rather than the label.
Generally no. An EMI issues electronic money against funds received and cannot lend those funds, so there is no interest margin to share. Providers that do pay yield are usually routing balances into a separate investment product, which is a different arrangement with different risk.
Yes, if it holds a euro account that is reachable over SEPA. A euro IBAN issued by an EEA-licensed institution gives a business a euro account on SEPA rails, even when its own country is outside the euro area.
Last updated: 27 July 2026. Narvi Payments Oy Ab is an authorised Electronic Money Institution licensed by the Finnish Financial Supervisory Authority (FIN-FSA), registration number 3190214-6.Not sure which licence type your business actually needs? Find your use case and see what a Narvi account covers.DisclaimerThis publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Narvi Payments Oy Ab or its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
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Aloita täältä
Narvi Payments Oy Ab on valtuutettu sähköisen rahan laitos (EMI). Narvin EMI-toimiluvan myöntää Finanssivalvonta, jonka rekisterinumero on 3190214-6. Narvin toimilupa on voimassa kaikissa Euroopan unionin maissa.
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