Fidor Bank has had great success in its home market of Germany and is now planning on recreating that success over seas. Billy Bambrough talks to Fidor CEO Matthias Kröner and The Currency Cloud’s Mike Laven about how the bank intends to crack the tough UK market
Direct banks have not fared particularly well in the UK in the past. While they consistently rank highly in terms of customer service, they have struggled to attract a significant proportion of the market.
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In 2013 ING Direct was sold to Barclays and rebranded as Barclays Direct (and is performing well according to Barclays’ most recent results announcement). It seems 2014 could be the year we see a resurgence in direct banking in the UK and Fidor would be well placed to take advantage of this customer interest.
Built on a foundation of Web 2.0 and social media, e-commerce, games and mobile internet, Fidor Bank wants to be seen as utterly different from a traditional bank and according to CEO Mattias Kröner the bank will "fundamentally change the relationship between the company and the customer."
Kröner explains that the bank is a platform for customers to share ideas, advice and opinion. "Our customers can interact with others, talk to employees and even the board members of the bank through the site. I think of Fidor as more of an operating system than a bank."
Kröner is insistent that the bank does not expect customers to use the message boards on the site as legitimate financial advice but for customers to "use it to form their own opinion."
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By GlobalDataHe says: "In a traditional bank you cannot ask questions. You cannot go into a branch and ask people there whether to buy gold that day. With Fidor you can, and you will get answers. It is up to you whether you take that advice."
Crowd finance and peer to peer lending are key to Fidor’s offering, bringing the customer into the value chain and making them a necessary part of the bank.
For this kind of open-door, community banking model the more customers and users the bank has the better able to help people and lend money it is. Kröner tells RBI that first on the banks list of countries to expand to is the UK, and is planning to open its virtual doors in the UK during 2014, although could not give an exact date.
The direct bank, which was granted a German banking licence in 2009, told also RBI that it has plans to increase its Russian operations this year.
Fidor Bank has yet to turn a profit but Kröner says that the bank expects to become profitable "at some point in 2014", despite the banks plans to expand.
Kröner has been critical of traditional banks failure to offer an alternative to the payday loan companies that have been gradually increasing their market share of the short term loan industry.
Fidor plans to open up the banks e-wallet will be upgraded to support Bitcoin in 2014.
Kröner explains that Fidor Bank is a Bitcoin supporter and wants to see the virtual currency work. "We are a believer in virtual and complementary currency systems, and Bitcoin is one of them. Being a digital based bank we need to keep up with the virtual world. Bitcoin needs to have a regulated partner and Fidor can do that."
The Currency Cloud has had a long relationship with Fidor Bank, and according to Mike Laven, CEO of The Currency Cloud, the e-money business may not be here today if not for the deal they originally struck with Fidor.
Laven says: "As an internet bank in the Eurozone and now opening in the UK Fidor needed to be multi-currency from day one. The bank wanted their customers to be able to pay their bills how they wanted."
Fidor was not able to invest in their own system for managing these kind of payments and opted to use the system created by The Currency Cloud, becoming one of the companies first clients.
The expansion that Fidor Bank has planned will be further put to use The Currency Cloud’s foreign exchange systems.
Laven says: "Our strategy of interfacing with other firms and allowing access to our technology was exactly what Fidor needed to quickly give them multi-currency capabilities anywhere in the world."
According to Kröner the fledgling bank will continue to use social media as its prime marketing channel following its UK launch, along with its crowd sourced approach to financial FAQs.
The Currency Cloud at a glance
– Established in early 2012, The Currency Cloud is a FinTech company based in London.
– The Currency Cloud’s aim is to power enterprises with a transparent, fast, easy-to-use and secure payments engine that will transform the way businesses move money around the world.
– The Currency Cloud work with 100 platform customers and with their service has reaching 40,000 end-customers.
– The Currency Cloud processes in excess of $4bn in payments every year, across more than 40 currencies in 212 countries.
– The Currency Cloud is backed by four FinTech investment firms – Atlas, Anthemis Group, Notion Capital and X’Ange – and has raised close to $10m in funding as of January 2014.
Fidor Bank – One to watch
– The Fidor Bank model is based on Web 2.0 and social media, e-commerce, games and mobile internet, the four key areas that Fidor’s founders see as becoming more and more popular among customers;
– Fidor encourages customers to comment and interact on the site and has crowd finance and peer to peer lending options;
– One of Fidor’s most innovative ideas has been the ‘like’ interest rate, which was launched in April last year. The more likes the bank gets on its Facebook pages, the higher the interest rate becomes, and
– The bank has created a business-to-business concept, Fidor TecS, a technology subsidiary that sells white-label solutions to what Kröner calls "big-name partners".
