Fidor Bank AG: The Fidor Smart Current Account
1. Congratulation Carsten, on winning the BAI-Finacle product and service innovation award. So what is the Fidor Smart Current Account? And what makes it innovative?
Thanks! It was an honor for us to receive the award, and an incredible affirmation of the work we’re doing to improve the lives of our community. The Fidor Smart Current Account is the account that everyone gets when they sign up with Fidor, but it’s much more than your standard current account. It’s built with APIs, so connections can easily be made to third parties to offer innovative financial services. Some examples of these partnerships come in the form of global money transfer, precious metals trading, and crowdfunding (just to name a few). Generally, newer FinTech companies can offer a better and more customer-centric solution than the traditional banks can. Combine that with the fact that as a bank we are required by law to thoroughly vet each of the third parties, and you create an environment where it’s less risky for the customer to try these new products and services. It’s hard to describe, but the account feels better than your traditional ‘set it and forget it’ bank account. We offer the customer the ability to explore, to experience the best of FinTech.
2. You have a very interesting concept of ‘community’ in banking. Could you talk about the idea behind this?
The bank actually started out as a financial community where users could rate products and advisors to try and get the best value for their money. This was back in 2009 when the world was still reeling from the crisis and didn’t know who to trust. This mentality of being as transparent as possible and working with the community to create fair products still shapes how the bank makes decisions today. We regularly use the community to ask for feedback and to help shape the development of new offerings. Simply giving customers a medium to voice their opinions and suggestions may seem obvious, but unfortunately, it’s still fairly uncommon in the world of banking.
3. Tell us about how a Fidor Bank account holder’s experience would differ from that of a bank account holder in a regular bank.
The biggest thing people will likely notice is everything is done online. While there are plenty of resources you can contact if you need help, we have a total of 0 branches. We believe that the branch experience of being told which products to use is far inferior to getting advice from a community of people who look out for one another.
Additionally, the account itself feels more transparent and easy to use; there are no secret products or fees. If you want to start a social trading account, simply go to the social trading option and compare the vendors we’ve integrated with. When using their account, the customer realizes that the account is more than just a place to store your money; you can cover all of your financial needs with it. Another huge difference people will notice is the speed at which you can execute on many functions. Fidor has several products that can be applied for and completed in less than 60 seconds.
4. What are the products you are planning to launch in the coming year?
We have a tremendous to-do list that we’re working on and have a couple of priorities for the upcoming year. Our Fidor Smart Current Account is pretty well developed for retail customers, but we’re looking to improve the experience for our SME customers. Some general tweaks like payment processing, more credit and savings features, an expanded mobile app, and new APIs will make the account even more attractive for SMEs. We’d like to show off our range, and highlight more clearly that you can do business with Fidor as your primary business bank account. Additionally, we’re exploring taking the first steps towards a banking “app store”. While it’s still in the conceptual phase, our approach already allows for easy integration of third parties, so why not create an experience for it? Our existing partners will receive better exposure and Fidor customers will be able to more quickly find solutions to their financial problems. We’re also looking to introduce a new card scheme and update the community – so there’s a lot to look forward to!
5. What is your take on the blockchain technology, and are you looking at using it in any way?
We continue to look at blockchain technology with curiosity and we’re exploring how we can use it in new, innovative ways (e.g. building a core banking system on top of it). We already partner with companies like Ripple and Bitcoin.de (the leading German bitcoin exchange) to offer innovative services on top of their cryptocurrency offerings.
Many banks are starting to look especially at the underlying technology of Bitcoin, especially the distributed ledger component, which is something that could impact the future of banking. Companies like MultiChain or Ethereum (among others) are tackling some tough problems to try and figure out how to best utilize these concepts in a practical manner, and it’ll be exciting to see in which direction this technology ends up going.
6. What about bitcoin banking?
We’ve talked to a lot of experts on this topic, and while many interesting ideas came from it, we concluded that there is no real demand for a “Bitcoin bank” at the moment neither from the consumer, nor from the entrepreneurial perspective – the industry still is in a phase where it needs to consolidate the business models, products, etc. Additionally, because Bitcoin ownership is determined by knowing a private key, a Bitcoin bank would essentially be in the business of data storage. The fact that specific Bitcoins are traced back to a specific owner is irreconcilable with the model of traditional banking- loaning out money and paying interest on deposits. While the general public is becoming increasingly informed about Bitcoin, it’s still (unfortunately) a small, niche market. As such, the ever-evolving wallets, marketplaces, and brokers seem to meet demand admirably. If we’re talking about Bitcoin specifically, we’ll have to see some key milestones met before a bank makes sense. It’s something we’ll keep our eye on, though, and perhaps we’ll be in a very different place a few years from now – though we think it probably will not be limited/focused on one specific currency. We feel it’s important to be close to cryptocurrency development and that we keep an open mind. As a bank, however, we always have to keep our regulatory obligations in the back of our mind. Cryptocurrencies are a result of the digital lifestyle and as such it’s important for us to understand the development happening around them.
7. I’m sure this is a question you get a lot…but what is Fidor Bank’s vision – from when it was started, to the present time, and going forward.
Fidor was built on the idea that the world needed better banking. We have no desire to be like the gigantic banks, because they don’t do right by the customer. Fidor charges fair rates and doesn’t try to sell the customer things they don’t need. The motto is “banking with friends” encapsulates this feeling pretty well. Banking should leverage social networks and technology to better lives, not just turn a profit. We believe in asking a community versus being told by a financial advisor, financial literacy over intentional confusion, and openness over secrecy. Banking can and should be simple and fun.
Lending Club: Breakthrough Ideas
Congratulation Andrew, on winning the BAI-Finacle Most Innovative Non-Bank Financial Services Organization Award. Could you talk about what Lending Club is doing that makes its service truly innovative?
Lending Club leverages technology to deliver a frictionless, transparent, and highly efficient online marketplace that delivers lower rates to borrowers, solid returns to investors, and an overall better customer experience. On one side of the marketplace, investors get unprecedented access to consumer credit as an asset class and are empowered to diversify their investment across hundreds or thousands of loans. On the other side of our marketplace, creditworthy borrowers can find out if they are qualified for a loan within minutes of applying and are often eligible for a lower rate than what is available from other sources.
So what brought on this idea?
In 2006, Renaud Laplanche, Lending Club’s founder and CEO, looked closely at his credit card statement and realized that despite a great credit history, he would pay a 16.99% interest rate on a balance, while his deposits at the same bank were only earning 0.48% percent interest. This inspired him to do more research, and he began to understand just how inefficient the traditional banking industry can be. Renaud founded Lending Club on the premise that an online marketplace would offer a more cost-efficient and consumer-friendly way to allocate capital between savers and borrowers than the traditional banking system.
Physical branches: Essential or redundant?
Consumer behavior is fundamentally changing in the U.S. and across the world as more consumers engage with their financial institutions online or through mobile devices. Lending Club’s proprietary technology platform and online marketplace model capitalizes on this change in customer preferences. As a result, Lending Club eliminates costs related to a branch network and allows us to make credit more affordable. Furthermore, online product delivery broadens our reach into communities that have been historically underserved by traditional banks.
The banking industry is transforming. Where do you see traditional banks placing themselves as the wave of change comes. And will you partner with traditional banks?
Lending Club has established partnerships with many banks over the last few years through which banks can buy loans from Lending Club’s online marketplace or use Lending Club’s online marketplace to offer co-branded loans to their customers. This can be particularly helpful in areas such as personal loans or small-balance commercial loans, which are often hindered by high underwriting and servicing costs. This partnership plays to each party’s strengths – Lending Club’s low operating expenses, combined with banks’ low cost of capital, reduces the cost of credit for consumers and businesses. Further, Lending Club’s online platform provides a solution to banks that want to offer loan products online, but find it difficult to do so because of legacy systems.
Tell us about the Google partnership
The Google partnership allows Google to facilitate low-interest and no- fee financing to select Google for Work reseller partners. The program leverages Lending Club’s platform so Lending Club services the loans and enables Google to purchase the loans, thus investing its own capital in its partner network to drive business growth.
How do you see it taking shape in the next two years? Is it about more customers, or introducing newer services? Add-ons?
Our goal is to make ourselves more useful to more people over time, and we’re doing that through continuing to deliver a superb customer experience and expanding across different product lines such as small business loans and lines of credit, as well as through partnerships such as Union Bank, BancAlliance, Google and others. We think there’s a huge opportunity to help people achieve their financial goals.
Lending Club: Breakthrough Ideas
What is the mobile ATM service all about? And what makes it click among your customers?
The Mobile ATM service enables Idea Bank’s clients, mostly SME owners, to summon an ATM-laden vehicle via a smartphone app and use it to deposit their daily income whenever and wherever they find it most convenient. According to our research, one-third of Polish SME owners use only cash transactions, and 80% deliver their income to the bank in person, wasting even an hour daily as a result. We decided to lift the burden of money transportation off entrepreneurs’ shoulders and prove that cash-loving conservative clients are no excuse for the lack of innovative payments thinking.
The mobile ATM is such an innovative concept, what are the other innovations Idea Bank has introduced to its customers?
Delivering innovative business-management solutions lies at the roots of Idea Bank’s corporate strategy. Only in the last couple of years we have managed to launch multiple different projects, all of them designed specifically to support entrepreneurs in their everyday duties. Be Proud, for instance, is an on-going program aimed at providing free marketing services to SME owners. Since its inception in 2013 we have conducted over 200 micro-campaigns, promoting our clients’ businesses in the mainstream media. Idea Cloud is another breakthrough initiative of ours – it is the first banking cloud in Europe and the world’s first transactional platform combining both accounts and banking functionalities. Equipped with many business-management apps, it helps entrepreneurs cut red tape by half. And let’s not forget Idea Hubs, our new experimental branches fitted with co-working space, bookable conference rooms and all the necessary office facilities. Their success proves that innovative bank branches may still attract customers and teem with life.
What are the products you are planning to launch in the coming year?
We have a very special project awaiting its launch in 2016. The World Bank estimates that Polish companies spend a minimum of two months a year just tending to social security- and tax-related matters. In order to change that ratio, we are looking to integrate our corporate e-banking system with the national administration system. When that happens, entrepreneurs will be able to carry out most of their administrative chores online – shortly after logging into their e-banking accounts. We will be the first bank ever to provide its clients with such a possibility.
What is the vision of Idea Bank, and how do you see it shaping up in the future?
Idea Bank’s brand awareness is on the up, and our innovative SME-targeted solutions contribute largely to the bank’s increasing popularity. As a rising leader in servicing Polish entrepreneurs, we also aim at becoming their bank of first choice. A strong and highly recognized brand, Idea Bank will attract employees who take great pleasure (and pride) in driving innovation. It already does.