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Entrepreneur Ali Niknam and his internet bank bunq are gnawing away at the foundations of the big legacy banks. The innovative fintech firm aims to earn money by offering its clients fantastic products. ‘Other companies.’ Niknam says, ‘can use our technology to build their own applications.’
Ali Niknam began bunq in 2012 more out of frustration at the products supplied by the big banks than because of their poor reputations. Starting with no shareholder equity, he has since pumped an estimated €40 million into his initiative. He earned that money through TransIP, the company he founded after leaving university and which has grown into one of the biggest webhosting providers in the Benelux region. Bunq cannot be compared with a traditional bank, says Niknam. He says bunq wants to earn its money through customer-friendly services more than by making money from money. Clients pay to use bunq and organise their financial affairs via the bunq app. When he launched the project, Niknam said he wanted bunq ‘to grow into the WhatsApp for banks’.
How well are Dutch firms doing when it comes to digital transformation?
‘We are not used to having big dreams in the Netherlands and to tackling things on a big scale. You can see that in the doubts being expressed about digital transformation. But we have the talent and the skills, in terms of both companies and people. If you say in the Netherlands that the world is going to the dogs and suggest building a rocket to fly to Mars, everyone says you are mad. In the US they say, “good plan: let’s see if we can put it into practice.” Just look at Elon Musk. In the Netherlands we can transform digitally, but we are not doing enough of it. And if a company starts the process, they wrongly see it as a sort of instant, cure-all wonder drug. So people end up making the process too complex and things go wrong. This is evident in big government projects, which are always looking for the impossible. Look for what you can achieve instead. There are enough examples of what can be done.’
Ali Niknam (37) studied computer science and engineering at Delft University of Technology and then founded webhost provider TransIP. In 2012 he launched internet bank bunq, which was awarded a banking licence in 2015.
What approach should you take?
‘Keep it simple. What part of a problem can you solve with new digital technology? Do that first and then look again. This kind of approach leads to faster and easier advances. So don’t begin with a complicated, all-encompassing digital strategy.’
Are Dutch firms ahead when it comes to digital transformation?
‘No. We don’t have the innovative culture of the Americans and the British. They embrace innovation; it’s a cultural thing. We may be a small country but that does not mean we should think small as well. We have a lot of quality around us in terms of people and infrastructure. But lots of big companies seem unable to take decisions. It’s not simply down to size. Look at Amazon. It employs hundreds and thousands of people but it is a very innovative and agile company.’
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What distinguishes bunq from the big banks?
‘For a start, our app is linked to the contacts in our clients’ phones, so they can more easily send a payment request, together with a photo. They can app money to a friend or manage a joint kitty with a group of friends on holiday. We have a lot of useful functions. But in essence, it is about the great user experience that the bunq app offers. It is intuitive and fast. We don’t have a desktop version and that is something you might have to get used to. It is a bit like reading the newspaper via a screen. After a while, you don’t know any different.’
Bunq offers a savings product, but what about loans or a mortgage?
‘We don’t want bunq to be a copy of a legacy bank per se and I see us as an IT company with a banking licence rather than a traditional bank. Our clients are interested in more products and we are researching the options. But we won’t make any moves until we can offer a product that is both different and better than the way things are done now. For example, we offer a relatively high interest rate on our savings product. But bunq is not going to offer more of the same. You don’t have to leave your bank to use our services. You can use our app as an addition.’
You are keen on alliances and give other companies access to your computer system.
‘Yes we do. Companies can build their own applications with our technology. For example, Exact offers real time book keeping via bunq.’
Your client base and income are rising year on year but your losses are mounting too. Last year, you invested a further €9 million. Isn’t it time to turn a profit?
‘That is the standard question every journalist asks. I’m not that interested in profit. I am more interested in the underlying growth figures, and they are very good. We keep investing in our technology and the profit will come of its own accord. It is not that I am against making money. It is, of course a healthy end target. But we are driven by something other than profit. You should see bunq as a group of 80 idealists who want to fundamentally change an ageing financial sector that does nothing in the interest of its clients.’
is no instant,
cure-all wonder drug’
The big banks are slowly becoming more digital and are making their payment apps easier to use. ABN AMRO has launched Tikkie, for example. Are you afraid of competition?
‘On the contrary. The banks have been copying our functionality for years. Do I mind? No. Because they are acknowledging that we know what users want and what makes them happy. But despite the banks’ deep pockets and big marketing departments, our products are still better. The digital copies the banks are coming up with don’t have the same feeling as the real thing. In that sense, Bunq has changed the banking agenda.’
What makes you different to the big banks?
‘Our tech background. We have a different vision to bankers. They want to earn money with money and we want to offer our clients the most fantastic service and experience. That is in our DNA and that is why I call us the bank of the free.’
Bunq operates in other countries as well. Do you have to take cultural differences into account?
‘Of course. Alongside the Netherlands, we are now active in Germany, Spain, Italy, Austria and most recently Belgium and France. The French still use cheques and in Germany cash is very popular. So it would not be clever to go for a one size fits all approach. But there is one thing every market has in common - we build technology for a world as it is going to be, not as it is now.’
How would you advise established companies to keep successful start-ups at bay?
‘Forget it. If history teaches us anything, it is that by far the most of them won’t be around forever. You have to treat your clients, your workers and your shareholders as well as you can for as long as you can. And, well, there may come a time that you can shut up shop because a newcomer has taken over your business. Don’t see it as a problem. It means you have done your job. Things often go wrong when established companies take a short cut to digital renewal. The Telegraaf Media Groep took over the Dutch social media platform Hyves in 2010 for a huge amount of money, because it fitted in with their digital transformation. But they hadn’t got a clue what to do with Hyves, so it was a total waste of money.’
Established companies are forming alliances with start-ups by buying or taking a stake in them. Is this wise?
‘In theory, yes of course, but do it without trying to exert influence because it won’t work. Start-up culture is radically different. If big companies keep trying to interfere in a start-up then you know it won’t be a success. You can’t be big and innovative and a start-up all at the same time. They don’t go together.’
What risks should you be aware of when undergoing digital transformation?
‘That is such a Dutch question! Look at the opportunities, not the risks. If you are scared of flying, don’t get in a plane. But remember, a seat belt will protect you from turbulence.’