Digital bank Fidor seems to understand the future of money better than anyone
The future of money is a relatively safe science. We all know how it works, where it’s probably going to go, and that there’s very little in the way of disruption to the basic idea of money. While there are contenders to the norm in the form of cryptocurrencies, they too still adhere to the rule of money as money – they just eschew the financial institutions that govern it. And, it’s in those institutions where we’ll see change coming about, trying to tackle the wave of how people do business in the modern age. So far it seems that Germany-based digital bank Fidor has the competitive edge
Speaking at Wired Money, Fidor CEO Matthias Kröner spoke about how the current banking system is – in essence – broken.
So what is he proposing solves it, and in the process helps form a new payments infrastructure?
Well, at Fidor there’s no physical bank at all. It’s entirely digital. When asked by some about how he manages to convince offline bankers to become online ones, his reply is “why?” Kröner believes, and rightly so, that he needs to convince nobody in the general public about ‘converting’, its a service in demand, and people will come. In fact, it’s so ingrained into what people are thinking and what consumers want its social media campaign says that for every 2000 ‘likes’ it gets, interest rates on overdrafts drop by .1 per cent. It’s a gimmick, that’s for sure, but it’s one that works and one that engages customers and spreads the word.
But Fidor isn’t just a bunch of jokes, it’s a bank – a licensed bank in fact – and it takes business very seriously. Using the Ripple network for banking, thus enabling instant transaction, and a custom operating system to enable clarity and financial advice, this really is the bank of the future. It has a complete customer-centric approach, “treat community members like co-managers,” states Kröner, explaining that they talk to their community about upcoming interest rate changes 5 – 10 days before they take place. It also seems that the community help each other out with financial advice, putting forth tips and even assisting with borrowing money if that needs to happen.
Fidor attributes a lot of its success to community intergration, but also to the fact that it’s not the bank that sets the working terms. While traditional banks are closed on Sundays (although an increasing amount are beginning to open across these periods), require a day or two to process transfers and cheques, sate that certain business can only be done between certain hours of the day, and that if you need advice you better wait until the banks open again; Fidor doesn’t. Instead it understands that by being a digital bank it has to be completely open in many ways. This means that services are available 24/7, on holidays and weekends, wherever you are in the world. It’s even open to using and accepting bitcoin if that’s what its customers want to store and spend there.
“Web banking is cross border banking; there’s no sense for us to send money from Stuttgart to Berlin, that’s boring. It must be open for local business partners as well as global,” said Kröner, before stating that “there’s no reason not to pay out a loan not on a Sunday. There is not a day off for money — when you bill me, [a customer might say], there’s no day off.”
Such an attitude to banking has paid off massively too as the cost of customer acquisition is 20 per cent of the industry standard, sitting at about €1.40 per customer; with a fully-processed KYC customer clocking in at around €16.70. It also helps that Fidor has loads of data on all of its customers and where they’re spending money thanks to the entire digital nature of its business.
But for all of this why was Kröner so adamant that Fidor needed a banking license for this purely digital venture? “To hijack a flight you have to be sitting in the plane,” answers Kröner; and with that it’s clear that this is where the future lies.[Image: Michael Gray - Wired]