Fidor Bank's Kröner: "Interacting socially is at the heart of our DNA"

• Fidor Bank sets ups an Asian headquarters to sell its digital infrastructure and platform to banks in the region
• The bank has introduced a number of innovative solutions, such as Fidor FinanceBay, a marketplace of financial products and social community
• The bank will use Singapore as a base for selling its solutions to financial institutions in the region to support inclusive banking

Fidor Bank started operating in Germany in 2010 as a digital bank, Kröner said, and it calls it the “oldest financial technology (fintech) bank in the world.” The focus is on customer-centricity, ease of on boarding, and operating a community in which people can exchange ideas. “You get a bonus for interacting socially,” Kröner explained. “This is still at the heart of our DNA, and making us different.”

The bank, which was acquired by French banking giant BPCE in 2016, has about 220,000 customers in both Germany and the UK, and an even-larger half million people in its broader community. It is expanding next into France, where it is currently in a closed beta.

While an acquisition might seem like it would stifle a fintech bank, Kröner sees it differently. “It should help us to remain independent, agile, and rule-breaking in a compliant way. We want to break the unspoken rules of how banks are acting. As CEO, it was important that we are in a safe harbour.” Being part of a larger bank gives Fidor greater scale and credibility, and it has also leveraged the expertise of the larger group in areas such as setting up frameworks for risk management.

Being a BPCE group member has, however, changed the way Fidor Bank is regulated. “We had been regulated by the BaFin,” Kröner explained. “Now, it is the joint supervisory team of the European Central Bank, BaFin, and Bundes bank. BaFin was a more consultancy approach. This is different. Very much to the book. The joint supervisory team does not reflect the size of our bank.”

A year of transaction, a year of transition

While 2016 was “the year of the transaction”, as Kröner describes it, 2017 has been a year of transition. “Changing from startup to growth requires some work (for) optimising processes, product, (and) standards of quality, in order to avoid problems.” Fidor did a shakeup of the bank organisation, from the executive board to the bottom level, and created new departments which Kröner sees as more appropriate for a data-centric company.

A recent addition has been Fidor FinanceBay, an open banking ecosystem which Fidor says offers “every financial service a customer could possibly want” and brings together a multitude of fintech and insuretech products in a single marketplace. It gives customers a secure environment to compare and select products including insurance, cryptocurrency trading, foreign exchange, peer-to-peer (P2P) payments, money transfer, savings bonds and crowd-financing.

Kröner said Fidor defines success by its net promoter score, which is currently in the 40s to mid-50s. One example of what drives that high score is loan onboarding, with loan disbursement taking place in about 90 seconds, 24/7. “Relevant is the biggest word,” Kröner said. “You can be relevant once you are in the position to deliver the service,the money, at the time the customer is requesting it - not in a week after you have gone through the document check. This is possible because we operate on the Fidor operating system, the digital infrastructure from FidorSolutions.”

The bank’s next step

The next step, Kröner said, is further European expansion. “This expansion will reflect the opportunities that European regulation will give through the second Payment Services Directive, or PSD2, which is forcing banks to be open. This is offering a huge set of options for new entrants. It could be another point of endangering banks. Being a small player, we see us on the attacking side.”

Fidor is also expanding its services by offering its operating system to any bank. Fidor Solutions, which currently operates in Dubai and will open soon in Singapore, has six institutional partners, including banks and non-banks. “Any institution can take advantage of the infrastructure and offer a digital banking experience,” Kröner said. He said the system enables client banks to deliver speed, a data lake that allows analytics, faster loan distribution and low-cost banking. Fidor partnered with Abu Dhabi Islamic Bank (ADIB) last year, for instance,to launch the Middle East’s first community-based digital bank.

Fidor’s expansion plans for Asia

Fidor has begun its expansion into Asia by opening an office in Singapore that will start by providing support for students at the polytechnics. It has pledged to spend €500,000 on training students and lecturers on the development of fintech applications, in a program supported by the Monetary Authority of Singapore (MAS).

Fidor’s plans in the region are clearly larger. “Singapore is a headquarters, less as a retail market,” Kröner said. “You have a stable environment, regulation. We will fight to be part of the MAS-driven initiative in the region. Let’s take it geographically from there.”

The current plan, then, is to use Singapore as a base for selling the Fidor Solutions system to financial institutions in the region to support “inclusion banking, a minimum viable product, finance.” Kröner said “the Fidor operating system, we standardised as much as possible and made it easier. Reusability is a strong component. The reinvention of the wheel is not needed. A product in market A will work in market B.”

While many bankers say their market and customers are different from any other country, Kröner believes that “we are more standardised than we think, all over the planet. We are getting on the same track. Yes, regulators in Laos are different than in Myanmar. (However), they all know they need to getto digital finance. There is a global understanding that we need to create a proper financial infrastructure.”

The points of motivation, he said, are to be scalable, low-cost, high-speed infrastructure, data understanding. “In this, everyone is the same.”