Bunq’s founder Ali Niknam promised to take users to a world of banking that they’d never seen before. His mobile-only challenger is still on that yellow brick road and people are loving the journey.
Angered by the failure of financial institutions during the 2008 recession and prompted by a sense of social duty to offer an alternative to what he saw as broken banking, serial entrepreneur Ali Niknam started working on bunq, a subscription-based mobile challenger, in 2012.
In 2014, it gained its European banking permit, the first in more than 35 years, and when it launched in 2015 in the Netherlands, it was the only licensed European challenger bank to be completely self-funded. It remains unique in that to this day.
Niknam had invested €44.9million of his own money into bunq, the ‘rainbow bank’, beyond which he saw a place where dreams that customers dared to dream really can come true: a bank that not only listens to them, but conducts itself according to a code of ethics built around sustainability. That extends to the balance sheet, which, Niknam says, is imminently capable of showing a profit.
The self-styled ‘bank of the free’ has not only seen users offset 12.3 million kilogrammes of CO2 to January this year (which translates to more than 13,000 flights from Paris to New York) through its Green Card, a metal card launched in 2019 that plants a tree in partnership with Eden Reforestation for every €100 spent; it also allows account holders to dictate what their deposits are invested in. Currently, there are eight ethical options to choose from. Customers can even suggest newer avenues for their funds in line with their principles, and bunq will consider them.
Subscription-based and offering a primary account with sub-accounts, each with its own IBAN (international bank account number), bunq works hard to create features and products its users love. In April, it expedited the launch of its +1, a version of a joint account that offers users greater flexibility, particularly in light of coronavirus. Existing premium customers can invite a friend or relative – a trusted ‘plus one’ who is not a bunq customer in their own right – to share a sub-account for a monthly subscription.
Its bunq cards are integrated with Apple Pay and Google Pay in selected countries, and users can even create an online-only card for e-commerce purchases. For Apple iPhone users, bunq also integrates with Siri, allowing them to perform some common tasks using voice. Its fee-free travel card, launched in 2019, is a prepaid card wrapped in a Mastercard and you don’t even need a bunq account to open one. Now operating in 30 markets, across seven languages, the challenger is routinely demonstrating how banking can be different. Here Ali Niknam explains how he gets bunq to do that.
The Fintech Magazine: Can you describe the genesis of bunq and how and why you launched without venture capital (VC) or other external funding?
Ali NikNAM: I started coding when I was nine. I started investing in stocks when I was 12, and founded my first company when I was 16. I founded my first really successful company, TransIP, when I was 21. It is, today, the world’s third largest domain name and web hosting provider. But in 2008, in the amidst a financial crisis, I saw a lot of people – both ordinary people who couldn’t afford their mortgages and bankers who were mostly just doing their jobs – getting caught in the crossfire.
Being an engineer who loves to create products people love to use, and also very socially engaged and environmentally conscious, I figured ‘while everybody is pointing fingers to figure out who to blame, why not spend that time and energy creating a new type of bank that is completely different to what people are used to?’.
Bunq was to show everyone what a bank could be, how user-centric it could be and what a different experience you could have. I chose to fund it myself because I really wanted us to be focussed on our users and create a product they love, rather than getting caught in the VC game of running after vanity numbers. For a company to be healthy and sustainable, first it needs to understand its users and then it needs to create something they value. So we took our time to do just that.
At bunq, we do still have losses, but the underlying business model is healthy, the unit economics are healthy and it’s projected that, if we wanted to, we could make a profit a couple of years down the road.
We have taken a different approach; we’re slightly more calm, less aggressive on our growth and more focussed on creating those products that really make life easy.
TFM: You were pretty fast out of the stocks with the new +1 account, though. Was it purely a response to COVID-19?
AN: The amazing thing about bunq is that our users are really engaged with us. They’re engaged because they notice that somebody is actually listening when they come with a suggestion, a hint or an idea, and implements it. We had a lot of bunq advocates who said ‘hey, I want to have an easy way to share this experience that I love so much with the people around me’, but we expedited the release of +1 because of COVID-19. Because we’re mobile first, onboarding is super easy. You can invite someone in just one tap. You can literally become a part of the bunq community in 90 seconds.
TFM: How has the pandemic affected your working operations?
AN: Because we’re very modern and mobile, we were like ‘OK guys, work from home if you can; go to the office if you must’. So, for us, not much changed. More meetings are being kept virtual and we really didn’t have many operational issues. We did have some downstream. For example, the production of the cards happening all over the globe means we need to make sure we have enough stock. But, otherwise, working from home has been great. In fact, in certain regards, I get more done now because I get interrupted less!
TFM: How do you plan to stay current while not committing yourself to huge and ongoing technology investment?
AN: As with any technology platform, there is a huge advantage of being able to start afresh. If you want to keep having that advantage, it takes effort and discipline, and an understanding of technology.
There are a number of factors that would contribute to helping prevent huge spending to stay current. First, which really can’t be underestimated, is having somebody aboard, in a serious position, who actually understands technology and is capable of making the right calls and ensuring whatever is necessary actually takes place. I’m obviously a coder. I love coding. I was coding until 5am this morning to make sure that the +1 launch went well.
Second, avoid getting behind, because as you start accumulating technical debt, as with normal debt and interest, it ramps up much quicker than you would anticipate.
Third, educate users to expect constant change. We aim to be current at all times. That means the interface will get better every time, the card will get better every time, the experience will get better every time. It also means that there will be continuous change. If you don’t enjoy that, then bunq is not the place for you. Being clear about that enables us to have an environment where we are encouraged to continue innovating.
TFM: What’s your proudest moment?
AN: With +1, we hit techcrunch again. That’s obviously something to be proud of. Users’ responses are very positive, which is logical because we’re creating stuff people actually want. Also, I really love the Green Card and the fact that we planted 200,000 trees in less than four months! There are a number of other things I’m excited about that are launching soon.
TFM: Atom Bank has will.i.am, Klarna’s got Snoop Dogg. If bunq was personified by a musician, who would it be?
AN: It wouldn’t be one person, bunq would be a festival. That’s why we have the rainbow colours: we are not just one thing, we are together and we’re different.
> The full story behind the launch of bunq is told in a book, Break Through Banking, available through Amazon.