The price, key in the evolution of neobanks such as Bnext, Revolut and N26. Giants such as Tencent or the sovereign fund of Singapore support these projects.
They still do not generate profits, they do not carry out mass advertising campaigns and they do not provide a catalog of services that covers the entire spectrum that traditional banking covers. Fintech banking is still a developing sector in Spain, but growing at rates above double digits.
This still incipient sector in Spain expects 2019 to be its year. Neobanks such as Bnext, N26 and Revolut, which barely had tens of thousands of customers 12 months ago, expect to surpass the one million active users jointly, driven by their low-price model and investment in technology.
The growth of Bnext
Bnext, a Spanish technology-based company, is the one that presents more ambitious objectives. In January of last year, this fintech had about 800 clients. A year later, the number of active users has risen to 115,000 people, generating a volume of transactions of 140 million euros per year.
The growth of Bnext is accelerating and therefore the goal of this start up “is to multiply the number of users by five next year,” according to Alfonso Sainz de Baranda y López-Artamendi, responsible for the company’s growth, which He emphasizes that one of his strengths lies in the fact that they are not a bank, but a marketplace, a digital supermarket that, among other things, offers products from third parties.
The flagship products of Bnext (which does not have its own banking license, but operates through Pecunia Cards, an entity authorized by the Bank of Spain) are a free mobile application and a prepaid card with an associated bank account that allows Withdrawals of cash from any ATM without cost.
“The best alternative for customers”
Also be able to make withdrawals of free ATMs is one of the advantages offered by N26 to its users. This German neobank, which counts among its investors the Chinese giant Tencent and the sovereign fund of Singapore, unlike Bnext itself that has its own banking license and competes in the Spanish market also with a card (in this case debit) and a current account, in addition to offering a catalog of financial products such as a digital supermarket.
“Nobody can be the best in everything, so our proposal is to offer what we believe is the best alternative for each type of product to our customers,” explains Francisco Sierra, Head of European Markets at N26 and responsible for the business in Spain. The fintechalemana offers, thus, a catalog of services thanks to specific alliances with different suppliers: loans through Auxmoney and Younited Credit, savings products through the online supermarket Raisin, funds indexed through Vaamo …
The importance of ‘big data’
However, the marketplace path is not N26’s main strategy. The goal is to become “the day-to-day bank” of your clientele thanks to the low commissions it applies. The main source of income for the bank will be the commissions paid by the merchants and the means of payment platforms for each transaction that arrives through the N26 card.
Given their reduced rates, the logic of this strategy is to grow in volume; “That’s why we want our users to be very active,” says Sierra. The greater the number of clients and the more operations they carry out, the greater will be the data treasured by these neobanks, which agree that the use of big data is another leg of their business model.
The entity adds 2.3 million users in Europe. In Spain there are 150,000 customers, and the bank’s managers prefer not to set a customer target in 2019, although they recognize that the pace of growth so far this year allows projected to multiply by three the figure by the end of 2019.
Also ambitious are the growth objectives of Revolut. The neobanco based in the United Kingdom today has 160,000 clients in Spain and expects to exceed 250,000 this year, according to those responsible. And that the entity, which last December obtained the banking license from the Bank of England, has not carried out any massive advertising campaign within the Spanish market.
“We are gaining customers by word of mouth and punctual marketing actions,” explains Matthew Gladstone, Revolut’s ambassador in Spain. Among the strong points that explain the success of this fintech are low commissions and transparency. “We have three types of cards and our business is transactional, we are left with a portion of what Visa or Mastercard charge in each operation,” he adds.
The British neobank aims to grow in its customer base precisely to generate a greater volume of revenue. The intention of the heads of the entity is to expand the business to more countries and there are already plans to open branches in Australia, Japan, Hong Kong and Singapore. In the medium term, the United States and Canada will be the next steps. “The technology is very scalable and allows us to go from 40 clients to 400 million without anything happening. That flexibility does not exist in traditional banking, “explains Gladstone.