Amsterdam-based digital bank Bunq is preparing for a relaunch in the UK.
The neobank, founded in 2012, previously had a presence in the UK but was brought down by Brexit regulation in 2020 along with a number of other European digital banks, including Berlin-based N26.
Now Bunq is planning a comeback, boosted by the fact that the UK is home to a community of 2.8 million “digital nomads” which it is looking to tap into.
This is Money’s banking and savings reporter Helen Kirrane speaks to Bunq CEO Ali Niknam about its plans to re-enter the UK market and how it will compete against digital banking giants Monzo, Starling and Revolut to make up for lost time.
Bunq in Great Britain: the Dutch bank seeks to return after leaving thanks to Brexit
‘The banking scene in the Netherlands has always been a bit like Broadway. If you can make it here, you can make it anywhere,” Bunq CEO Ali Niknam told This is Money.
While Amsterdam’s DeLaMar theater may not be Broadway, its latest upgrade, Bunq25, has around 450 customers, investors and interested parties in attendance waiting to check out its new features, so that’s certainly what Bunq is going for.
From the stage, Niknam announces that the neobank has reached 12.5 million registrations across Europe and deposits worth 8 billion euros.
It now plans to increase these numbers by relaunching in the UK.
The bank achieved its first full year of profitability in December, reporting pre-tax profits of €53.1 million.
It plans to roll out some of this for its UK launch. But his ambitions are somewhat hampered by bureaucracy, says Niknam.
Late last year it submitted an application for an electronic money institution license to allow it to launch in the UK.
Granting e-money status can take between one year and 18 months, depending on the application.
Niknam hopes for a relaunch in the UK “sooner rather than later”, but adds that the regulatory processes to achieve this are “long and difficult to predict”.
Ali Niknam: Regulatory overhead has held back bank’s ambition to relaunch in UK
Fellow European neobank Revolut also has EMI status.
He has been trying to get a full banking license for a few years and still hasn’t been able to get one.
One of the key differences between an electronic money institution and a banking license is that the former allows companies to offer loans.
Companies with a banking license can lend money, while those with an electronic money license cannot.
But Niknam doesn’t think having an e-money license rather than a banking license will stop Bunq in the UK.
It says: ‘For the service we want to offer, we believe that an e-money license will serve us and our customers well.
“As these UK licenses allow you to connect to the interbank system, we believe we can serve our UK users very well with an e-money licence.”
‘It’s not the technical challenge that is holding us back, but all the regulatory overhead.
‘We are really a technology company at heart, so implementing technological systems is what suits us.
‘But we also need to include all the additional compliance and risk and all the additional reporting that we need to do. And that’s really the reason we’ve fallen behind.
Ambitious: Bunq is eager to return to Britain, but boss Ali Niknam says “regulatory expenses” have delayed the launch in Britain.
In addition to regulatory challenges, Bunq also faces an extremely competitive market in the UK, dominated by players such as Starling and Monzo.
The main challenge will be whether Bunq will be able to control a portion of its customers.
“The Monzo and Starling apps don’t have a presence in Europe, Revolut does have a presence in Europe, so possibly some of the features are already there,” says Niknam.
Bunq’s target market is ‘digital nomads’ (Britons living or working in the EU or EU people working or living in the UK) and having an interface where they can make payments is paramount, Niknam says.
This is a potential market of 2.8 million for Bunq. Niknam says there is still a group of digital nomads after Brexit: “I think, if anything, after Covid, things have become more widespread,” he says.
‘The first milestone is getting that license so we can launch.
“And I’m pretty sure that once we can launch it we’ll be able to compete.”
Recently, Bunq launched Finn, its own generative AI tool similar to Chat GPT that can answer questions about customers’ financial habits, such as “did I pay my taxes last month (a question Niknam himself posed)?”
Finn is not intended to replace customer service for troubleshooting, but it will effectively replace the in-app search function.
Niknam said: “Finn independently resolves up to 40 percent of user support questions and helps with 75 percent every day, helping users resolve any issues they may have using Bunq.”
One thing that attracts many customers to Starling is their customer service and the fact that they can talk to someone for help.
In terms of Bunq customer service, Bunq uses chatbots but has a hotline for urgent issues like a card being blocked.
Other new features include global travel insurance and a travel money assistant. Customers can also receive spending information from their external bank accounts by adding them to Bunq.
To those who say the UK is already a saturated market, Niknam says: ‘In all European countries, including the UK, around 99 per cent of the total market is still in the hands of the old traditional banks. So it’s not crowded at all.
‘We love healthy competition. “We would rather have strong competitors in a competitive and fluid market than be the only new player.”
“Now that we have traction, financial health and a proven business model, we will patiently add regions one by one,” says Niknam.
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