fintech bunq as a disruptive force in the dutch banking sector

During our first class we talked about whether banks are necessary or not. This inspired me to write the following article about how new digital banks (also called fintech/neobanks) are disrupting the traditional banks. I would like to write this blog post from my personal perspective, which is as someone who previously worked inside a Dutch fintech bank named bunq. What I experienced here is the way the business model of banks are currently being disrupted.
One of the initial ideas of bunq was to no longer use the money of people on the bank and make profits by investing/lending this money out, but using a subscription model to generate revenues. Resulting in no or a lower need to invest client’s money and thus lowering the risk profile of the bank in general in times of crisis. This idea worked well, since people are more used to having subscriptions then years ago. Using subscription models to acquire revenue, the bank has been able to give back to the customers by consistently offering the highest interest rates of all Dutch banks (currently 3.36% vs 2.60% for second highest).
Although their business model is different and disrupting the Dutch banking sector, what is more impressive is their operating and organizational model. Bunq is truly run like a start-up software company, the largest number of people employed besides the necessary compliance people are by far developers. The organization is extremely flat, in such a way that basically every document and/or piece of code is still passed through the CEO (Ali Niknam). This is something unheard of at traditional banks.
Over time the Dutch media has written a few quite negative stories about bunq and their lack of protection against banking fraud. I think that everyone can conclude that bunq could have been more cautious here, but this is not the point I am trying to make here. Because what this scandal also showed is the way their organization works and is able to disrupt the rest of the industry. This is due to the fact that after the scandal came out, bunq handled quickly and made changes to their processes, made adjustments in their app and set up a phone help desk, all within 3 weeks. Clearly displaying how flat and fast this organization can handle on matters. I assume that in larger banks their bureaucratic processes would be in the way of such quick actions.
Another example showing the disruption of bunq is by how they have handled the process of onboarding new customers. the regulator (Nederlandsche Bank) had a very strict policy towards onboarding new customers and what questions to ask. The procedure of onboarding new customers was a long and bureaucratic process of questioning the customer. An example question was “ Are you a fraudster?”. After Ali Niknam went through these questions he stated that using the numerous datapoints and AI they are able to make better informed decisions on whether customers should be onboarded than asking a large abundant question list. Next to this, they wanted to make the process of onboarding as quick and convenient as possible. After numerous discussions bunq decided to do what no other bank had dared to do; sue your regulator. This can be seen as a suicide mission, since suing the people that grade your homework does not often result in high grades. But the courtcase turned out in the favor of bunq, the judge stated that the process of onboarding was outdated and that bunq was indeed not doing anything wrong. This has resulted in a big leap forward in terms of how KYC (know your customer) processes are currently set up. The disruptive nature of bunq clearly shows, since most other dutch banks started adapting their onboarding processes after the trial of bunq.