There will be rebundling after unbundling – Interview with NUMBER26

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At the Pioneers Festival 2016 in Vienna, we met Maximilian Tayenthal of the rapidly growing mobile banking startup NUMBER26 and talked to him about the evolution in finance and what it means for their business.

HI MAXIMILIAN. I GUESS MOST PEOPLE WILL HAVE HEARD OF NUMBER26 BY NOW, SO THERE’S NO NEED TO EXPLAIN TOO MUCH. WHAT’S MORE INTERESTING TO ME IS: I BELIEVE THAT YOUR USER EXPERIENCE IS STILL YOUR UNIQUE POINT OF SALE. IT’S FAST, IT’S EASY. IS THIS THE CORE OF YOUR INNOVATION, THEN, OR WHAT’S MORE?

Maximilian: We are a heavily product-focussed company, but if you ask the customers of today – as you said, we’re perceived mostly for user experience and competitive pricing – they will name these exact things. We have a lean product and we’re working on what we call the FinTech Hub. A year from now, a customer will choose NUMBER26 because he will have access to the best financial product in every category. We want to become the partner in all things concerning our customer’s finances and offer products from savings to investments to insurances. We don’t want to build all these products by ourselves, like established banks often try to, but cooperate with partners who already offer great products. That’s not only beneficial in terms of time to market, but we are able to offer the best, competitively-priced products with a smooth user experience and design.

A MORE PROVOCATIVE QUESTION: AS OF NOW, WHY ISN’T NUMBER26 JUST A FRONTEND FOR THE WIRECARD BANK? YOU ATTRACT MANY CUSTOMERS FOR THEM (OVER 100.000 BY NOW) WHILE ONLY TAKING CARE OF THEIR USER EXPERIENCE.

Maximilian: We want to fundamentally change the user experience and customer journey in banking. When you are a mere frontend, (like e.g. Numbers) you do not control many processes. You can only be as good as the bank in the background and the access they grant you. If your bank is only able to display your turnover with 2 days delay, so can you. When someone calls you as a front-end solution, you cannot really do anything. Lost your card? You need to call them, block the card and so on. With us, everything is much more integrated, we are the primary contact point for our customers. As a result we know our customers much better. If you only offer a frontend, you cannot offer a user-experience like the one we do.

SO WHAT IS YOUR BUSINESS CASE?

Maximilian: At the moment we have a revenue share system. The merchants pay to be able to accept card payments and we get a share of the customer’s turnover volume. On top of that, we earn a share on the fees of additional products, whether that be international money transfers or an overdraft. But we are building the FinTech Hub and want to create revenue on all sides next to the current accounts.

THE FUTURE OF BANKING – WILL IT BE COOPERATION OR COMPETITION BETWEEN ESTABLISHED BANKS AND FINTECHS OR IN BETWEEN FINTECHS? OR TO USE A BUZZWORD: WHAT ABOUT COOPETITION?

Maximilian: To add another buzzword: We’ve seen a lot of unbundling in financial services over the past years. Startups focused on profitable niches – P2P Payment, P2P Lending, Investment, Savings, to name just a few… What we are working on is the rebundling of these services. Nobody wants one app per financial service, but rather one app for all aspects of the financial life. We offer the account and are working on rebundling all services offered by startups to be accessed from our app. If you have built a relationship of trust with your customer, you want to offer him the best products to retain him. Competition in the FinTech space is still limited, due to a comparably weak market penetration. Our big competitors are the banks. When other Fintechs from UK arrive in Germany, they won’t take customers from us, really, but they will – as we did, too – convert customers from the established banks.

AND FOR HOW LONG WILL IT BE LIKE THIS? WHEN WILL COMPETITION BETWEEN THE STARTUPS INCREASE?

Maximilian: It’s a change in industry structure and you cannot make guesses how long it will take. Think back to the disruption of the travel industry. Most people no longer go to travel agencies, yet some still exist. Additionally, there are many online and mobile solutions for travel nowadays. It will be the same with banks and their branches. We’ve said for a long time that retail banking is the area most ready for disruption. It has proven to be true. And I believe that insurance will be next.

THANK YOU MAXIMILIAN