How banking app Bunq plans to win over European consumers

Bunq's cards

Bunq, a digital-only banking brand based in the Netherlands, is on a path to grow its customer base through travel rewards and an underwriting formula for its credit card based on how much money a customer has in their account.

The seven-year old company launched in the U.K. this month. Founder and CEO Ali Niknam said the company aims to reach customers who who are nervous about taking on credit card debt.

“Europe is a savings-oriented society,” said Niknam. “We’re not sure yet whether our users actually want credit. They just want acceptance of a credit card. So we set the money you have aside and provide you credit based on the money you have.”

The Bunq Travel Card is a way for British and European consumers to reap the travel benefits of a credit card without the risk of spending money they don’t have. Bunq extends customers credit based on how much money they have money saved. Consequently, they view it more like a debit card.

According to Niknam, the card sets apart Bunq from other digital-only banks, which typically offer traditional debit cards. Bunq designed the card for international use, as customers only have to pay the Mastercard exchange rate when making purchases abroad. Bunq doesn’t charge any additional exchange fees, which saves customers as much as 3% according to the company. There are no monthly maintenance fees.

Bunq also offers subscription-based personal and business accounts, which come with additional personal finance features common to other digital-only banks. The personal premium account, which costs €7.99 ($8.90) per month, allows customers to create up to 25 sub-accounts for saving and budgeting. Customers can make 10 free ATM withdrawals per month and send money to friends and family. They can save by automatically rounding transactions up to the nearest Euro and transferring the extra amount into a savings account, much like Acorns. The business account, which costs €9.99 ($11.10) per month, offers many of the same features but allows customers to complete additional tasks such as scanning invoices and adding employee cards linked to the account. 

Niknam wouldn’t say how many Bunq account holders are based in the U.K. According to numbers from December 2018, the company has garnered more than €211 million ($234 million) in deposits since its launch in 2012. With the U.K. launch, Bunq is now available throughout Europe. Niknam has self-funded the company with €44.9 million ($49.9 million), money he was able to invest after founding TransIP, a domain name and hosting company based in the Netherlands. For now, Bunq is only using word-of-mouth referrals, as well as social media and search engine ads to market the brand.

With the U.K. launch, Bunq is entering a crowded field with well-funded competitors like Revolut, Monzo and N26. However, according to Niknam, the proliferation of digital-only banks in the U.K. is a good reason to enter that market. “It means the mindset in the U.K. is starting to shift and people are more open toward these new banks,” he said. “The way I see the market is you have the new guys combating the old guys, and the old guys still hold 99.99% of the market.”

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