Old met new in the world of retail banking on July 28, as BPCE, France’s second largest banking group, announced the acquisition of the German digital bank and fintech pioneer Fidor Bank.
Founded in 2009, Fidor Bank has built a community of 350,000 users across Germany and the UK, who are rewarded for offering peer-to-peer financial advice and invited to participate in the social co-creation of products and services. The startup has also developed a proprietary technology platform – the Fidor Operating System (fOS) – which enables open and fast API banking, offering its 120,000 customers access to a wide selection of services provided by other fintech partners.
The news about BPCE inking a deal with Fidor came as no surprise. As I discuss in a recent report, the digital banks which have proliferated over the past few years – competing to win customers by offering more compelling digital customer experiences than those offered by established banks – are struggling to acquire large numbers of customers and reach profitable scale. Why? They operate on narrow margins, can’t sustain large marketing campaigns, and create limited perceived added-value for customers.
Fidor has done well since its launch, hitting profitability for the first time in 2012. The startup however made the decision to shift its business model away from just direct-to-consumer offerings, and now white-label its technology to financial institutions. The telecom operator Telefónica in Germany recently partnered with the fintech to launch a mobile banking service for its customers.