Ali Niknam / Bunq
Bunq: The Revolut challenger for digital nomads that’s taking Europe by storm
Bunq started life as a bootstrapped endeavour by serial entrepreneur Ali Niknam. On the back of a sharp focus on its users’ needs and desires, it has now evolved into the flagbearer for Dutch fintech. But what’s next?
Remote working and digital nomads have become synonymous with the future world of work. Supercharged by the pandemic, these trends are reshaping the economy, with millions of people realising their dream of living in one country whilst earning their money in another.
Against this backdrop of change, Amsterdam-based Bunq has become the EU’s second-largest neobank after Revolut. Founded in 2012 by serial entrepreneur Ali Niknam, the company’s chief executive officer, Bunq has grown in tandem with the rise of the digital nomad — the demographic it caters for exclusively.
A year to remember
It’s been a busy few years. In July 2023, Bunq announced it had surpassed nine million users and more than €4.5bn in deposits. In the same month, it revealed it had secured a fresh €44.5m in growth capital, meaning the formerly bootstrapped bank has raised nearly €100m this year alone, despite a market downturn. After ending 2022 on a quarterly profit of €2.3m, Bunq has predicted year-long profitability for 2023.
“We’ll always go where our users go,” Niknam told AltFi. “Since the beginning, we’ve been strongly user-focused. These growth figures are a proof point towards how much our users value us, and how much they appreciate our products.”
This sentiment is shared amongst the wider industry. “Bunq has a strong and bold narrative,” added Jan-Jaap Omvlee, a Dutch fintech commentator and strategy director at Cognito Media.
“It’s a story that sticks, and so the company is able to grow its customer base and appeal to investors. The story is not about technology, and often not even about the product — it’s about the people Bunq wants to service and connect to. It’s a well-defined narrative that people are eager to sign up to.”
Niknam and his team pride themselves on meeting the needs of intrepid digital nomads. For example, in response to user demand and customer feedback, Bunq recently launched what it claims is a unique feature by European standards: 2 per cent cashback on public transportation and 1 per cent on restaurants and bars. The bank also now offers 3.71 per cent interest on US Dollars and British Pounds to further help its location-independent users.
Maintaining The Focus
As it continues to grow, Bunq will avoid spreading itself too thin. “Our growth will come from an ever-increasing market share in a market that’s growing itself, and by expanding the geographies we operate in,” added Niknam. “It’s very difficult to fully focus on multiple user demographics with the intensity and thoroughness it requires. And there isn’t a business need to add the complexity of additional user demographics.”
By listening carefully to its customer base, Bunq is confident it will create long-term value for its users. Niknam rightfully prioritises this ahead of short-term gains, which perhaps explains the disagreement, about pace of growth and valuation, with minority shareholder Pollen Street Capital last year.
“We’re not constrained, or driven, by short-term goals,” explained Niknam. “Our set-up has always been about long-term value creation for our users — and that’s starting to pay off now.”
As well as the cashback feature and higher interest rates for savers, which Niknam hopes will help provide a “borderless experience”, Bunq is also rolling out CO2 insights, which allow users to monitor, and mitigate, the impact they are having on the environment. Customers will also be able to follow the progress of Bunq’s considerable reforestation efforts through a dedicated dashboard.
This sits nicely in line with what consumers now expect from their banks. According to CRIF’s Banking on Banks 2023 report, two-thirds (66 per cent) of Europeans say they are more likely to bank with a company that’s transparent about its operations, whilst nearly half (45 per cent) want their bank to tell them how their spending impacts the environment.
“Digital nomads are literally seeing the world changing as they travel across it,” explained Niknam. “Our aim is to provide them with tools to make them more aware of their impact, and also tools that help them to easily offset part of that impact.”
The majority of Bunq’s customers are in Europe, but Niknam now sees a considerable opportunity in the US.
In April 2023, Bunq began the process of obtaining a US banking license and plans to target expats from Europe who have crossed the Atlantic but still have roots back home.
“Our move into the US is fully inspired by the whereabouts of our users, and so is our product development,” said Niknam. “Our days start and end with our users — we’re guided by them.”
Niknam is bullish about Bunq’s future. “There’s an old child’s tale about the Tortoise and the Hare, and I think it will be true for Bunq as well,” he said. “The fintech sector has been spoon-fed capital and liquidity, resulting in many people having never experienced a downturn, and never being brought up with the financial discipline required in such a period. I’m proud of our approach, so let’s now see what the future will bring!”
Omvlee agrees it’s a winning proposition. “Larger, more traditional banks try to stay ahead of change through volume,” he added. “They offer a ‘one-size-fits-all’ solution, and fail to provide bespoke solutions to smaller audiences.”
“The agile approach of neobanks like Bunq, N26 and Revolut enables these digital-first providers the opportunity to cater to smaller groups, without flipping their cost base. For incumbent banks, it’s virtually impossible to compete in this space — and maybe they should not even try.”