The emergence of challenger banks over the past decade has not only given consumers more choice, it has also fundamentally reshaped the financial ecosystem and spurred incumbents to innovate.

And unlike conventional banks that rely on their reputation to retain and attract new customers, these new digital banks are embracing new financial technologies to reduce costs and better meet customer needs.

“Bankers are more inward and process oriented. At Bunq, we work the other way around. We try to really understand what our users want and need and try to surprise and delight them by applying technology,” Ali Niknamfounder and CEO of Amsterdam-based challenger bank Bunqsaid PYMNTS in a recent interview.

According to Niknam, even though Bunq’s technology is essential and designed to offer instant solutions, having a mindset focused on satisfying consumer wants and needs is what sets the neobank apart from others in the industry.

Read more: Why Bunq is banking on the cloud for an innovative advantage

“We have created all of our core banking, core processing [and services] ourselves. We have a fully tested pipeline [that] we can deploy in minutes. We continue to provide, which I don’t think traditional banks do, so we are very quick to introduce new features that make life easier for users,” he said.

Available in 30 markets across the European Economic Area (EEA), the neobank received a full banking license from the Dutch Central Bank (DNB) in 2014 – its German rival N26 is currently the only other European player with a Full Banking License – and allows users to open a personal or business bank account in about five minutes, with a 30-day trial period to test the product.

In April last year, the Amsterdam-based digital bank announced that it had reached 1 billion euros ($1.11 billion) in user deposits since its launch in 2012, which was followed by a mega-raise of $228 million to a $1.9 billion valuation in July after being a start-up company since its launch in 2012.

Beyond banking

Bunq has expanded beyond basic banking services into different verticals, including partnering with Dutch lender Tulp to offer mortgages to customers.

According to Niknam, the Dutch mortgage market is a “gigantic” market worth around $800 billion today, which represents a huge opportunity for Bunq to modernize the lending process and make it more efficient for consumers.

See also: Bunq adds new feature allowing shared bank accounts with non-users

“One of the opportunities we’ve seen is that it often takes traditional mortgage providers a few weeks to get back to you on your mortgage application and given that many of our users are going to have their very first mortgage and their first home, we know it can be quite stressful for people to wait to get their mortgage application answered,” Niknam explained.

Bunq now offers a bank mortgage solution that allows customers to have their mortgage application reviewed within 24 hours, making the complex process less stressful and more appealing to customers buying a home for the first time.

The Dutch FinTech has also ventured into the digital wealth space, recently launching a new feature in partnership with Luxembourg-based investment firm Birdee that will allow customers to invest their money in a range of socially and environmentally responsible via three diversified portfolios, depending on their risk appetite.

“I [can] set up my payments at five euros, which means that every payment I make is rounded up to five euros and the difference is automatically invested in green investments,” Niknam noted.

New Guys vs. Old Guys

There has been a boom in digital banking across Europe and although it is common to pit one neobank against the other, Niknam argued that it was more “the new against the old” and that the real Competition is between new entrants like Bunq and conventional, established banking players in the region.

“Even the biggest new challenger banks don’t have even one percent market penetration. If you asked me who my peers are, I would say the new banks. Who is my competitor? I would say HSBC, Lloyds and BNP Paribas. These are the players who already hold the market share and continue to serve their customers suboptimally,” he said.

He went on to say that each challenger bank has its own niche or target market and for Bunq it is all about putting users at the center of their offering which over time has led users to trust its reliability and to adopt it as a replacement bank. .

Bunq, Niknam said, “goes deeper than just cheap FX [foreign exchange rates] or further than fair [managing] money and it’s actually a real bank replacement. And I think it’s because of the close relationship we have with our users that helps us make their lives easier.

The company now aims to expand to other countries in the region, targeting Germany and France where the product is already popular among users. He acknowledged, however, that going from a small country like the Netherlands to a country six times bigger like Germany would be a daunting task.

“But I’m very excited about it because if I look at our product and if I look at how our users react to it, I think we have a very good chance of having a reasonable impact,” he said.

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