Any banker will tell you that it’s not easy to attract and keep new clients. Why do people change banks? I see three reasons:
- Home buyers get better terms on a mortgage compared to their existing bank.
- Savers get a higher interest rate on their savings.
- The new bank has better services.
Roughly speaking, (1) is the stategy of traditional banks. Online savings banks attract deposits with (2) and fintechs employ strategy (3)1.
Let’s apply this framework to NewB, a new Belgian bank (yes, it’s really called NewB). How easily it will attract customers?
- You can’t get a mortgage at NewB.
- The interest rate on its savings account will be zero percent, which is less than the minimum of 0.11% at other banks.
- Finally, there’s no indication that it will delight customers with superior services.
So NewB scores zero out of three.
Yet NewB’s business plan expects the bank to have 277 million euro in deposits by the end of 2024.
Some Chinese banks offer pork meat as a reward for opening an account. Maybe NewB should give an Impossible Burger to new customers? Otherwise, this is gonna turn into Mission: Impossible.
- Research in the UK shows that most customers use the app of a large incumbent bank. Customers of fintechs such as Monzo, Revolut or N26 use the neobank for specific transactions. People count on the traditional banks to receive their salaries and to pay their bills.
I know at least two people, including myself, that with pleasure completely or partially ditched ING, KBC and BNP for Triodos several years ago, paying more for just having the bank account and using a debit/credit card, receiving less interest, experiencing less service. There might be more people that did and will do that. My personal reason was: I prefer to park my money at a bank that is investing in ethical projects and people, into ‘real economy’. Back then, I found it a pity and felt sad that Triodos was actually the only serious banking alternative.
There is also something like dignity, fairness and a commitment to a larger purpose.
Nothing is completely black, nothing is completely white. That also counts for banks, I guess. They’re not perfect. But it’s a choice most of us needs to make; most of us needs to have a bank account in this current society. For me, it was an easy choice. “Ethics of possiblities” (hope, optimism,…) in front of “ethics of probabilities” (cost, benifits, risks,…). Being pragmatic is often needed and should be taken into account, but for me only up till a certain level. I think things could be done better, especially when it comes to banking and their investments. Therefore, it somehow makes me feel good to see this NewB initiative. Something is moving in the Belgian society. At last!