Words from experts

Neobanks: the new rules

Hugues Le Bret2In just three years, Compte-Nickel has established itself as the leading bank account opener in France. The company guarantees a RIB [French bank account number] and a bank card in five minutes at any newsagent/tobacco shop. Hugues Le Bret, founder and CEO of Compte-Nickel, discusses the company’s explosive growth.

Pay and get paid

“Compte-Nickel has democratized access to bank accounts with no income or asset conditions,” explains Hugues Le Bret. The fintech company has done that by disrupting traditional bank functions. “The banking industry is built on three services: paying and getting paid, financing and savings; we focused on the first.” All French people need a bank account, but only 47% of them borrow, and only 50% of them hold 92% of all savings. Compte-Nickel decided to capitalise on this situation by focusing on ID verification, without dwelling on the customer’s financial condition. One piece of identification, €20 and five minutes are now all that is needed to open an account.

The second part of this successful strategy is the technology that allows payments to be made in real time, and not through the typical bank batch-processing. Compte-Nickel customers therefore have no overdraft facility. “For each transaction, we instantly verify that the amount is available in the account; if not, the transaction fails.” Hugues Le Bret recalls his surprise when he learned from a Panorabanque study that 45% of French customers exceed their authorized overdraft limit at least once a quarter. Once that limit is exceeded, the fee for each additional payment is €8—an estimated annual cost of more than €500. “French consumers are now more informed and more restrained; they no longer want to spend without thinking.” By eliminating overdrafts, Compte-Nickel has attracted customers outside its initial target market of 1.2 million unbanked people.

“Retro-lutionary” distribution

The 700,000 Compte-Nickel customers are backed by an unusual combination of marketing and distribution. “Between marketing, communications and special offers, online banks spend between €200 and €300 to acquire one customer. That was not an option for us.” Going against the “all-digital” tide, the co-founders turned to a firmly established distribution network: newsagents/tobacco shops. Open six and a half out of seven days a week, 13 hours a day, this network sees a daily stream of 10 million visitors in France. It has enormous firepower and is now an important partner, as the network’s union owns 5% of Compte-Nickel’s capital. In 2017, some 2,700 shopowners were equipped and trained to open accounts. Once again, technology was central to maintaining the “less than five minutes” guarantee, with Compte-Nickel using a process even simpler than an online form: “ID documents are scanned and the data are automatically extracted.”

As for communication and marketing, while others “were buying Google AdWords,” Hugues Le Bret published No Bank, a 240-page book in which he tells the story of how the Compte-Nickel project began, who the founders are, and the significance of their operation. It is an “entrepreneurial story” of the kind the media are fond of. “We have appeared on nearly all of the shows with an audience of two million or more, and I announced the launch of Compte-Nickel during the evening newscast,” says Hugues Le Bret, smiling. “In line with our local presence strategy, we focused our press relations efforts on the local media. We also did an enormous amount of work with city councils and non-profit associations that provide support for heavily-indebted individuals, meals for the poor, and housing assistance.” The marketing was free (“but not in time and energy!”) and very effective. “Our activities and presentations were widely disseminated on the web.” Online awareness is gradually taking over from the field operation, and the Compte-Nickel machine is up and running.

Hugues Le Bret describes the customer service side as a model that requires care and personal attention on the part of both newsagents and call centers. “We envisioned a totally automated system, but quickly realized that our customers needed more support.” Today, 90 people handle Compte-Nickel’s customer service.

The end of one-stop banking?

Hugues Le Bret believes that banking services will continue to be unbundled. “From blockchain to security to savings, people will shop for the most competitive products, segment by segment.” Compte-Nickel sees itself over the long run as the “Amazon of fintechs”: a platform that aggregates the best financial products spanning the entire range of banking services. “We have the customers, and the fintechs have the products and services,” says Hugues Le Bret. Stay tuned to Compte-Nickel for more breaking news!