Dutch digital bank BUNQ has re-entered the UK and is taking advantage of the “large and underserved” market of approximately 2.8 million British “digital nomads.”
Pavlo Gonchar | SOPA Images | Lightrocket | Getty Images
Dutch digital bank BUNQ said Tuesday that broker-dealer registrations have been filed in the US as it appears to expand further throughout the Atlantic.
BUNQ CEO Ali Niknam said that the broker-dealer application will be the first step to secure a full banking license. He said he was unable to provide a solid timeline for when BUNQ secures this approval in the US, but he was excited by the outlook for growth in the country.
Once you have a broker-dealer license, BUNQ can “provide many services to users who have an international footprint, the user demographic we are aiming for,” Niknam told CNBC. BUNQ is primarily “digital nomads” and is aimed at individuals who can live and work from anywhere.
Mr. Niknam
BUNQ, who promotes herself as a “digital nomadic” bank, currently has a banking license in the European Union. I had applied to BUNQ’s Electronic Money Agency (EMI) in the UK, but previously ran a business in the UK, but was forced to withdraw from the country in 2020 due to Brexit.
BUNQ originally applied for the US Federal Bank Charter in April 2023. However, it retracted the application a year later, citing issues between Dutch regulators and US agencies. The company plans to resubmit its application for a full US banking license later this year.
65% jumps to profit
Beyond the latest information on international expansions, BUNQ also reported on Tuesday that it had surged its profit of 65% year-on-year to 85.3 million euros ($97.2 million). The jump was primarily based on a 55% increase in net interest income, but net fee income also increased by 35%.
Like Fintech peers like N26 and Monzo, BUNQ benefits from a high-interest environment by pocketing the yields of customer deposits that were sitting at the central bank.
The CEO of BUNQ told CNBC that high interest rates certainly help, but more generally, BUNQ has increased use of the platform, focusing on cost-effectiveness from an operational standpoint.
“We were very lean, mean and we set up all our systems from scratch, so we were able to not only make profits, but also provide very good interest rates in the European market in general, and in the Netherlands in particular,” Niknam said.
Recently, the EU and UK and US central banks have moved to cut interest rates in response to concerns about economic slowdowns that could bite bank revenue.
Niknam said it is not interested in the prospect of a fall in interest rates and expects a “diverse” revenue mix and new features, including revenue from paid subscription products, to offset the potential decline in interest income. BUNQ recently launched a tool that allows users to trade stocks.
“This is different in continental Europe in the UK, and we had negative interest rates for a long time,” Niknam told CNBC. “So as we grew, our cost base was growing, so was our cost base as people had to pay for all the deposits they deposited with BUNQ.
BUNQ is opposed to a mountain of competition, particularly in the US market. The United States is already offered by established consumer bank giants, including JPMorgan Chase, Bank of America, Wells Fargo and Citigroup. There are also several major fintech brands, such as Chime and Robinhood.
Source link
