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An Open Letter to Incumbent Banks: By Igor Kostyuchenok

Dear European Incumbents, this an open letter to you from a founder of a FinTech startup. You've been watching the Neobanks like Revolut and N26 acquiring customers in your jurisdiction at a relatively high rate but you weren't worried since most of your customers stayed with you. You have the reputation, you're too big to fail and even you will the government will bail you out, right. We've seen this story multiple times with Monte dei Paschi di Siena, Banca Popolare di Vicenza and Veneto Banca in Italy and Hypo Real Estate Holding, IKB Deutsche Industriebank, WestLB, HSH Nordbank and Commerzbank in Germany. Other European countries have been there as well. You prefer to close your eyes and pretend that nothing is happening. So far in continental Europe Neobanks have been acquiring expats as their customers. Expats are experiencing problems with opening a bank account with your incumbent bank so they retreat to a Neobank that welcomes them with open arms. This was only the start though. More and more customers are toying with an idea to move their deposits to a Neobank. Neobanks have more to offer, more savings and investment products, more travel products, even a mobile plan. What does your incumbent bank have to offer? No new products have been introduced lately. You are trying to defend the status quo. You don't want to build new stuff - it's too expensive and too risky. You only want to do the absolute minimum to comply with Open Banking (PSD2, PSD3) and other initiative like FiDA. What you rather do is to lobby your way out of the innovation. You use the regulator to remove the competition rather than enter the battle for the customer. With growing deposits and larger investments Neobanks are finally becoming a real threat to you. The last hurdle - offering credits and mortgages - has almost fallen. Soon the Neobanks will offer them as well and then most customers will start leaving your safe harbor of technological stagnation. If you won't handle now, you will lose most of the customers. You still have time and financial resources. Start using them to prepare your bank for the future - it's almost here and you're in danger not to experience it. Yours sincerely, FinTech Founder