Bunq Bank appears to be like to relaunch in Britain – can it compete?

Amsterdam-based digital bank Bunq is limbering up for a UK relaunch.

The neobank, founded in 2012, previously had a presence in the UK but was ousted by Brexit regulation in 2020 along with a host of other European digital banks, including Berlin-based N26.

Now Bunq is plotting a comeback, spurred on by the UK being home to a community of 2.8million ‘digital nomads’ which it is looking to tap into.

Helen Kirrane, This is Money’s saving and banking reporter, speaks to Bunq’s chief executive Ali Niknam about his plans to re-enter the UK market and how it will compete against digital banking giants Monzo, Starling and Revolut to make up for lost time. 

‘The banking scene in the Netherlands has always felt a little bit like Broadway. If you can make it here you can make it anywhere’ Bunq chief executive Ali Niknam tells This is Money.

While Amsterdam’s DeLaMar theatre might not be Broadway, in attendance for its latest update – Bunq25 – are around 450 customers, investors and stakeholders waiting to hear about its new features, so that’s certainly what Bunq is going for.

From the stage, Niknam announces the neobank has reached 12.5million signups across Europe and deposits of €8billion.

Now, he has plans to grow these numbers by relaunching in the UK.

The bank reached its first full year of profitability in December, posting pre-tax profits of €53.1million.

It plans to deploy some of this for launch in the UK. But its ambitions are being hampered somewhat by red tape, Niknam says.

At the end of last year it submitted an application for an e-money institution licence to allow its UK launch.

It can take between a year and 18 months to be granted e-money status, depending on the application.

Niknam hopes for a UK relaunch ‘sooner rather than later’ but adds that the regulatory processes for getting there are ‘long and difficult to predict.’

Fellow European neobank Revolut also has EMI status. 

It has been trying for some years to obtain a full banking licence and has been unable to attain one yet.

One of the key differences between an e-money institution and a banking licence is that the former enables firms to offer loans. 

Firms with a banking licence can lend money while those with an e-money licences cannot.

But Niknam does not believe having an e-money licence rather than a banking licence will hold Bunq back in the UK. 

He says: ‘For the service that we want to offer we believe that an e-money licence will serve us and our customers.

‘Because these licences in the UK allow you to connect to the interbanking system, we believe we can serve our UK users really well with an e-money licence.’

‘It’s not the technical challenge that is holding us back, it’s all the regulatory overheads.

‘We are really a tech company at heart so implementing the tech stsyems is right up our alley. 

‘But we also need to include all the extra compliance and risk and all of the extra reporting that we need to do. And that’s really the reason why we have been delayed.’

In addition to regulatory challenges, Bunq also faces an extremely competitive market in the UK, dominated by players like Starling and Monzo.

The main challenge will be whether Bunq will be able to command a wedge of their customers. 

‘Monzo and Starling apps don’t have a presence in Europe, Revolut does have a presence In Europe so possibly some of the features could be there already’, Niknam says.

Bunq’s target market is ‘digital nomads’ – Britons who live or work in the EU or people from the EU working or living in the UK – having one interface where they can make payments is paramount, says Niknam.

This is a potential market of 2.8million for Bunq. Niknam says there is still a pool of digital nomads post Brexit: ‘I think if anything after Covid, things have become more spread out,’ he says.

‘The first milestone is to get that licence so we can launch. 

‘And I’m pretty sure once we can launch we’ll be able to compete.’ 

Recently, Bunq launched Finn, its own generative AI tool similar to Chat GPT which can answer questions about customers’ financial habits such as ‘did I pay my taxes last month (a question Niknam himself posed).

Finn is not intended to replace customer service for troubleshooting questions, but it will effectively replace the search function in the app.

Niknam said: ‘Finn is independently solving up to 40 per cent of user support questions, and assisting with 75 per cent every day helping users tackle any issues they might have while using Bunq.’

One thing that attracts many customers to Starling is its customer service and the fact that they can speak to someone for help.

In terms of Bunq’s customer service, Bunq uses chatbots but has a hotline for urgent issues like blocking a card.

Other new features include worldwide travel insurance and a travel money assistant. Customers can also receive spending insights for their external bank accounts by adding them to Bunq.

To those who say the UK is already a crowded market, Niknam says: ‘In all European countries, including the UK, about 99 per cent of the total market is still with the old legacy banks. So it’s not crowded at all.

‘We really love healthy competition. We would much rather have strong competitors in a competitive market that is fluid than being the sole new player.’

‘Now that we have traction and are financially healthy and have a proven business model, patiently we will add regions one by one,’ Niknam says.