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There’s a big difference between KYC and KNOWING your customer

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I had a really interesting conversation with @Anthemis last week.

These are the guys who have co-ordinated much of the funding and investment cycles in Fidor, Moven and Simple.

Udayan Goyal, co-founder of Anthemis, said to me: “you have to see that digital banks are different by the way they build their business”, and we went into a discussion about how to build a digital bank base.

“It starts with community”, said Udayan.

So Phase One is building a dialogue and socialise with the customer.

This is why Fidor ask for Facebook Likes and join in the discussion.

By way of example, Fidor – who are presenting in the Financial Services Club Poland tonight – change their interest rates based upon Facebook Likes.

For every 2,000 Likes they reduce their loan rate by 0.1%.


Why would they do this?

Because each Facebook Like = 235 free adverts.

You heard me.

Every Facebook user has an average of 235 friends and so each Like broadcasts Fidor’s loans to 235 people.

That’s why Fidor’s average cost of customer registration is €1.67 and a totally KYC’d customer onboarding costs just €20.

Compare that to the $1,500 average cost of customer acquisition reported by banks in the USA, and you can see the difference.

Fidor currently has more than 300,000 people registered and 250,000 community members. It has €200m worth of deposits, and its lending totals about €160m. With only 34 staff, no branches and a cost of only €20.00 to set up a customer with full banking, the overheads are low compared with traditional banks.

So then we come to how you get a Facebook Like to convert to a customer.

That’s Phase Two.

Phase Two is that once you’re in the bank’s community, you can see the conversation.

As you engage in the conversation, you can see the nature of the beast.

If the beast is likeable, then you register and Facebook Like their page too, to get that cheaper loan or higher savings rate from the bank that likes to hear your thoughts.

That’s Phase Two.

Then, as the conversation and socialising deepens, you eventually see 1 in 10 customers move to being a full customer.

So it goes from community to registration to customer.

It’s very different to the old way which went from customer to account number to share of wallet.

Unfortunately, most analogue banks start with acquisition based upon rate churn, so the first part is KYC, but they never really KNOW their customer.

You have to be social first to KNOW your customer.

There’s a big difference, and that is the diference with the new form of Digital Banks (€20 per KYC) to old banks ($1,500 per KYC).

And so the debate continues. 

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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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