Following on with our regular weekly interview the Finanser talks this week with René Frijters, Founder and CEO of the Dutch digital bank Knab.
Knab is the digital first bank funded by Aegon. In Aegon’s latest results summary, there are some interesting comments.
Knab, Aegon's online bank in the Netherlands, has been recognized as having the best new investment concept for its simple, convenient and accessible investing. It provides sample portfolios to help guide newer investors as well as advanced analysis tools for more experienced investors. Knab’s innovations have now attracted more than 50,000 customers, following a strong increase in 2014 … Gross deposits tripled to EUR 1.0 billion. This was mainly the result of the continued strong performance of Knab, Aegon’s online bank in the Netherlands. Knab accounted for EUR 0.6 billion of gross deposits in the fourth quarter, up from EUR 42 million in the same quarter of 2013. The number of clients at Knab has grown significantly in 2014 and now stands at over 50,000, supported by very high customer satisfaction scores.
Here’s what René has to say about it:
Can you give me a bit about the background to Knab Bank? When did it launch and who is behind it?
Knab was founded in September 2012. The initiative was started, mid 2009, by Rachelle van der Linden, Marcel Kalse and me. Rachelle has a marketing background. Marcel and myself were heavy involved in Alex Beleggersbank, a stockbroker which we had set up in 1999. Alex Beleggersbank was sold in 2007 for 380 mio Euros to Binck Bank. I was co-founder of Alex and Marcel head of business development.
For setting up Knab we needed a banking license and a lot of funding not only for the necessary investments but also for the required capital. Because of this we contacted several financial institutions to see if they wanted to support our idea. Aegon Bank (part of Aegon Insurance) was enthusiastic about our vision and became 100% shareholder at the end of 2010, the moment we started building the bank.
What is the bank trying to achieve and how did you see the market opportunity before you launched?
The reason why we started the bank was threefold.
First, we wanted to give customers a better insight in their financial situation, because increasingly they are becoming more and more responsible for their financial future. For example, governments are reducing tax-facilities to build up pension, to deduct interest on your mortgage, etcetera and companies are moving away from defined benefit to defined contribution systems, so pension risks are transfered to the employees themselves.
Second, we wanted to build a bank which really acts in the interest of it’s customers , instead of only talking about customer centricity while the company tries to earn as much money as possible without telling the customer at the same time.
Third, we wanted to give customers real attention. Preferred and private banking concepts completely fail in the Dutch market. Only a very small group of customer really get the attention and the pro-active advice they require from their bank.
Has that view of the market changed at all since you launched?
Not really. Because of the economical crisis we see more and more laws coming in, which strengthens the need to get better insight in your financial situation yourself. Banks try to be more customer centric, but they change very slowly because of various reasons (impact on P&L, legacy, reorganizations, compliance).
Why is the bank called Knab?
The name Knab says everything about our intention. Knab is bank spelled backwards. We try to work in exactly the opposite way the established banks are doing things. We put the customer – which, in Dutch, is ‘K’lant – first and the ‘B’onus on last, as in we don’t pay bonuses.
And do you offer all the usual bank services, such as deposit accounts, debit and credit cards, cheque books, loans, mortgages and so on?
Yes, we do. At the moment we offer a current account, a savings account, term deposits, a credit card, two investment products (Execution Only and Asset Management) and a lot of services and tools.
In fact we offer our customers a PFM platform together with a bank. So our tools and services are even more important than our products.
You talk about Banking-as-a-Service, could you explain that a little more?
Traditional banks live from product push. They talk about customer centricity, but their focus is on selling as much products as possible. We don’t believe in this model and really try to stand on the customers side by offering our customers all kind of services to improve their financial insight and situation. Let me give you three examples.
Personal (highest) Interest Service.
With this service we monitor the interest savings rates of the customer’s accounts at other banks and warn the customer when a change has taken place. Even when a competitor of Knab offers a higher interest rate than Knab, we send the customer an alert to make him/her aware.
Smart Cash Management Service.
With this service we automatically transfer money from the current account to the savings account when the amount on the current account exceed a customized threshold. And we do the opposite when an overdraft occurs on the current account. At traditional banks customers pay 14% on the overdraft while they get 1% on their savings at the same time. We see this as a kind of robbery from customers and refuse to do this.
Based on all the data we have, we send our customers alerts to call their attention to potential financial gains and risks. We have built about 100 of these alerts and they are only being sent to customers if it’s relevant according to his/ her profile
This also comes with an ‘subscription like’ payment model. A customer subscribes to one of our services (basic, plus, premium or business) and then gets a bank which is on his/her side.
You also talk about Knab as a Digital Bank - how do you define a Digital Bank?
Knab is 100% digital. We don’t have any branches and will not have them in the future (except from perhaps a flagship store in Amsterdam). Customers can do all their activities via Internet and mobile apps. They can reach our Customer Service desk via phone, (video) chat and social media (FB and Twitter). Signing of legal contracts is being done by using your bankcard, the same applies for changing your address, you card limits, etc.
What about customer onboarding, how you deal with KYC and all that?
The onboarding process is 100% automated. Customers can open a current account with us within five minutes. The only thing which they have to do, is to transfer money from an existing account at another bank, with exact the same name, to Knab to identify themselves. We do all kind of checks and balances (EVA-check, world compliance check, etc.) in the background, fully automated.
Is the bank using any form of social media outreach and, if yes, how?
We have introduced Knab Live. Knab Live is our community platform where customers can give feedback about our services and bring up their ideas. 100% open and transparent. We also organize a monthly Knab Open session at our office. Each customer is welcome and we use these events to co-create our products and services together with our customers. And of course we interact with our (potential) customers via Social Media.
You are a Dutch-based bank, and many Dutch folks seem more digital than elsewhere. Would you agree, and what's the typical sort of customer you are attracting?
In Holland we have a very good infrastructure and 95% of the people are online. Most of our customers are between 35 and 55 year old, but in comparison to the Dutch population, we are more dominant in the age between 20 and 35. Our customers are well educated and most of them have more than double the average Dutch income.
I note that you've achieved quite a high take-up of new customers compared to other banks, is that through heavy promotion, advertising or are you offering special deals on interest or other account opening incentives?
It’s a combination of facts.
First, banking is about trust and we see that, after two years, people believe we are here to stay.
Second, after a difficult start with only one proposition (premium) we have introduced in November 2013 a Spotify-like type of proposition. Customers can start saving with us without paying a subscription fee and grow within our bank (Basic., Plus, Premium).
Then we have changed our ATL-campaign from a more ‘brand advertising’ type of campaign to a more ‘proposition’ type of campaign where we communicate concrete advantages (two times interest, fixed subscription fee, etc.) .
Fourth, we started a multi-channel distribution strategy: partnerships / channels; comparison sites (referrals), independent advisors, Aegon customers.
We started doing ‘fact based marketing’. So, we measure every step a customer makes, do A/B testing on our site, etc.
Finally, we offer one of the top three interest rates in the savings market.
All these things helped us to grow our business with more than 40.000 customers in 2014.
From a marketing perspective, does the bank have any brand values, and what are they?
The brand values of Knab are:
a) We build the bank together with our customers
b) We share our tools and knowledge to help our customers to get better insight in their financial situation. So they can get the most out of their money.
c) We offer outstanding service, 7 days a week16 hours a day
d) We are 100% transparent
e) We always keep innovating to make maximum use of new technological possibilities
Specifically, are you providing a service that is different to other banks and, if so, how?
Yes, and maybe this a one of the biggest differentiators. Although we are a digital bank we believe that customer service is one of the post important things to become successful and to create ambassadors. The employees who have contact with our customers are all selected based on the right ’DNA’. Can they really listen to the customer and are they able ‘to stand in the customers shoes’ when they talk to them. Are they able to ‘over deliver’ and ‘surprise’ customers. That’s the way we like it and so, why shouldn’t customers like to be treated this way?
We have a Net Promoter Score (NPS) of +26 and Customer Service is an important part of this value (Dutch financial institutions have a negative value of -20 on average). It’s impossible for traditional players to reach this level. They have a product and procedure based service instead of a customer based service.
Looking ahead, how do you see the longer-term vision for the bank?
We really must focus on Personal Finance and on customer experience. These will be the differentiating areas for the future because products will become more and more commodities. We will enlarge our products and service offering and add on services like P2P-financing, mortgages and perhaps Bitcoins. The last one isn’t possible today because of rules and regulations set by Dutch Central Bank.
Finally, what would you like the bank to best be known for?
We like to be known as the most customer driven bank.
Some more about Knab on Slideshare:
About René Frijters
René Frijters is Founder and CEO of Knab. Knab is a bank built with customers and takes the financial situation and the interests of its customers as the starting point. He vows to be completely transparent with fees, and describes Knab as “socially conscious,” encouraging customers to allocate part of their savings to select charities. Before Knab was founded, he was CEO of the Alex Investment Bank for 12 years.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, 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...