The German company reinventing banking

Which bank rewards customers with higher interest rates when they invite their friends to “like” it on Facebook? Fidor Bank does.

Deploying Web 2.0 technologies and mindsets, Fidor’s Bavarian founder and chairman, Matthias Kröner, has implemented an exceptionally innovative banking concept.  

Fidor offers a novel, if not strange, mix of conventional internet and phone banking, precious metal trading, insurance services, peer-to-peer lending and deposit-taking services, not only for euros but also for virtual online game currencies such as World of Warcraft gold. Easy access to these services is simply laid out in each member’s online account. 

Listed on the open market of the Frankfurt Stock Exchange, Fidor Bank AG is a start-up with 25 staff and no branches. It obtained its German banking licence in 2009; has about 17,000 customers and a 90 million euro balance sheet.  

Fidor’s website (translated here with English makeovers) sums up the bank’s philosophy: “Three unique selling propositions (USPs) set our community bank apart from other banks. Our customers:

Can meet each other and interact online. They can exchange information and opinions about the community and their experiences; and improve the basis for their financial decisions.

Are rewarded for their dialogue and many other activities with our proprietary bonus system.

Can choose our products or our partner’s products to meet their banking needs.

The website continues: “With our slogan “Banking with friends” we bring the central operating principles of Web 2.0 – openness, transparency, authenticity and dialogue – to our way of doing business.”  

Kröner is the driving force behind Fidor. His comments on branches illustrate his grasp of the opportunities available from digital technology. “Why would we have branches? Branches don’t show me how qualified advisors are, whereas we show that in our chat rooms.  Branches create a ‘them and us’ position – servers versus served – whereas you would be unable to tell who our customers are and who our employees are.

“Everything we allow you to do online – managing virtual currencies, checking rates, using social connectivity – you cannot do in a normal branch. And branches are only open during certain hours.” 

With its size dwarfed by its appetite for innovation, and services assembled from alliances with software partners, Fidor invites comparisons with the young Apple. Twenty-five years ago a Harvard case study asked whether Apple would ever be more than small niche player in the PC market. Similar questions can be asked of Fidor, but whatever its future, it has already pioneered new banking experiences and broken new ground with exciting, collaborative ways of doing business.     

Next week I’ll dig further into the secrets of Fidor’s success and look how its ideas anticipate long-term trends.