Contrary to many of our peers, we didn't have a free subscription plan. At the time we started with a paid plan, which meant that people only used us who actually thought, 'Okay, this is useful. I need it.' I mean, you can hand out free stuff all day, every day. Doesn't mean somebody actually appreciates the product. And in doing so, we put ourselves to the ultimate scrutiny of our end users. And through that process, a company was created that on the one hand creates a product that our users love to use, and on the other hand, has the financial sanity to be profitable and therefore durable.
This is the Fintech 101 podcast, the show for Fintech enthusiasts looking to better understand the leaders shaping Fintech and banking today. My name is Peter Renton, and since 2013, I've been conducting in-depth interviews with Fintech founders and banking executives. My guest today is Ali Niknam, the founder and CEO of Bunq, the Dutch neobank that is now expanding into the US. Ali is something of a serial entrepreneur. He's got three unicorns under his belt, but Bunq may be his most ambitious project yet. Founded in 2015, Bunq took the unusual path of pursuing a full greenfield banking license right from the start, the first company to receive one in the Netherlands in 35 years. Even more unusually, Ali self-funded the company to the tune of nearly 100 million euros of his own money before taking a single outside investor. That kind of conviction has paid off. Bunq posted a profit of 85 million euros in 2024, putting it in rare company among European neobanks. Now, Ali has his sights set on the US, having applied for a national bank charter earlier this year. We talk about what drove that decision, why Bunq is describing as the first GenAI powered bank, and what it actually means to build a bank with AI baked into its architecture from day one. We also get into his philosophy on profitability, why he started with a paid subscription model when everyone else was going free, and what the personal CFO of the future might look like. Now, let's get on with the show. Welcome to the podcast, Ali.
Thank you for having me, Peter.
My pleasure. So, let's kick it off by giving the listeners some background. I believe Bunq is not your first rodeo, so tell us a little bit about what you've done in your career to date.
I was born in Canada, Iranian parents. I lived in Canada, I lived in Iran for a couple of years when I was very young, and I've been living in the Netherlands in the city of Gouda, Houda, Gouda, the cheese. It's a city, actually. A lot of people don't appreciate that, but it's, you know, the cheese you buy in the store. It's a city in the Netherlands. And apparently, I don't remember it myself, but apparently I started disassembling phones, like the old phones with the rotary dial and the and the horn and everything, at the age of two. I started coding at the age of nine. I started investing in stocks at the age of 12. Had my first business at the age of 16, first big business successful at the age of 21. Now, I have I think three unicorns under my belt, and I wrote a book.
Okay. So, let's talk about Bunq. You know, I read that you self-funded Bunq, you know, nearly 100 million euros of your own money before taking a single outside investor. I'm curious, that's not a typical path for a Fintech, particularly a neobank. What was the conviction behind that decision, and why did you sort of not want to take VC money when everybody else was doing that?
That's a great question. So, the start of Bunq is actually the end days of my previous company, TransIP, today called Team Blue. It's the world's third largest domain name and web hosting provider. And that was doing really well. We had a lot of great talent there, and I wanted to give them space to grow further and make the company even better, which they did. So, hats off to that. But then I was left with a lot of time for myself, and I figured it was too early for me to retire. I had a lot of energy in me. I wanted to do more, and to figure out what I wanted to do, I started writing the book that I just mentioned in the intro. And the book is about entrepreneurship and all my experiences and all of the things I came across. And while writing the book, which was one of my lifelong dreams, I came to the conclusion that what really drives me is two things. One, building products that people love to use, and two, trying to leave this world behind in a slightly better shape than I found it in. And so, once that was clear, it was also clear to me that I would at least try to start another company, and I wouldn't bugger off and buy a big boat. In hindsight, that may have been the better option of the two, but anyway. So, I started looking around into trying to find a company where I could make a difference. And being that the financial crisis were going on at the time, and the profound impact it had on society, on everyday life for normal people, I figured, 'Okay, let's try to make the financial sector different, better, more user-centric.' So that was the starting point. And so, when we started, we wanted two things. One, a laser focus on users and making a product they love to use, and two, to do it in such a way that we help society forward. And so, to have that laser focus, and having the benefit of having had other successful companies, I just invested literally every dime I had in the new company, and that's how we came about.
So, then how do you describe Bunq today? What do you guys do?
I think what we have done very successfully is a number of things. So, first of all, by and large, we live by this conviction that we do everything for our users. And so, we have created a banking platform that genuinely makes life easy. Like there's a lot of complex financial products out there that are just too complex for many people to benefit from. Such as investing in the stock market, you know, we all know it's probably good for us in the long term, but I know so many people that are put off by it because it's too complicated, or they can't find the time. So, we spend a lot of time at Bunq making those kinds of things accessible for everyone. And I think we've succeeded at that. Bunq is one of the very few neobanks that is actually used for day-to-day banking. People trust us. People enjoy using our app, and we're very proud of that. We do everything we can to expand on that. And the second thing that we have done is I think throughout the financial crisis and also in the many years after, we have consistently chosen the point of view of consumers and the common good and the common benefit. And so, we became the first company to get a greenfield banking permit in 35 years, and in doing so, we opened the door for others to also apply for a banking permit. A lot of the rules and regulations that you now see in the European banking sector are consequence of the process that we went through together with the Dutch Central Bank. So, we jointly came up with these ideas on how companies can be allowed to the financial market in a safe way. And our presence has objectively spurred innovation. The old-fashioned incumbent banks that were very traditional didn't really have any competition, so their apps were kind of mediocre, and they weren't doing anything. And thanks to our presence to the scene, they started innovating again, and you can see that in the number of deploys and number of features they added. And also, of course, we're really efficient and effective, and so we're very competitive, and you can see in the Dutch market that ever since we entered the market, you can see, for example, the savings rates going up and mortgage rates going down. That's because for the first time in a very long time, there's true competition in the financial sector.
So, I just want to go back to that banking license piece, because I think it's really important. I mean, 35 years without anyone getting a banking license. We thought it was bad in the US, but wasn't that bad. So, why did you go put yourself through that in the early days of Bunq?
Just to be very precise, we were the first in 35 years for a greenfield permit. So, there had been other banking licenses to existing banks, for example, or stuff like that. But greenfield means you're a company, you're a new company, you don't have any existing license, you're not like the subsidiary of an existing bank, and then you apply for a banking license, and then you get it granted. So, that was the unique bit, because giving a Dutch banking license to, for example, JP Morgan, is a completely different process than having a startup with 30, 35 people in a bunch of t-shirts and telling them, 'Hey, you know what? Yeah, sure, go play with other people's money.' So, you can imagine that process was very, very different. That hadn't happened for 35 years. And you can imagine in those 35 years, the rules and regulations have vastly increased in complexity and in number. And so that was a very big point in time.
So you launched I believe it was 2015. I read that it was described as the WhatsApp for banking. How did you view it when you got that banking license you launched? Did you believe that you were an IT company with a banking license and how did you feel like the traditional banks viewed you?
Well, I remember at the time traditional banks were very scared because they just weren't used to competition from new players because there had been none. And they could see I know that there were attempts from some of the big banks to try and enter our office to figure out what we were working on even back then. Yeah, that was something out of a spy movie. That was interesting. You know, we called it an IT company and we were called and also we called ourselves an IT company with a banking license just to signify that we were there to make tools to make life easy for our users, you know? Because I believe that that is what tech companies as they are called today do. They simplify a complicated problem into something that is understandable and usable by many or they make things affordable for mass people. And so it was from that ideology and that vision that we wanted to basically break through these old banking patterns that seem to revolve mostly about the banks themselves rather than their customers. And that's what we set out to do, which is also the reason to come back to your previous question why we went through the masochistic process of applying for a banking permit from the start. Because of course we are a commercial company and of course we want to make profit and we want to be financially healthy also because we want to be durable. But for us we want to really try and change the world to be more consumer-centric, to be more user-centric.
So who are the users? Who's attracted to bunq?
Oh man, we have so many these days. I think we have so many people with a what we call a digital nomad background. So these are people who live in one country and work in another or people who travel a lot or people who maybe have a relationship elsewhere. People who have a holiday home somewhere. So in the Netherlands the weather is usually kind of mediocre. I don't know where you're dialing in from but the Netherlands is always rainy so it is not uncommon for a lot of people to have a holiday home somewhere else and you know, in Europe you then as soon as you cross the border you end up with some complexity with having to have different bank accounts and etc. All of those things bunq simplifies. If you want to set up a joint account with your partner you don't have time because like everybody else you work during the day to go to the bank with the two of you to sign documents you can use bunq and set up a joint account in 5 minutes. If you're a happy new parent and you want to have a savings account for your kid, for your baby, you can set it up in 5 minutes and you can do all of that through 100% control that you have in the palm of your hand through the app. You don't need any people, you don't need to wait for opening times, you don't need to do all the other things. We put all that power, all that control, all that efficiency in your hand in a very easy way.
So let's talk about international expansion. Obviously, you know, the Netherlands is part of the European Union. I presume you took advantage of that. When did you move beyond the Netherlands?
I've been a very strong proponent of Europe as times have changed. I'm old now, so I have the benefit of a historical perspective. People were in favor of the European Union then they were and then they were again, then there was Brexit and then other people thought maybe we should exit too and now with all the sadness going on in the world a lot of people think maybe the European Union is not a bad idea, maybe we should do more together. So I've always been a proponent because ultimately I believe larger groups of people coming together reduces friction, reduces overhead, reduces bureaucracy and ultimately it's just a better deal for consumers. And the banking union has been one of the things that Europe has tried to set out and unify. It's been a mixed success so yes, with a European banking permit you can go in all of the European countries but then the success is mixed because there's still so much regulation that is country-specific. As a consequence the European market is not truly harmonized and not truly unified at the expense of consumers of course.
