Here's how Qonto works: the neobank that wants to take on traditional financial giants in the lucrative business of Spotify-style monthly fees for companies
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Pay a fixed fee per month to have all the bank’s services. This is Qonto’s model, similar to that of other neobanks that have started operating in recent times. However, their difference is that they are focused only on corporate clients: entrepreneurs, freelancers, and small businesses.
“Our service model is different from that offered by traditional banks, which is a free account in exchange for direct debiting products, our strategy is instead to offer all services for the payment of a fixed fee. In the style of Spotify or Netflix where you have a fixed monthly fee and you know what services are included” says Carles Marcos i Guàrdia, country manager of Qonto in Spain, who considers its “very interesting value proposition for this customer profile” that is halfway between the individual and the large company.
The rise of neobanks is a reality and everyone is looking for something that differentiates them from the others. Qonto was born in 2016 in France and arrived in Spain in 2019 in an expansion that led them to open three markets at once, along with our country they landed in Germany and Italy.
“We arrived with a very clear value proposition, which what it does is streamline the management of finances for this audience, with a fantastic user experience that can be used from any application and that differentiates us from banking in that the customer service answers in 15 minutes,” explains Marcos i Guàrdia.
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The fintech achieved a funding round of 104 million in 2020, which made it one of the 10 finance startups that achieved the largest funding in Europe. An operation in which Tencent, the company that founded WeChat, the technology investor DST Global or the co-founder of Transferwise, another successful fintech, Taaveet Hinrikus, entered.
Thus, the firm accumulates a collection of 136 million euros since its founding in 2016, when two French entrepreneurs after selling their company decided to re-create a company developing a bank specialized in entrepreneurs to try to be the solution that they did not have in their first business venture.
Specifically, Qonto has plans that adapt to different profiles, from 9 euros per month for the simplest plan with 20 free transfers and a free debit card to the premium 99 euros with unlimited transfers, 5 physical and unlimited virtual cards.
What Qonto does not have is the possibility of issuing financing because they operate with a payments license, although they are in the process of obtaining a banking license in France, which they would have to passport in order to be able to use in Spain.
The neobank Nickel of the giant BNP Paribas is already up and running: it wants to be the Digi of finance by using tobacconists to open accounts.
However, Marcos i Guàrdia points out that they are not in too much of a hurry to achieve this because if they saw the need to market financing products they could opt to do so with a partner. For the moment, their plans are focused on growing with existing services and increasing market share.
The neobank, which offers little financial data on its accounts, is still a small player among the banking giants.
Qonto has 120,000 clients in its four markets — still a very small number compared to other players in the market. For example, Sabadell, a bank traditionally linked to corporate business, added 93,802 companies as new clients to its services in 2020 alone.
A second bank for corporate clients
Among Qonto’s limitations, in addition to the issue of financing, is that of cash withdrawal, something very necessary for the profile of the self-employed operating in Spain, where there are many owners of small businesses such as bars, hairdressers, or butchers who need cash for their day-to-day business.
In this aspect, the manager of the neobank in Spain points out that in their market studies they have detected that the trend is that small entrepreneurs normally have two accounts, so they want to position themselves as this second bank to save them time in certain transactions and offer them a technological service.
Initially, their targets in the Spanish market were 40,000 customers. But now, they are no longer talking about that figure. Marcos i Guàrda explains that this is because they made these estimates thinking that the Spanish market would work like the French market and that they would attract a greater number of self-employed or entrepreneurs.
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However, in Spain, they are entering more easily among SMEs, which is why they are now focusing more on turnover (for which they do not provide any data) than on the volume of users.
Thus, in the attraction for this type of company to open their accounts in this entity, the executive highlights a combination of cost and time savings. In a study carried out by themselves, they came to the conclusion that more than 70% of SMEs and startups paid up to 500 euros a month in bank commissions. A figure that contrasts with the 9 euros per month of their cheapest plan,
“If we save you 5 hours a month compared to efficiency, it’s already worth it,” says Marcos i Guàrda, making hypothetical calculations for a small company with a turnover of 50 euros an hour. In this sense, he points out that they handle data on commissions charged by banks, although they do not disclose figures. “We know that we offer a very good service at a competitive price,” he concludes.
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