- Managing Me
- Big Ideas
- Managing People
Fidor Bank, the subject of my post last week, The German company reinventing banking, is an explosion of disruptive innovation that is attracting worldwide attention. It prompted me to pick up the phone and ask the founder and chairman, Matthias Kröner, how he arrived at such extraordinary solutions.
At Fidor, the boundaries between staff and customers are blurred (customers and staff ask and answer questions openly on the chat page), customers are given real financial rewards when they ask friends to “like” the bank on Facebook, and crowd-funding of movies and community projects is around the corner.
Leading innovators rarely set out to be innovative. They set out to solve problems, do things better and give expression to strongly held values. Innovation is a by-product of their success.
So it is not surprising that disruptive innovation is not a term favoured by Kröner. He sees innovation as little more than an improvement path leading to better service and value.
Kröner’s passions are customer service and trust. That focus is supported by a deep understanding of the transformational possibilities of Web 2.0 technologies. A conversation with Kröner reveals a business leader pleased that Fidor is on target to trade profitably next year; as expected within five years of establishment. It also reveals a social entrepreneur appalled by the failure of “the most intelligent people in the world” to regulate banking and finance in the interests of the public; and a fun-loving Bavarian excited by the opportunities afforded by technology to make banking more a more enjoyable, engaging and rewarding experience.
Kröner tells the story of attending a dinner party where his bank concept was a source of faintly superior amusement. So he said, “Let’s find out if gold is too expensive” and put the question on Fidor’s chat page. Within a couple of hours there were nine answers, most of them succinct and reasoned. Some of the diners joined the bank soon after.
Kröner says one of his core tasks is recruiting the right people, who can bring an agile combination of product knowledge, intense customer commitment and responsiveness to questions coming from customer’s mobile phones, iPads and notebooks. He is pleased at the incredibly low cost of acquiring customers achieved through internet advertising and online “word of mouth”.
He anticipates greater use of traditional market research and communication (print, TV advertising) as the bank starts moving from niche to mainstream, but considers that the extent to which traditional communication methods are needed will depend on how rapidly mobile banking becomes mainstream. (Forecasts say it will be within five years.)
Kröner also anticipates an extension of the bank’s successful alliance strategy, enabling Fidor to offer a wider range of products as it grows.
Given the rate at which technology changes and the ease of copying Fidor’s model, Kröner had expected copycat competitors within six months. He now believes Fidor may be three years ahead of the followers because of the learning curve and the vibrant adaptive culture of the organisation.
A social entrepreneur, Kröner believes that banks focus on margins, not people; and that they have lost the trust of their customers. (There are similar findings from market research on how Australians see banks.) The centrality of trust in Kröner’s banking philosophy is reflected in the bank’s name. Fidor is the Latin form of fidere: “I am to be trusted.” Its practical application is best illustrated by the feeds on the public chat page. Fidor is a 21st-century credit co-operative, or as Kröner prefers, a “fraternity”, where technology enables member-driven and staff-supported collaborative learning and accountability.
Kröner contrasts Fidor’s desire to make products easy to understand and fun to use with that of traditional banks where products and their costs and risks are hard to understand.
Fidor is not pursuing a Basel III implementation (Basel III is a global regulatory framework for more resilient banks and banking systems) because as a new bank it is already required to operate with a higher capital reserve than other banks.
Most surprisingly, Kröner says that due to the openness and transparency of its banking operations and user community; risks are lower than at other banks. He said large online retailers often know much more about their customers and suppliers than most banks, and that Fidor’s e-commerce partners already have new risk-scoring mechanisms in place.
It is too early to know how Fidor will evolve over the next few years. With a coherent philosophy underpinning clever use of technology, the outlook is positive and it’s hard to imagine that Kröner and is co-investors will allow a takeover.
It’s not too early to say that Kröner is a pioneer who builds bridges – offering traditional banking functions in new ways, using technology to achieve a better balance between regulation, risk and innovation; and pursuing profits while building trust.