Neobank Aims to Serve European Freelancers

Jump-starting a new business as an entrepreneur or solopreneur can be challenging no matter where an individual is based, but in Europe, business banking can be a nightmare as more established, traditional lenders often neglect individuals who do not have the typical 9-5 worker profile or a regular monthly paycheck.

The frustration of dealing with these banks is one that Alexandre Prot knows all too well and has been looking to fix since he co-founded French neobank Qonto back in April 2016.

In a recent interview with PYMNTS, he said the digital bank has been using the same three-ingredient “cocktail” to serve its 220,000 clients spread across four markets — France, Italy, Spain, and Germany — since it launched, including the convenience of opening an online account 24/7 in 10 minutes and a “stellar” customer support team that is responsive within minutes, seven days a week and in five different languages.

The offering is also centered on fairness and transparency, and the company ensures that all their terms and conditions, including the 9 euro ($10) monthly fee and no commitment policy, are clearly stated on the neobank’s website to avoid any doubts.

“You can upgrade, downgrade or stop your subscription in a couple of clicks, everything is simple [with] no surprises and that’s exactly what our clients are looking for and actually what any entrepreneur would be looking for,” Prot explained.

Related news: French Neobank Qonto Accelerates European Growth With $550M Round

And so far, that business strategy appears to be working well for the Paris-based firm. Earlier this year, the startup announced a 486 million euro ($552 million) Series D raise that shot its valuation to 4.4 billion euros ($5 billion), one of the largest ever in France.

With the funding, Qonto became the third French company and one of five to achieve unicorn status — firms with a valuation of more than $1 billion — less than a month into the new year.

According to Prot, the startup has been able to tick all the boxes of what it set out to achieve when it launched six years ago, and investors are confident in their potential to become a leading player in the regional payment space.

“We believe that Qonto has a bright future [and can] become the leading business finance solution for European freelancers and [small to medium-sized enterprises] SMEs, [reaching] 1 million clients by 2025,” he said.

Spend Management

The French startup is also tapping into the opportunity to serve members of the booming gig economy market, although Prot said the goal is to expand from the standard current account, bank cards and transfers to address the cash flow and corporate spending needs of larger companies — between five to 20 employees — with solutions around spend management and invoicing.

When it comes to spend management, Qonto’s SME clients have access to physical, virtual, or one-time cards that administrators or chief financial officers can offer to different sales managers, for example, each with a different spending limit based on their needs.

Prot said the ability to customize and tailor expenses enables companies to give the right autonomy to their teams while also maintaining a healthy level of control over their accounts and expenses.

In addition to that, clients are more efficient and save considerable amounts of time without having to fill out an Excel spreadsheet or scan receipts for expenses, making Qonto’s offer “a win-win-win solution” for employees, the management finance team, and accountants.

“That’s really what we’re about — giving an energy boost to our clients by saving them time, energy and frustration on managing their business finance,” he said.

Bank License Can Wait

In July 2018, Qonto obtained a license from French authorities to become a payment institution, and based on the firm’s current goals and objectives, Prot said it doesn’t intend to apply for a full banking license anytime soon.

“We’re really focused on serving our clients and prioritizing what makes the most sense for our next step, and that optimal next step is still to leverage our payment institution license to bring more services to our clients,” he explained, adding that moving to a different license is not necessarily helpful or of any additional value to clients.

He also highlighted the capital requirements and stringent conditions required to qualify for a banking license as another element to keep in mind and more reason why the firm has decided it’s best to allocate its assets and funds in a way that is beneficial to the company’s growth.

And they’re not missing out on much, he said, as the neobank has been leveraging partnerships and integrations to offer additional products such as credit services to its clients.

Moreover, thanks to European regulation, Prot added that the firm’s current license can be passported across Europe, making it easy to penetrate other markets in the region and more easily achieve its goal of hitting 1 million clients across the region by 2025.

Overall, the aim is to ensure that no matter where its clients are based, they receive a localized service that serves their needs, whether it’s through Qonto integrating with national tax offices or working with the right local accounting partners in each country.

“What we see is that 80% of the needs, 80% of the product [and] 80% of the service is the same across the different markets, but because we really want to bring the best service to our clients, we’re going the extra mile to add the remaining 20% of localization to make sure we bring the best value to our clients [regardless of the country they’re based in],” he said.

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NEW PYMNTS DATA: ACCOUNT OPENING AND LOAN SERVICING IN THE DIGITAL ENVIRONMENT

About: Forty-two percent of U.S. consumers are more likely to open accounts with FIs that make it easy to auto-share their banking details during sign-up. The PYMNTS study Account Opening And Loan Servicing In The Digital Environment, surveyed 2,300 consumers to examine how FIs can leverage open banking to engage customers and create a better account opening experience.

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