March 11, 2015

Digital-only bank targets millennials with crowd-sourced financial wisdom

2015-03-11 10.56.07 am

It’s bound to happen more an more; digital-only banks focusing on the needs gaps of millennials.

By way of Germany, Fidor Bank’s characteristics read like something you’d see in the grass-fed, locally-grown section of Whole Foods: branchless, digital-only, experimental, international, youth-oriented and specifically targeted to the “post-Occupy Wall Street crowd” who are “disillusioned” (and distrusting) of the traditional banking model.

Fidor also allows users to buy foreign currency and precious metals and participate in crowdfunding. It even offers a savings account with an interest rate that increases based on the number of Facebook likes. No, seriously, this is all reported in the American Banker.

Now this bank which has been called one of the world’s most innovative is coming to America (and, it seems, the rest of Europe as well as Brazil, Russia, India and China.) The bank uses peer-to-peer and social media as a way for its customers to crowd source financial wisdom. See more about it in the video below.

Beyond the social media component, what makes this bank interesting is its Google/Android-like approach to innovation. Developers seeking to modernize the banking experience are given application programming interfaces.

The Personetics View: As the article notes, some banks, like Citigroup, have danced with the open source approach. Fidor’s focused approach targeting a millennial audience could help them carve out a niche in the open source movement.

To be sure, every banking leader recognizes the challenges from competition, changing technologies, and appealing to a younger, more mobile crowd. But focusing specifically on younger customers makes the challenge of appealing to them on their terms a bit easier. And while the millennial generations well-known fickleness can be a concern, banks that figure out what works are likely to win their business.

Beyond the novelty of Fidor’s approach, however, the fact remains that the key to making the digital banking experience meaningful for all customers – not just millennials – is personalization. If Fidor can get there through open source development and Facebook likes, they might find a niche — but that approach will not work for every customer. For established banks who seek to appeal to all demographics to succeed, the ability to deliver custom, personalized experiences to each customer, no matter who they are, is the best road to success in this brave new world of digital banking.