Finland: Challenger Digital Banks

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Finland: Challenger Digital Banks

Holvi, Revolut, and N26 offer digital challenger banking in Finland. The Finnish banking market is dominated by four large banks that have over 81% of the market.

HOLVI

  • Holvi was founded in 2011 as a private company, and launched in Germany in 2016. They operate in Germany, Finland, and Austria. From 2017 to 2018 they saw year-on-year growth of 60%.
  • Holvi has raised 4.3 million Euros over six funding rounds. Their last round was in 2015.
  • The majority, 85%, of their customers are freelancers.
  • Holvi has over 150,000 micro businesses across Europe as customers.
  • They describe themselves as "a simple one-stop-shop for small businesses to collect income, manage expense and get an understandable real-time view of their company finances. New Holvi accounts can be opened in minutes online and Holvi customers don’t need a separate bank account."
  • Holvi was voted the "Hottest Startup in Helsinki".
  • E-Residents may business bank with Holvi.
  • Their website may be viewed here.
  • REVOLUT

  • Revolut was founded in 2015 and is based in London. In 2017, they reported $15.67 million in revenue, and $17.31 in 2018. From 2016-2017, their revenue growth was 443%. They offer personal and business products. Revolut launched in Germany in 2017.
  • Their market valuation is currently $1.7 billion, with $336.5 million in total funding over 12 rounds, with the last being March 27, 2019. They are a private company and considered a tech unicorn.
  • Revolut has completed a total of 350 million transactions at a total value of $48.9 billion.
  • Revolut states they have 7,000 new accounts opened daily.
  • They have nearly 20,000 businesses as customers, along with 4.5 million customers total. In the UK, they have 1.6 million customers.
  • Businesses may hold, receive, and exchange 29 currencies without charge.
  • Revolut claims they are ten times cheaper than a bank.
  • They have had significant reported losses.
  • Their business customers have an Open API to integrate their Revolut account into their current workflow and stack.
  • Revolut operates in Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom.
  • Their website may be viewed here.
  • N26

  • N26 is a Berlin bank that operates in 20 countries in Europe. They have 2.5 million customers worldwide and were founded in 2013. They are a Late Stage Venture and have raised $682.2 million in funding over seven rounds. Their latest round was July 2019.
  • N26 has a current market valuation of $3.5 billion.
  • In 2017, they generated revenue of 11.24 million Euros which was a 2000% increase over 2016.
  • In late 2018 they had two million customers. They currently have over 3.5 million. Their monthly transaction volume exceeds 1.5 billion Euros.
  • N26 offers banking for freelancers and the self-employed.
  • They operate in Germany, Austria, France, Italy, Spain, Portugal, Ireland, Greece, the Netherlands, Belgium, Luxembourg, Finland, Latvia, Estonia, Lithuania, Slovakia, and Slovenia.
  • N26 is planning to expand to the US in 2019.
  • Their website may be viewed here.
  • MARKET INFORMATION

    • The "Finnish banking market is dominated by four large groups, which together hold 81.0% of the market"
    • "The biggest group is the OP Financial Group, with 35.5% market share. The group consist of 160 cooperative banks. The second largest group is Nordea with 26.4% market share. In January 2017, the Finnish subsidiary of Nordea merged into the Swedish parent bank and became a branch in Finland. By the end of 2018 Nordea will move its head office from Stockholm to Helsinki and will become the first globally significant institution (G-SIB) domiciled in Finland. Through Nordea’s decision, the Finnish banking sector will grow to over three times the size of its gross domestic product. However, the foreign ownership will drop significantly."
    • "Contactless payments are increasing rapidly. Almost every Finn (97%) has a payment card (debit and/or credit) and 64% of cards include contactless payment facility. In 2015 the share was 22%."

    Research Strategy

    To locate the top challenger digital banks, we first located industry articles that stated who the best digital challenger banks were. To be included in the next stage of our research, a bank had to be mentioned multiple times. Once we had our list, we then researched each bank separately to obtain an across the board metric. This proved difficult, as some banks did not list their annual revenue. We believe this happened because some banks are operating at a loss due to how new they are. Our next approach was to order them by their customer numbers. This again proved difficult, as the biggest bank we researched did not separate their customer base, and some banks only do business banking. Active users and monthly transactions also ran into the same issues. To combat this problem, we holistically looked at all the metrics we obtained to get our top listings.

    To assess the market penetration, we began by locating industry reports and market studies. This did not give us enough information to triangulate a market share, as most of the information was global. Consulting business press releases from Globe Newswire, PR Newswire and from each business’ website gave us the bulk of our information. To finish our research, we researched available banking information from the government. Again, this gave us a few facts. Ultimately, we were able to put together a snapshot of the market, but not exact figures.
    Sources
    Sources

    Quotes
    • ""Challenger business banks include: • 01 | Revolut • 02 | Starling Bank • 03 | Soldo • 04 | Mettle • 05 | Countingup • 06 | Cashplus • 07 | Tide • 08 | Monzo • 09 | CardOneMoney""
    Quotes
    • "According to the report, the global digital banking market was valued at approximately USD 6,620 million in 2018 and is expected to generate around USD 8,646 million by 2025, at a CAGR of around 3.8% between 2019 and 2025."
    Quotes
    • "The Online Banking Market size is expected to reach $29,976 million in 2023 from $7,305 million in 2016, growing at a CAGR of 22.6% from 2017 to 2023. Digital banking includes all kinds of online/internet transactions done for various purposes. It is the incorporation of new technologies, to deliver enhanced customer services."
    Quotes
    • "Nordea has connected APIs to its production system and made its open banking live in Finland."
    • "Nordea’s open banking team worked together with more than 1,000 external developers, who tested and gave feedback on the open APIs and associated services. With that all complete, Nordea says it’s now the “first Nordic bank” to offer pilots access to customer data"
    • "The third party applications will be able to use the account information service (AIS) API where they can retrieve account information details and initiate payments through the payment initiation service (PIS) API. The end users will be able to authenticate themselves, giving consent to the third-party provider to access their accounts."
    Quotes
    • " Revenue£12.8 MFY, 2017 • Market Valuation$1.7 B2018-04-26 • Total Funding$336.5 M "
    Quotes
    • "Revolut is a digital banking alternative for instant payment notifications: free international money transfers and global fee-free spending."
    • "Founded Date Jul 1, 2015Founders "
    • "IPO Status PrivateCompany "
    • "Revolut currently supports spending and ATM withdrawals in 120 currencies and sending in 26 currencies directly from the mobile app. The company is based in Wharf, London and was founded in July 2015."
    • "Revolut has raised a total of $336.4M in funding over 12 rounds. Their latest funding was raised on Mar 27, 2019 from a Venture - Series Unknown round."
    Quotes
    • "A global business current account for easy international payments, with prepaid business cards and an Open API."
    • "Hold, receive and exchange 29 fiat currencies without any hidden fees"
    • "Transfer money to any other Revolut account (business or personal) instantly and for free. Save on transfer fees when you make payments to businesses around the world."
    • "Our Open API allows you to seamlessly integrate your Revolut business account into your workflow. Use it to automate cross-border business payments, send payouts to clients or employees and monitor transactions according to your business’ needs."
    Quotes
    • "Revolut for Business is currently available for companies registered and with a physical presence within the European Economic Area (EEA) and Switzerland. This includes the following countries: Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom "
    Quotes
    • ""SPEND IN OVER 150 CURRENCIES AT THE INTERBANK EXCHANGE RATE INSTANT SETTLEMENTS CROSS-BORDER PAYMENTS MULTICURRENCY CARDS INTEGRATIONS BUSINESS OPEN API""
    Quotes
    • "It has already attained the status of a tech "unicorn" - a term used to describe private start-ups valued at more than $1bn (£740m)."
    • "As of March, Revolut says it reached 4.5 million customers - 1.6 million customers are located in the UK alone."
    • "Revolut is currently valued at $1.7bn (£1.3bn) from its most recent fundraising. The three-year-old firm's growth has been impressive - its customer numbers trebled to 1.2 million in 2017, while revenues increased five fold to £12.8m. In September, Revolut said 7,000 new accounts were being opened a day, and that it was processing $3bn in transactions a month "
    Quotes
    • "On 22.2.2019, Revolut achieved 4,000,000 customers. It is signing up over 10,000 new customers every day, compared to around 7,000 day just six months ago. Revolut has boosted its Weekly Active Users (WAU) from 500,000 in July 2018 to over 1.2M in February 2019. Monthly Active Users (MAU) have increased from 900,000 to 1.9M in the same time frame. Revolut’s monthly transaction volume has also increased from $2.4B in July 2018 to over $4.6B per month."
    Quotes
    • "Feb. 2019 3.9 million $4 billion 1.8 million Oct. 2018 2.8 million $3 billion 1.2 million "
    Quotes
    • "Challenger banking service Revolut has reported its annual results for the year 2017, with some stark figures: the revenue has increased fivefold to £12.8 million ($16.8 million) from £2.4 million ($3.2 million) and the customer base has trebled to 1.3 million (from 450,000)."
    • "Monthly transactions volumes in 2017 grew from $200 million to $1.5 billion."
    Quotes
    • "$1.7 B Revolut Mkt valuation £12.8 M Revolut Revenue FY, 2017 Revolut Revenue growth (FY, 2016 - FY, 2017), %443% "
    Quotes
    • "PRIVATESTATUS 701-800EMPLOYEES LATER STAGE VCLATEST DEAL TYPE(Upcoming) $500MLATEST DEAL AMOUNT 21INVESTORS "
    Quotes
    • "N26 is a mobile bank helps customers manage their bank accounts through smartphones. Berlin, Berlin, Germany "
    • "Founded Date Feb 2013 Founders Maximilian Tayenthal, Valentin Stalf Funding Status Late Stage VentureLast "
    • "N26 offers mobile banking solutions to customers in the European Union through its subsidiary. It provides international money transfer, investment, overdraft, and cash withdrawal and deposit at stores."
    • "N26 has raised a total of $682.8M in funding over 7 rounds. Their latest funding was raised on Jul 17, 2019 from a Series D round."
    Quotes
    • " Market Valuation$3.5 B2019-07-17 • Total Funding$682.8 M "
    • "Customers: Dec, 2018 2 million"
    Quotes
    • "N26 Business banking for freelancers and the self-employed N26 Business is the free bank account for freelancers and the self-employed. Earn 0.1% cashback on all purchases you make, and enjoy free card payments worldwide "
    • "• You reside in a country where N26 operates: Germany, Austria, France, Italy, Spain, Portugal, Ireland, Greece, the Netherlands, Belgium, Luxembourg, Finland, Latvia, Estonia, Lithuania, Slovakia, Slovenia"
    • "• N26 Business is free to open online with no account management fees. It’s the easiest business bank account to open if you’re a freelancer or you’re self-employed."
    Quotes
    • "Since the initial product launch in 2015, over 3.5 million customers across 24 European markets have signed up for N26."
    Quotes
    • "N26 generated revenues of € 11.24 million in 2017, with the largest part being commissioned (€ 10.02 million). This seems puny at first, but compared to 2016, if you just capitulate to the commission income, corresponds to an increase of about 2000 percent. With this you can get income per customer somewhere between 20 and 25 euros. In our view, that’s not all that bad, even if some well-established banks alone make clear about the account fees 120 Euro per year for normal customers."
    • "According to our calculations, N26 won about 400,000 new customers in the year before last (2016)"
    Quotes
    • "In November, we launched N26 in the UK, our first non-Euro account and a major step forward in our global expansion. We followed this up by rolling out N26 in Denmark, Norway, Poland, Sweden, Liechtenstein and Iceland. And with new markets came new customers."
    • "In June we had 1 million customers, by December we counted more than 2 million customers across 24 countries, with monthly transaction volume exceeding €1.5 billion. We continue to be one of the fastest growing mobile banks in Europe and we’re not stopping there, with our sights set on the US in 2019."
    Quotes
    • "Helsinki, Southern Finland, Finland Founded Date 2011 Founders Kristoffer Lawson, Mikko Teerenhovi, Teemu Hukkanen, Tuomas Toivonen IPO Status PrivateCompany "
    • "Holvi is banking for Makers and Doers - European entrepreneurs, sole traders and business owners. It’s a current account with its own IBAN number and it's designed to help you run your business in one place."
    • "Holvi is a Payment Institution, not an old-fashioned bank. We’re a modern money service for the new wave of Makers and Doers. They are building financial technology that has a purpose and makes a difference in your day-to-day life."
    • "Holvi has raised a total of €4.3M in funding over 6 rounds. Their latest funding was raised on Sep 1, 2015 from a Seed round."
    Quotes
    • "Holvi is a simple one-stop-shop for small businesses to collect income, manage expense and get an understandable real-time view of their company finances. New Holvi accounts can be opened in minutes online and Holvi customers don’t need a separate bank account. The company recently released Holvi Expenses iPhone app for managing expenses on the go. Holvi is regulated by the Finnish FSA. Holvi is has been featured in the Economist and Financial Times, voted as the hottest startup in Helsinki by Wired Magazine and chosen to be one of most innovative and disruptive brands in financial technology by FinTechCity London."
    Quotes
    • "• 100% digital business current account • Easy to set up! No need to visit our office – easily verified with your e-Resident Card from anywhere in the world. • A diverse set of business management tools that save you time and make your life easier "
    Quotes
    • "Founded in 2011 and based in Helsinki, Finland, Holvi is the world’s premier digital banking service for freelancers and entrepreneurs. Combining powerful money management tools with an easy-to-use business current account, Holvi offers an innovative banking experience that actually helps you run your business."
    • "Holvi is the world’s first financial service operating with its own Payment Institution License. We’re authorised for operations across Europe by the Financial Supervisory Authority of Finland (FIN-FSA)."
    Quotes
    • "Over 150,000 micro businesses across Europe. 60% year on year growth 201-2018 40% of customer growth in 2018 came from Germany. "
    Quotes
    • "Micro-enterprises, though small in size, have come to be known as the growth engine of Europe, forming a significant share of our entrepreneurial landscape. According to OECD statistics (2016), between 82% to 95% of the European business population are micro-enterprises, with self-employed individuals (a segment of micro-enterprises) numbering a whopping 30.6 million in the European Union in 2016."
    Quotes
    • "BBVA-backed start-up Holvi will expand its offering to micro businesses in Ireland, Italy, Belgium, France and the Netherlands after reaching a 150,000-customer milestone, reports Jane Connolly. Holvi has been providing business banking in Germany, Austria and Finland for over three years and has seen year-on-year growth of 60% from 2017 to 2018."
    Quotes
    • "Finnish banking market is dominated by four large groups, which together hold 81.0% of the market"
    • "The biggest group is the OP Financial Group, with 35.5% market share. The group consist of 160 cooperative banks. The second largest group is Nordea with 26.4% market share. In January 2017, the Finnish subsidiary of Nordea merged into the Swedish parent bank and became a branch in Finland. By the end of 2018 Nordea will move its head office from Stockholm to Helsinki and will become the first globally significant institution (G-SIB) domiciled in Finland. Through Nordea’s decision, the Finnish banking sector will grow to over three times the size of its gross domestic product. However, the foreign ownership will drop significantly."
    • "Contactless payments are increasing rapidly. Almost every Finn (97%) has a payment card (debit and/or credit) and 64% of cards include contactless payment facility. In 2015 the share was 22%."