581 Digital Banks and Founders Changing the World of Banking bunq

Welcome to Breaking Banks, the number one global fintech radio show and podcast. I’m Brett King. And I’m Jason Henricks.

Every week since 2013, we explore the personalities, startups, innovators, and industry players driving disruption in financial services. From incumbents to unicorns, and from cutting edge technology to the people using it to help create a more innovative, inclusive, and healthy financial future. I’m J.P. Nichols, and this is Breaking Banks.

Hey guys, Brett King here. I’m actually in Dubai this week for the World Government Summit, which is a pretty cool event to attend. But you may have heard me talking about some of the work I’ve been doing on a new book.

In fact, I’ve got a new book, Branch Tomorrow, coming out very shortly. So you’ll hear about that over the next couple of months. It’s certainly going to be out by this summer.

But I’m actually been working on another really interesting project, which is a book, hopefully will come out next year, which is entitled The Rise of the Challengers. And I thought it was important to document what’s been happening over the last decade or so with this sort of material change in the way people are doing their day-to-day banking, whether that’s through mobile wallets or neobanks. And of course, now some of the largest banks in the world are digital players, the likes of Nubank, Revolut, WeBank in China, and so forth.

And I thought it was time for us to document these various players who have been instrumental in building this new category of digital bank and where that has reshaped the way people’s expectations of digital banking in general. And obviously, the wallet movement is part of that as well. So this week, we’re going to start this series.

And it’s the first of many interviews that are already in the can. It’s a CEO series of founders, of leading digital banks in their market. And essentially, their foundation story, some of the challenges they had, the regulatory approach they took in each market.

I think you’ll find this, if you’re interested in sort of this pioneering history of this neobank or challenger bank movement, then I think you’re going to find this series really, really interesting as I have sort of really reflecting historically on my time at Moobin and stuff like that in these interviews as well. So I hope you don’t mind that indulgence. But check it out.

This week, we have the CEO, Abhi, from Bank. And they’re based, of course, in Netherlands. And I think you’ll find their story very interesting.

Let’s listen to the interview. Welcome back to Breaking Banks. I am the host.

And of course, Breaking Banks is the number one fintech podcast. So great for you guys to be joining us today. We’re going to continue our series of speaking to founders about their founder journey, particularly in the challenger bank, in the neobank space.

And today, we have a serial entrepreneur, Ali Niknam, who is in 2012, founded Bunk, launched the app in 2015. And they call themselves the bank of the free. So Ali, welcome to Breaking Banks.

Thank you, Brad, for having me. I look very much forward to this conversation. You’re always so well informed.

So I think we’ll have a lovely chat. Nice of you to say so. Thank you.

I try to be. And of course, you know, we could get into talking about, you know, the news of the moment around DeepSeek. Maybe we’ll get into AI a bit later.

But, you know, because it is, it is an interesting conversation. But let’s start with, you know, before we start talking about the idea, where the idea for the bank came from, and so forth, give us a little bit, a bit more about your background. What did you do before Bunk? It says serial entrepreneur.

What were you entrepreneuring? I’ll give you my 30 second intro. Maybe that’s, that’s, that’s cool. So I was born in Canada.

Iranian parents left Canada when I was two, lived in Canada, then Iran. Then we came to the Netherlands, brought up in the city of Gouda, you know, the cheese that’s actually a city. So that’s kind of funny.

Not many people realize that. Interesting. I started coding at the age of nine, I started investing in stocks at the age of 12.

And I had my very first company at the age of 16. My first big company, I founded at the age of 21. That company is today called Team Blue.

And it’s the world’s third largest domain name and web hosting provider. After GoDaddy from the US and Einstein’s in Europe. While running that company, we correctly predicted there will be a shortage of data center space.

And so I co founded what turned out to be the largest privately owned data center in the Netherlands. Then I took a step back and figured out, you know, it will be a great time to contemplate what to do with my life. And I wrote a book that I’m incredibly proud of.

Yeah, wrote it in Dutch. But other than that, that was cool. And then I figured out that what really drives me, what really defines me, what really, you know, I think describes me as a human being is basically two things.

On the one hand, creating products that people love to use. And on the other hand, in doing so trying to help the world forward a little bit. And given that financial crisis, what was kind of at its peak at the time, I figured, hey, you know what, starting a bank sounds really challenging, very difficult.

I don’t think I can do it. I don’t know if I can do it. Nobody thought we could do it.

It’s hard, you know, it’s like getting a spaceship to orbit starting. Yeah. Yeah.

No, but it really is. And the fascinating thing is, you know, in the case of a spaceship, it’s actually hard because of what I would like to call real hardness, like the limitations of physics, the limitations of this planet limitations of material is what holding you back. And in the case of banking, none of that is true.

Right. Because if you look at what banking actually is, the hard part is self-imposed difficulties like the regulators and all the rules and all the regulations and the complex products and the complex products. Yeah.

Well, I’m sure you have spoken to a regulator or two. Yes, of course. Yeah.

Well, I’m actually I’m on as I’m officially advising regulators now. I’ve got to that point in my career, so I don’t know what that quite means. But it’s I guess I’ve been telling them, you know, I’ve been speaking to regulators for years, but, you know, I have the advantage of as you do of having interacted with regulators as an innovator, which actually isn’t so bad if you have the right posture with the regulator, if you go to the regulator and say, we’d really love to do this.

The regs don’t allow us to do it right now, but obviously you’re going to be doing this at some point in the future. Can we have a conversation about a safe transition to that future where you can experiment with us? You know, I thought that approach worked pretty well. And just, you know, the other the other one that’s very effective normally is bringing in examples from other markets that are already doing it.

Right. But, you know, when you started to get the idea to do bank, you know, I mean, obviously the regulatory stuff would have been there to some extent, but you wouldn’t have had any idea how difficult or how tortured the regulations are for banking. But what was the real driver apart from helping people? What did you I mean, how did you why did you think you could do banking differently? Well, I think, quite honestly, I didn’t understand at the time the way banks operated.

And I felt like everything would be digital, which is kind of a moot point, I guess, today, you’re like, of course, everything would be digital, but not back in those days, not in like 2015, 2012. Earlier, right? Because we started in 2012. So yeah, yeah.

So moving. I mean, I was there in 2010 with moving and we, we were trying to get by a bank by 2012. You know, and, and this was in the US where even we had to get, like, regulatory approval to launch our app, because we didn’t have a wet signature, we were the first app that allowed you to do a debit card without a wet signature.

And I remember just having the conversation when I was like, well, yeah, they’ve done it in these other markets. And, you know, we’re gonna have to do it at some point, because the traction that mobile is getting and so forth. And they knew that.

And they like, yeah, we know we’re gonna have to do it at some point. But so I said, well, we can give you a safe option, you know, we’ll do 5000 customers, we’ll see how it goes. And yeah, but it was it was one of those processes of I, you know, I don’t think I still to this day don’t think incumbent banks realize they can negotiate with regulators as long as it is safe, safely innovating, innovating the market, right? I’m pretty sure they do, though.

Yeah, at least in Europe, they do. Yeah, well, that’s, that’s true. Yeah.

So I mean, I think, for us, it was really important. It’s and again, this was amidst the financial crisis that had a deep impact on society. So a couple of things came together.

One of it was that we, we felt that the future would be very digital, which allowed us to be very user centric, which is close to my heart and close to everybody that is now working at Bunk’s heart. Because tech allows you to customize a user experience towards what they are expecting. Secondly, we felt that the impact would be far larger than just, you know, innovating banking, because an unstable financial sector means an unstable society.

And thirdly, we felt that it was almost like a duty, like if we don’t do it, who will? Because we looked around us. And, you know, as Albert Einstein says, you can’t get out of a problem with the same mindset that came to the problem. And unfortunately, at the time, at least, what we observed was a lot of the same mindset.

And so we felt almost like a duty to start this journey, which also resulted in us having a quite different path to nearly all, if not all of our competitors that started a couple of years later, because of my fortunate position and background in the other startups and companies that I have founded, rather than rushing to market with a MVP, and then, you know, basically setting a card product in the market, and then skating up towards the bank. For us, also, given our ideology, it was most important to get that banking license. And so when we started in end of November 2012, our goal was to actually get the banking license and in doing so, opening the door for many others that would follow.

And, you know, it took us two and a half to three years, and we became the first in 35 years, 35 years to get a greenfield banking permit. And of course, as you know, in those 35 years, the complexity had only increased with all kinds of additional regulations and rules and etc, etc. So for us to pull that off, that was quite something.

Yeah, I mean, Fedor got their banking license in 2012, if I remember correctly, as well. So it was a pretty interesting time, you know, there wasn’t, there wasn’t a lot of activity, you know, you had Eubank in Australia in 2008, but they were a spinoff from, you know, from NAB. So they were under NAB’s license.

And you had ING Direct, obviously, prior to that in Amsterdam, but they were a web-based thing, not really mobile focused. And there wasn’t a lot of innovation, you know, that sort of took us outside of the branch until the mobile came along. You know, then you had Simple Ourselves, Green Dot in the States, coming along in around the same time.

And then you had an explosion of neobanks, 2013, 2014, and so forth. So I know from personal experience, even in 2012, and well, 2013, we had a quarter of a million customers for moving, and we couldn’t raise any funding as a NEO. And then 2014, you got Monzo and Starling and Revolut all kick off in 2014, Newbank, 2015, you know, and now Newbank is the largest challenger in the world.

So, you know, it was an interesting time, but the hurdles were not insignificant. So how did you get through that initial period, you know, over those first few years where funding started to free up? Well, I think that’s a great point. So I don’t know the history of Fedor, but it may have been that they already had different licenses or that they were working… Oh, they were in Germany, and I think it was a very early digital license.

They might have started with EMI, I don’t know, but I’d have to ask Matthias. Yeah, probably an EMI, because anyway, to the best of my knowledge, we were the first in 35 years, and actually, sandboxing and all those ideas were tested with us first, and then deployed in the rest of Europe, together with the Dutch regulators. So that was quite something.

And then, you know, for us, because we have had such different ideologies, such different focus, we never paid attention to many of our competitors. We first focused on, you know, getting that license, because we knew that would open up the door to others, which it subsequently did, because many of those who started with either EMI license or PSP license, or one of the lighter licenses, subsequently moved up to a full banking license, Monzo and Root being two of those examples. And then once we had that license, because we had the freedom to create products that we felt our users actually needed, we started focusing on our product, which allowed us to come with so many innovations that nobody else had thought of at that moment, or at least nobody had launched yet, like biometric security, and all the stuff that is normal today.

But, you know, being the first was always a bit difficult. Like, I remember we had a facility in the app where you could turn the card on and off, right? So 2013, if you misplaced your card, you could turn it off, right? And there are still banks today that don’t have that in their app. Yeah, exactly.

I mean, even today, and I don’t want to name any names, but even today, some of the largest Dutch banks don’t have push notifications for your payments. And it’s almost inconceivable how big the gap is between what we offer as a neobank and these old dinosaurs. And I think because we have had that focus on our users, and then subsequently translating that into something they love to use, over time, we have steadily grown into being trusted as a bank, because I think that’s also what makes bank unique, that people actually trust us as their main bank.

Contrary to some of the other neobanks that have perfectly valid use cases, many people actually rely on us and use us as their day-to-day bank. Many businesses do so. Many expats do so.

Many entrepreneurs do so. Many people just do so. And I think that is the result of our focus on being user-centric, building something they love to use, and in doing so, gaining their trust that we’re here to stay and that we’re a serious partner.

That’s cool. Well, when was your first funding round then, your seed round? That’s a great question. And I feel like I should probably know, but I think three or four years ago.

Time kind of flies. I think three years ago, it ended up being the largest A round in fintech history. So I think we got like $193 million or something at a valuation of nearly $2 billion.

And it’s been the only funding round we have done, because a bank has been bootstrapped, which is, I guess, also kind of unique. Not many banks are bootstrapped, to the best of my knowledge. Become a leader in the emerging fintech space through NYU Stern’s Master of Science in fintech program.

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GMAT and GRE scores are generally not required. To learn more about the program, submit your resume for a candidacy review at stern.nyu.edu slash MSFT dash breaking banks. Let’s talk about the difficulties during the process.

What were the times that you had during the process of foundation of the team and going to market and so forth that were really, you know, the trickiest things you had to push through? You know, I know you self-funded this, you know, you had your other enterprises that you’d exited from and so forth as well to some extent, but were there any points in the process here where you were like, this is really testing my patience, I don’t know if this is the right path? You know, most of us have had those moments, right? Oh man, are you kidding? I think every day, and I’m not even exaggerating, every day, I was like, what am I doing? Why am I doing this? What am I doing in my life? And it’s just hard. I mean, starting a new company by itself is hard, as you know, doing so in a regulated environment is super hard, doing so in a regulated environment in a small country where you have these big, big incumbents that, you know, will do anything to stay ahead is near impossible. And then, um, yeah, it was just hard, you know, and it was hard on so many levels, because we were trying to do new things.

Obviously, the regulator is very careful about allowing new things, but then we needed those new things to be able to differentiate from the old guys. But then we ended up spending a lot of time and energy on getting those new things through the regulator. And so that was a disproportionate impact, you know, on our P&L.

And then as soon as we got approval, then the big guys kind of made use of that, you know, so it was it’s, it wasn’t actually so it’s a very, very strange dynamic. And I think the reason why we made it because we’re profitable now for two years, and the future looks very, very good for bank, I believe, is really three things. One, laser focus on our users, we just knew what they felt what was important for them.

And in doing so, we also had to joy, you know, when we excited someone, or when we please someone, and we saw their response, that was just such joy. Second, the team, at the time, I mean, a lot of young people, I know, in a banking sector, usually, especially when you talk to regulators, they’re like, hey, you know, we want great, we want 30 years of experience. But again, as Einstein said, you cannot solve issues with the same mindset that creates them.

And so you actually need new people with a fresh look and creativity and, you know, to get to that innovation. And, and it was and still to this day is such a joy to walk around the bank and see all these people coming up with creative ideas. And, you know, like, I didn’t think of that.

That’s a really good idea. Yeah, that’s great. When you got a team that can do that, they can push you.

But it’s still, still the essence of what you wanted to create, but they can sharpen the vision of it. Yeah, collectively, they can. And it’s, and it’s, you know, and it was just nice to see that despite the hard environment, these young people were just determined.

They were determined that, you know, they, they came up with something, they tested it with our users, they knew our users wanted it, and they just wouldn’t give up. And I think that’s the third thing. And that was just, I’m so proud of these people.

It’s like, we would have never been where we are today without them. Yeah. So I do have a I do have a question about the name and how you came up with the name, because I would have thought debunked would have been the name, right? But how did you how did you come up with bunkers? And I mean, apart from the obvious that it sounds like bank, but tell us about that.

Great question, because a lot of people think it has something to do with debunking, or there’s deeper meaning, or it sounds similar. But actually, the way it went down is, we tried to come up a name. And then first, the first inclination was to come up with a name that’s smart, you know, that kind of reflects who we are, what we aspire to be to our users.

And, you know, you end up with, quite frankly, a bunch of shitty names. So then we didn’t do that. And then the second is you come up with names that sound cool, you know, something like, you know, whatever name you want to use, like, something that sounds like moving, like moving, moving bank, right? That was how I came up with it anyway.

And then we were really going through it. And then, you know, I just suddenly woke up in the middle of the night. Literally, this is a true story.

I woke up in the middle of the night. And I had this image in my head that money moves from hand to hand. And so what I wanted was a name that visually represented two hands.

So I thought, oh, you know, and it was like, it honestly was 4am. And I checked the domain name. And in the Netherlands, it was available.

And the dot com wasn’t. And we ended up buying it. Because the first logo of Bunk was the B and the U. And the U and the N were actually two hands holding each other.

Like we’re in this together. And you see what I see. And we’re on the same page.

That’s what Bunk was a lot. Then we simplified the logo a little bit, because the readability wasn’t sufficient. That’s how we got.

That’s a good story, man. I like that. I like what it’s got a bit of, you know, personal, you know, creation.

I remember I was doing the roadshow for bank 2.0 for my book. And some of the listeners have probably heard this before. But I was doing this roadshow on my book bank 2.0. And I was at this networking breakfast in Santa Monica, run by a friend of mine, Ken Rutowski.

We’ve been friends since then. And I was talking about the bank account of the future. This was August 2010.

And I was talking about, you know, well, it’s don’t be silly, you’re not going to go to a branch to get a bank account. You’re just going to download it to your phone. And you’re going to use your phone to pay for stuff.

And your phone is going to be smart enough to coach you on how to use your money safer and so forth. You know, I was talking about AI-based, you know, personalized banking. That was the vision.

And one of the big VC guys there, William Quigley from Clearstone Ventures at the time, William said, yeah, but who’s going to do this? Banks aren’t going to do it. And I was like, well, I’m going to do it. So that afternoon, I went home, August the 8th, 2010, and I registered the domain moveandbank and moveandbankcontracted.

Right. So that was a similar moment, right? Whereas like, I know what I’m going to do, you know, it’s like just clicks. Yeah.

You know, so I get it. All right. So in the interest of time, I want to stay on track.

Let’s talk a little bit about the core technology differentiation of bunk and how you separated or distance yourself from the traditional players. And more significantly, right now, today, as we’re recording this, there’s a lot of hullabaloo about deep seek and AI in general. And, you know, so where do you think AI is going to take bunk over the next few years as well? Okay.

That’s a great question because, you know, as I said in my intro, I’ve been coding since I was nine. I consider myself to be more of a techie, like an old school techie, back when it wasn’t cool with the big glasses and the whole thing. So tech has always been a fundamental part of bunk.

I’ve been developing, co-developing the backend code myself. I still review code on a daily basis. And when we started bunk, we knew that we needed to have a code base that would be sustainable for a very, very long time.

On the one hand, and on the other hand, back then, even back then, we knew that AI, which was called kind of machine learning back then, would be so profound. And so when we created bunk, we already took into consideration in the data structures, in the code base to be ready for this future. And we have been using AI for a long time, for example, for transaction monitoring to keep your money safe and secure.

And now fast forward to today, we’re using AI in so many different areas. We’re using AI to help a user’s budget. So like, you know, you can ask, you can literally ask your bunk app, like, hey, you know, how come I spend more this month than last? It’ll analyze your thing and give you an answer in real time.

You can ask it for tips on how to save money. It categorizes your payments automatically. So AI is going to, I think there’s a lot of buzz around AI.

And like, as with any new technology that moves so fast, probably 90% of the investments are going to go down the drain. But that’s not the point. The point is that those 10% is going to, are going to return a thousandfold.

And I’m very excited about the future. And you get to, by the way, experience something very special because you can actually see the sun in my face. And I think that’s the first time this year in Amsterdam.

So I’m happy to share this moment with you. There you go. That’s good news.

See, we bought the sun. It exists. It exists.

So tell me about your favorite moment at Bunk over the last few years and what, you know, if you’re telling the story of Bunk to your grandkids one day, what are you going to tell them about Bunk? Oh man, there are so many great stories. Like when we, when we launched, we didn’t know what was going to happen. And, you know, we got so much attention.

We had so many users in limited amount of time. And obviously we were a small team. So then people just volunteered to stay at the office.

People fell asleep on the couch and, you know, just to make sure that their users were taken care of. I think one of the moments that I really enjoyed was I was standing in line at this very small festival to just buy a drink. And then the person in front of me had a Bunk card.

And then I love that. It’s so, it’s like, you see your creation in action and check this out because this was the early days. They started talking about Bunk.

It was like, Oh, that’s a cool card. And he said, yeah, it’s his new bag. Selling it back to you.

And then did you tell them you were the CEO? Say what? Did you tell them you were the founder? No, no, they weren’t speaking to me. It was the person in front of me. Oh, okay.

That’s cool. So I was just observing as the scene was happening. It was magical.

It was so magical. So yeah, I love that. So those sort of stories.

I remember we, we did real-time receipts with categorization. We had that in December, 2012, right? So, you know, and I remember the first time we had a customer contact us and at this stage, you know, through social media, people would just call me up as the CEO. My telephone was everywhere.

And I remember getting a call from a customer and she said, you just saved me. Cause I, I didn’t realize I’d lost my card. And the real-time notification for the receipt was what triggered me to find out that, oh, my card’s gone.

It’s been stolen and someone’s using it. And I was able to turn off the card in the app. And that was when I realized how amazing real-time messaging or notifications were for stopping simple fraud, you know? Yeah.

So as an example, but yeah. Anyway, listen, Ali, it’s been great to have you on the show. Thank you so much for having me.

What have you got planned for Bunk for this year in 2025? What, is there any major news we’re, we’re going to expect to hear? Stuff. Well, I can promise you- You don’t have an IPO up your sleeve, do you, by any chance? No, no, no. I can promise you it won’t be an IPO this year, but we have a lot of amazing stuff coming, a lot of stuff that I can promise you will surprise you and will delight you.

But as is our way at Bunk, we will never spoil the surprise until we’re ready to launch. So you’ll have to be a little bit patient. All right.

Well, no exclusives for the Breaking Banks team this time, but Ali, thanks for joining us and really exciting to see what you’re doing with Bunk at Amsterdam, the bank of the free. And, you know, we hope you stay free, or at least affordable. That’s it for another week of the world’s number one fintech podcast and radio show, Breaking Banks.

This episode was produced by our US-based production team, including producer Lisbeth Severins, audio engineer Kevin Hirsham, with social media support from Sylvie Johnson. If you liked this episode, don’t forget to tweet it out or post it on your favorite social media, or leave us a five-star review on iTunes, Google Podcasts, Facebook, or wherever it is that you listen to our show. Those actions help other people find our podcast, and in return, that helps us build an audience that can be supported by sponsorship, so we can continue to provide you with our award-winning content every week.

Thanks again for joining us. We’ll see you on Breaking Banks next week.