Dutch Fintech Banking startup launches US expansion bid

• The Dutch banking startup Bunq has launched its application for a US banking license.
• Bunq, founded in 2012 and initially self-funded by CEO Ali Niknam, is looking to expand in the US.
• The Amsterdam-based startup claims to be profitable and targets ex-pats.

Dutch banking startup Bunq has launched its application for a US banking license, looking to succeed where others have failed.

The Amsterdam-based company, founded in 2012, was initially self-funded by CEO Ali Niknam, until it took on €193 million ($210 million) in external funding at a valuation of $1.9 billion in 2021. Bunq offers a range of banking services such as personal and business accounts, ATM withdrawals, money transfers, spending in multiple currencies and savings products.

Europe’s biggest fintech startups have pursued US banking licenses, but very few have been successful to date. Fintechs such as Revolut, N26 and Monzo have all pushed across the Atlantic, but none have secured a license yet.

The cost and difficulty of obtaining approval from the FDIC is a huge barrier to entry, leading many fintech startups to partner with already registered institutions instead.

Bunq wants to target the estimated 5 million digital nomads, consisting of either Europeans living in the US or vice versa, despite the tougher macroeconomic environment, and provide them with banking services.

“I think the US is a giant market and it’s very easy to drown yourself,” Bunq CEO and co-founder Niknam told Insider.

“If I look at most of our peers, there was a pattern of trying to do growth as quickly as possible, kind of a land grab thing, and if you looked at the products that were offered, they weren’t necessarily localized. We’ve decided to go the other way and look at our user requirements and build our product based on their requirements.”

The process of getting regulated in the US is no easy feat, even banking fintech startups like San Francisco-based Chime have found it difficult while German neobank N26 pulled out of its US press in 2021 despite spending big on marketing themselves.

Niknam said Bunq had the advantage of having an EU-wide banking license through the Dutch regulator, becoming the first institution to obtain one in 35 years in 2014. “The Dutch regulator is particularly difficult. They are globally known for being difficult, and this commands some respect from the US authorities,” he added.

Bunq, which reported a pre-tax profit of $2.5 million for the final quarter of 2022 and broke even in 2021, said cost efficiency would be key to any success in the US.

“We have to be laser focused,” Niknam said. “Bunq US will effectively be a startup again, starting from scratch. I don’t necessarily see us doing a lot of awareness, at least not initially because it’s just expensive to build teams in the US, it’s notoriously expensive compared to Europe so we will try to have as small a team as possible.”

Bunq has submitted its application to the FDIC in New York, the length of time it takes for a decision varies, but the process can take between 18 and 24 months to be approved.

“We know it’s going to be a lot of work, but I’m confident we can do it,” Niknam added.