As Qonto, the French digital bank, reaches a customer milestone of 600,000 and files for a banking license, it signals a significant shift in strategy from being a mere payment institution. The pursuit of a credit institution license, as revealed by CEO Alexandre Prot, is not just about expanding services but a strategic move to solidify its stance in the competitive European financial landscape for freelancers and SMBs. This clever maneuver from Qonto speaks volumes about the evolving dynamics in fintech, where securing a more official banking status is increasingly becoming a game-changer.
Currently, with a payment institution license, Qonto has been navigating the European market, albeit with certain limitations, notably in credit offerings. The transition to a credit institution would not only enhance its product suite with broader lending, savings, and investment options but also place it on a level playing field with traditional banks and more established fintech players like Revolut. Interestingly, while Revolut flaunts a full Lithuanian banking license, its commercial lending offerings remain under wraps, suggesting that having a license and leveraging it effectively are two different ballgames.
Qonto’s strategic shift comes at a time when its competitors are frantically redefining their operational bases. Revolut's recent maneuvers to establish a significant presence in Paris and seek a French license hint at a looming fintech battle on French soil. But Qonto isn’t just reacting to competitive pressures. Achieving profitability ahead of schedule in 2023, as Prot pointed out, positions Qonto in a financially robust spot to undertake this licensing journey without additional fundraising.
The move towards a banking license also reflects a broader trend where fintechs are increasingly seeking to transcend their initial operational niches. Unlike Memo Bank, which launched with a banking license tailored for SMB lending, or Finom, which experiments within the confines of an EMI license, Qonto’s approach is more about expanding organically and prudently. The proposed credit institution status would enable Qonto not merely to offer loans but also leverage customer deposits for lending, which could significantly amplify its revenue streams.
Moreover, Qonto’s ongoing development of an AI-driven “Qonto Intelligence” layer and in-house card processing capability signals a fintech that is not merely adjusting to regulatory and market demands but actively anticipating them. As the likes of Revolut and other B2C and B2B hybrids amplify their market aggressions, Qonto’s measured step towards becoming a fully-licensed bank could well be a blueprint for sustainable growth in the volatile fintech sector.
For those tracking the evolution of fintech regulations and market strategies, Qonto’s latest move is a testament to the intricate dance between innovation, regulation, and market competition-a dance that all fintech players seem to be learning, albeit with different rhythms.
