August 14th 2016 was my first day ever in the US. Together with my wife, we decided to fly in two weeks before classes at HBS were supposed to start to get to know Boston, settle in and, most annoyingly, sort out necessities, such as mobile phone numbers and… bank accounts. The latter resulted in particularly many problems, which prompted me to write this piece.
Born and raised in Eastern Europe, with a brief stint in London, I have always been taught that the West, the US in particular, is way more advanced than Poland, where I come from, in any respect, technology being one of the most obvious areas. In terms of retail banking back home, I only had to visit a branch when it was necessary to set up my bank account (but even then, some banks offered online sign ups). Almost everything I could do either online, or through a mobile app. Same day transfers? No problem, just use your app. “Account maintenance fees”? We don’t really have that. Currency exchange? Online, great rates, no additional fees. I assumed the same would be the case when I move to the US – oh, how wrong I was…
I’m not going to dwell on frequent visits to far away branches, still using paper checks and 3-day transfer clearance periods. Having discovered the magic app Venmno made our lives easier, but made me question whether this sort of solution would have any use where I come from – probably not, every bank has its own Venmo. So, let me tell you a story of mBank, one of Poland’s first online banks, which started a digital revolution in how financial institutions serve their clients in Poland.
It all starts in the year 2000 (only 11 years after Poland regained its independence from Soviet Union), when German Commerzbank-owned BRE Bank launched its new entirely digital retail arm, mBank, in just 100 days. The original business model, championed by Mr Slawomir Lachowski (BRE management board), aimed for mBank to become a “banking Walmart” that would offer customers limited number of high quality products at very attractive prices. The bank’s success was to be driven by rapid technological advancement and innovation, in particular mobile phone use which, at that time was three times as prevalent as use of internet.
One of the most important decisions the bank took towards digitization were:
- Gradual product expansion adjusted to user technological sophistication (few simple products to start with, then product expansion). Ultimately mBank also opened up physical branches, they were, however, as innovative as branches get (see the picture below).
- Simple and reliable consumer technology – mobile app and online banking features evolution followed customers’ growing sophistication
- Strategic partnership with Orange Poland, one of the largest telecoms in the country, aimed at enhancing online banking experience for Orange’s customers.
- Constant search for innovation opportunities – mBank created mBank Startup Challenge to identify fintech solutions to further disrupt the industry. In 2015 the challenge was won by Koala Metrics, software specialized in enhanced customer profiling based on mobile applications used by account holders.
mBank Startup Challenge
- Introduction of innovative revenue generating solutions, such as mDeals, Europe’s first transnational marketing platform.
In terms of future steps – why change something that works well? mBank was the spark that ignited a revolution in Polish retail banking. It goes without saying that competition has picked up the gauntlet for innovation leadership with interesting concepts, such as Idea Bank’s “mobile pay-in cars”, which business can request to securely deposit their day earnings. mBank will have to continue innovating to stay ahead of the curve.