Matthias Kröner, the maverick 48-year-old head of Fidor Bank, believes that the financial sector is generally slow to respond to changing customer demands. He is in a position to know, having successfully ridden two major waves of innovation.
In the early 1990s, it was relatively expensive for the ordinary German investor to put money into the stock market directly, with stockbrokers competing on quality, not cost. This meant that Germany lacked the equivalent of the American firm Charles Schwab, which had been offering a low-cost service for decades.
After finishing a diploma in business administration at the Munich University of Applied Sciences in 1992, Kröner decided to fill this gap by setting up his own house, which would provide discount brokerage services. The big problem was that German regulators required financial firms to hold large amounts of capital.
Despite his lack of experience, Kröner talked HypoVereinsbank into funding his discount brokerage, Direktanlage Bank (DAB), as a direct subsidiary. As part of the deal he was appointed CEO.
DAB opened for business in May 1994. Two years later it became the first bank to offer some online services. By 1998, this would broaden into a comprehensive platform that allowed investors to trade stocks via the internet.
This combination of savings and convenience saw the number of accounts rocket from 9,796 in 1994 to 129,532 by 1999. In 1999, DAB took advantage of the tech bubble to become a listed company.
But problems within the parent company led to a takeover of the whole group by UniCredit, creating a “chaotic” situation, which led to Kröner standing down as CEO in 2002.
At first, he became a venture capitalist, funding various technology companies. But he kept an eye on banking. He became increasingly aware that social media, or “web 2.0”, was a key part of the internet’s future – and, as before, banks were doing little to take advantage and were poor at communicating with their customers.
Sensing another opportunity, he decided around 2006 to focus on his idea for a bank built around an online community, where customers would be encouraged to share ideas and tips. Once again, it proved hard to persuade regulators.
This was not just due to the radical nature of his business model, but also because of the financial crisis. However, his past success with DAB convinced them that he could successfully set up Fidor Bank “in the eye of the storm”.
Thanks to €16m from four major institutional investors, including technology financiers Anthemis Group, Fidor finally received its banking licence in May 2009 and opened for business.
While Fidor’s emphasis on social media and communication – with interest rates influenced by the number of Facebook likes – may seem eccentric, it had total commission and interest-rate revenue of €5m last year, expected to jump further in the coming months.
The secret behind this success? Kröner advises that would-be entrepreneurs should “be persistent”. While they should “dare to make mistakes”, they also need to be flexible enough “to correct them”. Overall, setting up your own business is “a marathon rather than a sprint”.