How a bank became a startup

- Our experience as a Fintech teaming up with a retail bank

  • gunnar

When we founded Memento, the majority of Fintechs were planning to destroy the old established banks. Today, with examples such as the BBVA acquisition of Simple, and numerous other ones, this whole discussion has now a more mature feel to it and we can hear a new collaborative tone.

Banks need Fintechs and vice versa

Banks are realizing that innovation cannot happen within their walls at the same pace the consumer needs, and they are beginning to understand their role as service companies in the changing landscape.  At the same time, Fintechs, have realized that the pressure to launch exciting products and generate great metrics or profits for investors, doesn’t go very well with the heavy requirements related to legislation and compliance. Additionally, having enough marketing power to successfully launch a financial product to the market is, in many cases, too much to handle for an average Fintech. More than a year ago, we got a chance to witness this synergy for ourselves. Below, we will tell you how, Islandsbanki, a retail bank in Iceland was able to become a startup for three months while launching an innovative social payment platform, Kass, together with us in Memento.


Status quo after the financial crisis in 2008

Memento had been operating for a while as a startup with core focus on product design and development and less focus on compliance and business model, which is in many cases the reality for Fintechs. Innovation in the financial service space had been lacking for years, with a status quo situation directly associated with the financial crisis in 2008. However, in the summer of 2015 this was about to change, when Memento – a small startup, launched a social payment platform, Sway. After the launch the Icelandic market heated up quickly. Few months later, one of Iceland’s largest telecom companies, Nova, made a clear move into the payments market, providing the same features-set as Memento. It was clear at that point, that offering financial service was not an exclusive right held by banks. Customers, especially young people, don’t find anything wrong with letting non-banks, such as startups and telecom companies, handle payments and other financial data for them. At this time, Icelandic banks were starting to get the indications of how the world post-PSD2 could look like. Islandsbanki acted quickly which led to an agreement with Memento to rebrand its social payment platform for the Icelandic market and integrate as layer on top of the bank’s existing infrastructure.

Seeing opportunities where other see threats – the true startup mindset

Islandsbanki, seems to have a keen eye in understanding the changes that are currently occurring in the financial market landscape. Few key executives, at least, had the confidence to view Memento as an opportunity but not a threat to their organization. This is one of the key elements vital to any company that wants to stay relevant, long term, and it has never been more urgent for banks to adopt this mentality during the upcoming changes in the financial service sector.

Moving quickly, dropping the formality and being unafraid to break some habits

Launching a new financial product like Kass in only three months is impressive, for any kind of organizations, let alone a bank. For this goal to be met, the bank had to un-bank itself so to speak, where conventional formal communication channels had to be replaced by new and faster ones. Despite having to sacrifice the “best practice” w.r.t. things such as traceability and structure, the benefits were major. For three months, Memento and Islandsbanki became a well-oiled machine, a team where personal egos were left aside so that an outsider could not have pointed out who was on which side initially. That being said, it’s unavoidable and also necessary that communications become more formal with the product launch in hindsight. 

The bank is in full control

It’s now been almost a year since we launched Kass and the response has been absolutely great! The user base has more than doubled every three months, following similar trends as Vipps in Norway and MobilePay in Denmark. About 6% of user make a transaction each day sending on average ~$55 each time, with both on the rise between quarters. We’ve assisted the bank to launch a product which is highly appreciated by users, regardless of which bank they do business with – and we did it in only three months. The bank is now in full control of how it wants to go forward with Kass and how it will be integrated with other existing services. At the same time as Islandsbanki is closing branches and becoming less visible in the ‘physical world’ the bank has taken a giant leap towards becoming more visible and relevant in the digital world and on social media, where today’s traffic takes place. Us at Memento will keep on delivering updates to our platform, improve social features and connections to established social media. It’s onwards and upwards from here on for us all.