“Is Qonto an actual financial institution?” is without doubt one of the best prompt questions in Google searches in regards to the French fintech startup. The solution isn’t any, however it might alternate: Qonto has filed for a banking license in France, CEO Alexandre Prot printed.
Qonto, which goals Eu freelancers and SMBs, these days operates with a cost establishment license it received in 2018, and which already enabled it to introduce a form of buy now, pay later (BNPL). However a credit score establishment license would let it be offering broader lending, financial savings, and funding choices to its goal consumers.
Since its present license is legitimate around the EU, Qonto has already been in a position to enlarge into a number of Eu markets, and not too long ago reached the milestone of 600,000 consumers. However missing a credit score license is a hindrance for its purpose to achieve 2 million consumers through 2030.
Whilst providing a extra complete answer turns out like a herbal transfer to compete with incumbent banks, acquiring a license and rolling out credit score isn’t simple. That explains why Qonto’s SMB fintech competition have approached this factor in several tactics, and why Qonto isn’t precisely taking part in catch-up.
Memo Financial institution used to be founded as a bank from the outset, and gives lending to SMBs, however that makes it an outlier. Finom operates with an electronic money institution (EMI) license, nevertheless it best simply began checking out the type of lending that this regulatory heart floor lets in. Revolut has a complete Lithuanian license, however as opposed to BNPL, it has but to roll out credit score choices to companies — despite the fact that it plans to do so this year.
Nonetheless, the promoting energy of well-funded competition that perform each in B2C and B2B can have been an indication that Qonto had to boost up, particularly as Revolut not too long ago loudly introduced plans to hunt a French license and turn Paris into its Western Europe HQ.
No longer bringing up competition, Prot mentioned that Qonto’s timing used to be pushed through “having completed profitability forward of agenda in 2023.”
The son of former BNP Paribas President Baudouin Prot, Qonto’s CEO had clearly already thought of pursuing a credit score license — and that’s now not only a wager. All through a press briefing, Prot showed that he and co-founder Steve Anavi critically regarded as the theory at one level, however in the long run brushed aside it as a result of it will have required an excessive amount of time and extra fundraising.
Having been winning since 2023 implies that this hurdle now gained’t require Qonto to boost extra investment than the $552 million it secured in 2022 at a $5 billion valuation. Prot recently said that “the principle, or the one reason why, why lets lift further capital is that if we do a big or very massive M&A deal, paid most commonly in money.”
In its 8 years of life, Qonto has made two acquisitions: It took over its German competitor Penta in 2022, and it purchased accounting and fiscal automation platform Regate in 2024.
The latter is a mirrored image of Qonto’s positioning past banking and as an built-in finance control answer, with an providing that still contains equipment for invoicing and bookkeeping.
This method helped it develop within the B2B phase throughout Europe. Prot declined to provide a complete breakdown of its 600,000 consumers, however he mentioned that Germany is now Qonto’s greatest marketplace after France. In unspecified order, Spain and Italy come subsequent, adopted through the markets it entered in late 2024: Austria, Belgium, the Netherlands, and Portugal.
Nonetheless, Prot operates below the belief that some consumers gained’t select Qonto until this is a credit score establishment. That’s as a result of this could grant them further promises on their deposits, and since they would like credit score to be an possibility in the event that they ever want it, which some already do.
Qonto validated that call for for credit score with its Pay Later provider; introduced in 2024, it has already facilitated €50 million in financing, in keeping with the corporate (roughly $59 million). However the be offering is proscribed through its present license — each for Qonto, which will best lend from its personal fairness, and for its consumers, who can’t borrow for longer than 365 days.
To assist its consumers get admission to different kinds of loans, Qonto additionally put in combination a “financing hub” with third-party fintech companions together with Defacto, Karmen, Riverbank, and Silvr. Prot mentioned Qonto plans to stay it for no less than a couple of extra years. And a few of these choices are extra particular than what the corporate would possibly need to get into.
Nonetheless, turning into a credit score establishment in its personal proper would liberate new earnings for Qonto, each from the margin on credit and extra upside from deposits, which it will be capable to use for lending. Prot declined to expose earnings figures however mentioned that earnings higher through 30% within the ultimate 12 months.
On the other hand, Prot mentioned that this extra earnings wasn’t the principle issue at play. Obtaining new consumers apart, Qonto additionally sees this as a chance to rely much less on others and release new merchandise sooner. In the similar vein, it not too long ago constructed an in-house card processor to extend acceptance charges whilst decreasing its reliance on 0.33 events.
With a staff of one,600 other folks, Qonto now hopes that it is going to have the bandwidth to paintings on new product traits, such because the AI-enabled “Qonto Intelligence” layer, whilst additionally bettering its banking infrastructure and chance control groups.
The latter could also be aimed to display its readiness to France’s banking manager, with which it plans to paintings carefully to procure its license. The method would possibly nonetheless take years, however additionally it is a part of a broader “rising up” effort for Qonto, which not too long ago added a number of senior profiles to its board of administrators. Those steps may just additionally assist lay the groundwork for a long run IPO, even though that is still a longer-term prospect.
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