Bruno Wattenbergh, our economics specialist, discusses NewB’s difficulties this morning. This Belgian cooperative neobank promotes ethics and sustainability and it fails to take off. He deciphers for us the reasons for these difficulties.
NewB, the ethical and sustainable Belgian cooperative neobank fails to take off?
No indeed. Despite 120,000 cooperators and several major players in the voluntary sector, NewB must find €40 million within 3 months to strengthen its equity and also 100,000 customers. At this price, NewB could break even. Otherwise, it will mean the loss of the banking license.
Why is this not working?
This is where it becomes instructive. While 120,000 cooperators bought a share in the cooperative for a total of €35 million, only 15% of them decided to become NewB customers, i.e. to open an account, migrate their savings, or even borrow. As a result, the bank’s figures are bad and the members are asking questions. Legitimate because in the event of default, if savers would be reimbursed, this would not be the case for these members.
Regarding the banking products offered, the range is very limited and NewB refuses to make volume on high-margin products. Finally, concerning insurance products, in partnership with a French insurer, they are not taking off either, due to a lack of commercial aggressiveness.
Wouldn’t NewB be different enough from traditional banks?
On its organization certainly. Also on its values. On its products, not really… It took a decade to launch NewB. A decade during which the banking world has also evolved and offered more ethical products, more respectful of people and the environment.
What lessons can be learned from this experience?
I think there are several.
The first is thatit is often easy to criticize the existing economic fabric …remember Banks in 2011, it was the devil dressed in a three-piece suit. Every day the media praise this or that start-up or association that is more ecological, more united, not capitalist, etc.; but there is what is called a selection bias. Few of these initiatives reach the critical size to have a real economic, societal or employment impact… or simply in terms of the taxes paid to contribute to solidarity. What market companies manage to do.
The second is that ultimately, no offense to many dreamers, the market always ends up being right. And the market, even among cooperators, disavows NewB for the time being. NewB had put forward a respectable desire for reasonable salaries, but at the same time is struggling to recruit, which is also a disavowal of the market. Finally, it demonstrates that entrepreneurship is and remains something difficult and that customers are always right.
Let’s get along, I sincerely hope that NewB will succeed. I hope so, for the cooperators. And I urge them to become a customer. Whatever the result, it is a reminder of the respect we must have for those who undertake, whether they succeed or fail. Let’s also stop pitting citizens against businesses. Whether large or small, what is important is that these companies are resolutely committed to the transition…