ipagoo, launched by the Orwell Group, claims to the be the first pan-European bank account, allowing customers to have the same current account in four countries in Europe. Orwell Group CEO Carlos Sanchez wants 6m customers by 2020, but is this feasible?Patrick Brusnahan writes
Launched this year by the London-based Orwell Group, whose financial products also include prepaid cards, ipagoo allows consumers to hold the same account across Europe. It is a ‘pan-European’ account in the United Kingdom, France, Spain and Italy, accessed with a mobile app and a debit card. Some of the features include instant cross-border transactions and cash management services. One of the highlights is the ability to make and receive payments in different currencies from a single online banking platform.
Go deeper with GlobalData
Carlos Sanchez, CEO of Orwell Group, believed that this new offering is something that consumers cannot receive at banks. When he talked to RBI, he said: "You might think that banks such as HSBC or Barclays are pan-European, but those are just banking groups. Each bank in each country is an independent bank, even if they all share the same logo and policies. They are different legal entities. For the consumer, it means that if you need banking in more than one country, there are a number of relationships that you need to start. They are pan-European groups, but they are not pan-European banks. The service they provide is fragmented at a country level."
Sanchez stated that the typical banking model is also fragmented in a different manner: the cash management side versus the credit and savings side. In 2012, the FCA’s Retail Conduct Risk Outlook gave the fifteen risks of financial services for retail clients and six of them were related to this conflict. This leads to, in Sanchez’s words, a ‘natural tension between what you want from the bank and what the bank wants from you’.
On what separates ipagoo from banks, Sanchez believed that the banks were not able to offer what ipagoo offers due to a lot of economical, governmental and regulatory pressure. He said: "The problem with [banks’] model is that the credit and lending activity has a lot of risk for the economy. The restrictions imposed on that activity by governments and regulators limit what the bank can do up to the borders of their country. Beyond that, they have to open another bank."
The best way to describe it for Sanchez was ipagoo being to the banking what smartphones are to telecommunications. He expanded: "Obviously, you don’t need a smartphone to make a phone call, but the smartphone offers you so much more. That’s why people spend so much money to have one. ipagoo is something that brings the level of functionality and flexibility and mass customisation that mobile phones now represent.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData"With ipagoo, you have a world of convenience which people didn’t even realise was available. The debit card adapts to your environment and you can change account or currencies. You can include family members on your account. There are alarms for expenditure, the ability to deny a direct debit and conditional payments. There’s a long list of new features that people have no experienced because they have not been offered yet."
While this offering looks to be a valuable alternative, who is it aimed at? For many consumers, going abroad does not necessarily require opening a bank account. Opening a current account for a two week holiday seems excessive.
Sanchez said: "Travellers will find the offering extremely compelling from the outset. Those are the ones we do not have to convince. Anyone that we’ve talked to who has a hint of an international life asks us when they can set up an account. There are 30 million Europeans living in a country other than their own. The market is significant. That is 30m, plus 2.5m people changing countries every year. Europe is full of people with double, or even triple, national lives due to many reasons, whether that is work, family, retirement or whatever."
With a huge untapped market waiting to be leveraged, Sanchez has high expectations. Of the 30m Europeans living abroad, he hopes that 6m of them will be using ipagoo in five years and 150,000 individuals by the end of 2015. As well as individuals, the target is to have 200,000 businesses as clients as well.
Having launched only in five countries, a client base of six million in only five years seems close to unachievable. This is an especially bold target when considering the start-up market where those even lasting five years are few and far between.
Sanchez has no such concerns. He said: "There are five countries which represent 80% of the migration in Europe. Those are the four we cover plus Germany, which is going to be active by the end of the year. Therefore, by the end of the year, we’ll have 80% of the migration in Europe covered. The four countries we cover have a combined population of 250m, with Germany it’ll be 360m."
While ipagoo remains pan-European for the foreseeable future, plans are much grander and it could end up pan-global. Sanchez concluded: "We are not going to stop at Europe. We have already started applications for outside Europe, in the Asia Pacific region, and we will eventually go to the US and Canada as well."
