A small financial revolution

Matthias Kröner, Raphael Otten and Boris Janek have one thing in common: they want to create a more transparent financial system, a system which is more customer-oriented, and where customers understand what is going on with their money.

Of the three, Kröner is probably the best known in the world of traditional finance. He founded his first back some 11 years ago. As head of the Direkt Anlage Bank (DAB), one of Germany's first online banks, he coined the slogan "You are the bank."

His new project - Fidor Bank - has been underway for about four years and it takes the concept further.

Cash for questions and suggestions

Some 26,000 bank clients and 160,000 registered users take part in the Fidor community's discussions. Users themselves use Facebook to decide on the daily interest rates for the bank's immediate-access savings account: the more 'Likes', the higher the rate. The maximum rate stands at 1.5 percent, which is higher than what most banks currently offer on this type of account.

The bank stresses the importance of communication with its clients. One group regularly debates the bank's interest policies. "What's being discussed there - we take it up on the board, and we use it as a guideline," Kröner says.

In Fidor's online forum, users discuss the financial products and pose questions. The bank even offers a few cents for each sensible question posted in the forum. Kröner grants that such sums won't make anyone rich, but says, "Our customers should know that we respect their opinions and questions. Just imagine the face of a normal bank clerk if you were to ask a question and then want to be paid for it."

So far, Fidor Bank has managed to double its clientele each year, but Kröner is also relying on offering technical services for businesses to support future growth: "We're pushing innovation together with the Community, and we want to become the online service leaders in this field."

'Democratizing the financial world'

One of Fidor Bank's software customers is Raphael Otten. It means that customers can pay him online without his having to have a banking license. Otten is 26, finished university two years ago and has big plans for the future. Together with his business partner Adrian Porger he's working on nothing less than what he calls a "democratization of the financial world."

The company is called United Equity and it it's a platform for crowd financing, a variant of crowdfunding which aims at making real money for investors rather than supporting favorite projects. "Starting with five euros, you can start making profit here," says Otten. "We want to give normal citizens more weight in the financial landscape and create a counterbalance to the big players."

United Equity specializes in finance for small and medium sized companies. Their last participation was a digger for a local company, a project which raised 8,000 euros more than the 25,000 euro target. If everything goes according to plan, the investors will get around 5 percent on their money for five years. At a normal bank such sums would call forth an indulgent smile, but, says Otten, "even the traditional banks realize that something's gong on here."

New financial concepts are currently springing up like mushrooms. There are already some 20 to 30 crowdfunding and crowdsourcing platforms on the Internet. Almost all of them try to help where the state doesn't - for example, by investing in small start-ups.

Reinventing banking

Boris Janek blogs on Finance 2.0 about innovative banking concepts. He argues that the banking sector needs to get back to a focus on the real economy: "It should help drive society, culture, the economy of course, but above all the aspirations of people. It should not be mainly concerned with maximizing returns." Crowd financing and crowdfunding can help, as people can decide online what they want to invest in.

Janek's day job is as marketing manager of the Volksbank Raiffeisen group, a bank that focuses on older clients and is often seen as rather sedate. It has many branches and little contact with its customers via the Internet. Its structures have been built up over decades, and the bank has been very successful with its business model. "That makes it difficult for established players to make changes quickly," Janek believes.

But even at Raiffeisen, people are beginning to think about local crowdfunding. Janek is sure that banking will be different in 20 to 30 years, and it will have to reinvent itself to keep in touch with the younger generation. "Banks that still think in the old structures will need to change their approach."

But the numbers are not yet speaking for Kröner, Otten and Janek. The turnover of crowdfunding platforms may have more than tripled in the past three years but it's still a very small part of the banking world. Kröner still hasn't made any profit; Otten admits that you can't expect to earn much with a start up. The Internet pioneers are driven by hope, especially by the hope that a new generation of customers will no longer use bank branches at all, but will want to use the Internet to find out exactly what their money is doing.