The Rise and Fall of DKB
As of today DKB is the third largest direct bank in Germany with more than 3.9 million customers.
After it has introduced the custody fees for the deposits larger than 25.000 Euros and removed its best product - a fee free credit card that could be used abroad free of charge both for payments and withdrawals it’s destined to lose some of its clients.
DKB is a relatively young bank - it’s been around since 1990 and is owned by BayernLB since 1995.
It’s not a secret that DKB is BayernLB’s most valuable asset and that is responsible for the majority of the group revenue.
All German banks are pressured by the custody fees imposed on them by the European Central Bank since 2014. Despite the fact that they had 7 years to solve this problem without pushing the fees on to the customers, most of them did nothing. Unfortunately DKB is one of those banks.
In the last year DKB lowered the fee free deposits three times and reached now 25.000 Euros per account. Additionally to that DKB decided to remove the fee free Credit Card from its offering - it’s a paid product now.
The time to remove the Credit Card that was perfect for traveling couldn’t be better for since COVID-19 outbreak we travel less than ever. It doesn’t take away the fact that an integral banking product is gone.
I’ve been a customer of DKB for more than a decade. This direct bank has been a hidden gem of the German banking landscape for a very long time.
As a person working in the FinTech industry for a quite some time I really liked the fact that the bank have chosen the path of getting customers by offering the best possible banking product on the German market for an average customer free of charge without unnecessary bells and whistles.
It never had a fancy user interface, neither on the web nor on the mobile device. Despite the fact that DKB is trying to promote itself as a fancy FinTech bank and has been hiring developers for the last couple of years, any real improvements haven’t been made to the customer facing applications. DKB’s mobile application is still its website wrapped into the WebView.
Having the right products customers could bear with rather antiquated digital products but now since the desired products are removed, the customers are being left with the bank that has a below average offering in an old packaging that still claims to be a FinTech bank which sounds rather ridiculous now.
So, what will happen next. I assume DKB will lose at least 10% of its current customer base without acquiring new customers. Most if its clients who were using DKB as their main banking account will probably move to ING - the largest direct bank in Germany will only get bigger. Some younger clients may move to N26.
Unfortunately most of the new banks didn’t learn how to make money, so the only way they are able to stay afloat is to go with the subscription model without offering a great product. Accumulating a lot of money they cannot do anything valuable with it.
I would love to talk to the decision makers at DKB to understand their mid- and long term growth plans and how they’re planning to overcome the future challenges without losing most of their client base.
If you have worked or still work at DKB and would like to talk - drop me a line at firstname.lastname@example.org.