I really wonder what Kard long-term strategy is. I may be wrong but I don't believe there is an interesting market around banks and teenagers. The core business model of banking is based on loans (and I hope Kard isn't betting on a world where the European higher education system becomes as expensive as the anglo-saxon one). Thus if you can't make money on loans, then you try to make money on payments, which is a paytech model and not a banking one.
In my humble opinion, the only move they can make would be to acquire at a next to 0 CAC teenagers that will eventually become high net worth individuals / high consumers of financial services and products. In studies made by firms such as Exton Consulting, it is crystal clear that most of the revenue of insurers and banks come from a tiny portion of their clients (Pareto law). But these clients, once they are working and investing, have a huge CAC (several hundreds of euros). So Kard endgame could be to build a very attractive customer base that they would later sell to an incumbent.
Great comment @Benoit! I really appreciate that, thank you!
The long term view on high net worth individuals is truly interesting. But even for Kard it's hard to have a clear idea of the LTV of their clients (they launched recently).
From what I've read, they plan on launching financial products that fit teenagers' needs. In other terms, they see an opportunity where incumbents "simply" offer discounts or unadapted financial products.
Also, I wonder what will become their client after 25y old. Those are the years where their clients finally get a regular cash flow, but this is also the moment where their offer no longer makes sense. Some of their competitors simply sell the lead to banks.
Finally, the end game for Kard might be targeting an acquisition by a bank. Understanding teenagers today is understanding the future clients a bank may have. This is highly valuable for banks as they struggle in getting new customers, in making their brand attractive and retaining their current customers.
I may be wrong but I don't see teenagers having a need for financial services (maybe a car loan, a home and a travel insurance). I mean they should open financial products such as a "PEA" or an "assurance-vie" and start learning about financial education, but it's already difficult to explain that to adults...
If they need to wait 5 to 10 years to start (potentially) making money on a client, they will soon run out of cash and won't be acquired. I would also argue that after 20/25y old, their marketing no longer makes sense. Because if these teenagers today communicate with emojis and sms language, I bet they will evolve when growing up. So it means that Kard should also grow up with its clients and rethink its marketing and value proposition.
I'm going to be intentionally a little bit provocative but do banks really strive to be more attractive and retain their customers? I mean we all know their NPS is so low we might think they're oil companies. It would be an interesting debate...
Great memorandum!
I really wonder what Kard long-term strategy is. I may be wrong but I don't believe there is an interesting market around banks and teenagers. The core business model of banking is based on loans (and I hope Kard isn't betting on a world where the European higher education system becomes as expensive as the anglo-saxon one). Thus if you can't make money on loans, then you try to make money on payments, which is a paytech model and not a banking one.
In my humble opinion, the only move they can make would be to acquire at a next to 0 CAC teenagers that will eventually become high net worth individuals / high consumers of financial services and products. In studies made by firms such as Exton Consulting, it is crystal clear that most of the revenue of insurers and banks come from a tiny portion of their clients (Pareto law). But these clients, once they are working and investing, have a huge CAC (several hundreds of euros). So Kard endgame could be to build a very attractive customer base that they would later sell to an incumbent.
Great comment @Benoit! I really appreciate that, thank you!
The long term view on high net worth individuals is truly interesting. But even for Kard it's hard to have a clear idea of the LTV of their clients (they launched recently).
From what I've read, they plan on launching financial products that fit teenagers' needs. In other terms, they see an opportunity where incumbents "simply" offer discounts or unadapted financial products.
Also, I wonder what will become their client after 25y old. Those are the years where their clients finally get a regular cash flow, but this is also the moment where their offer no longer makes sense. Some of their competitors simply sell the lead to banks.
Finally, the end game for Kard might be targeting an acquisition by a bank. Understanding teenagers today is understanding the future clients a bank may have. This is highly valuable for banks as they struggle in getting new customers, in making their brand attractive and retaining their current customers.
Thanks for your reply!
I may be wrong but I don't see teenagers having a need for financial services (maybe a car loan, a home and a travel insurance). I mean they should open financial products such as a "PEA" or an "assurance-vie" and start learning about financial education, but it's already difficult to explain that to adults...
If they need to wait 5 to 10 years to start (potentially) making money on a client, they will soon run out of cash and won't be acquired. I would also argue that after 20/25y old, their marketing no longer makes sense. Because if these teenagers today communicate with emojis and sms language, I bet they will evolve when growing up. So it means that Kard should also grow up with its clients and rethink its marketing and value proposition.
I'm going to be intentionally a little bit provocative but do banks really strive to be more attractive and retain their customers? I mean we all know their NPS is so low we might think they're oil companies. It would be an interesting debate...