Since time immemorial, traditional banks are an essential part of the global economy!
However, the banking industry has often been shrouded in mystery, with complex revenue streams that are not transparent to customers.
While many believe that banking costs are confined to monthly fees, the reality tells a different story.
Banks typically earn three to four times the perceived amount, benefiting from a risk-free interest of 4 per cent on customer funds from the European Central Bank.
Each payment made with a bank card generates an average fee of 1.25 per cent of the transaction amount for the bank.
Additionally, most banks charge fixed fees for every transaction, both incoming and outgoing, up to €0.25 each.
GoDutch: Pioneering fair banking
Based out of Amsterdam, GoDutch is pioneering a different approach to business banking.
The Dutch company is on a mission to redefine the concept of “fair banking” by prioritising transparency, social responsibility, and environmental sustainability.
In this edition of our “New Kid on the Block” series, we interviewed Thomas Vles, the founder of GoDutch.
Throughout our discussion, Thomas shared details about the company’s humble beginnings, commitment to fair banking practices and sustainable practices, and much more.
Birth of GoDutch
The founder of GoDutch realised that major banks worldwide, including the three largest in the Netherlands – Rabobank, ING, and ABN AMRO – reported profits exceeding €18B in 2023.
These profits mainly came from fees and interest on deposits, benefiting shareholders more than customers or the planet.
“During my time within the financial services, I noticed this and decided that change was needed. I consider the income that banks make off their client’s money and usage versus the value for customers and the world as unfair and unbalanced,” he explains.
“Additionally, more often than not, people are unaware of the income streams of banks. They think that the costs of their banking accounts are limited to their monthly fees, while banks earn three to four times more from customer usage, on average,” he says.
And thus born GoDutch!
GoDutch’s mission and vision
“Our banking principle is based on the belief that it is time to redistribute the income streams of banks in a business model where transparency is not just policy but a fundamental principle,” he explains.
The Amsterdam company’s goal is to have a ‘fair banking’ with a balanced relationship between people, planet, and profit.
At its core, GoDutch provides transparency by disclosing its income sources and redistributing a substantial portion back to its users, the community, and the planet, all while delivering an exceptional banking experience.
GoDutch’s Approach
GoDutch pledges transparency by revealing all income sources and sharing up to 70 per cent of its total banking income with its users.
The company achieves this through a range of business banking packages, from a free account that shares 10 per cent of the income to paid packages that increase the revenue share up to 70 per cent.
The higher the package fee, the more features it includes, and the higher the revenue share for users.
Every quarter, users receive a detailed statement outlining the interest GoDutch has earned on their balance, the income generated from their card usage and transactions, and the applicable revenue share percentage based on their chosen package.
This information, including a prediction of the total earnings for the entire quarter, is also accessible in real-time through the GoDutch app, fostering complete transparency.
Becoming climate positive
As part of its commitment to social and environmental sustainability, the Amsterdam company is on a mission to become climate-positive within two years.
“As of now, we are collaborating with Justdiggit to regreen 5 square metres of African savanna per user, for as long as they remain a customer. We are also discussing the possibilities with other companies to initiate projects aimed at compensating for our carbon footprint,” says Vles.
“A key priority is the management of funds, which are currently held at a traditional bank and thus do not meet our sustainability standards. Our goal is to grow until we reach a critical mass of total funds under our company, allowing us to move our funds to a 100 per cent sustainable,” he adds.
Currently, GoDutch supports a wide range of charities, including the Dutch Cancer Society, War Child, and The Ocean Cleanup.
Every quarter, users receive a share of GoDutch’s income and have the option to automatically donate their benefits to one or more charities after their monthly fees have been accounted for.
“Looking ahead, GoDutch plans to expand its support through the establishment of its foundation, thereby increasing the number of initiatives we’re supporting together with our users,” he states.
Why choose GoDutch over other traditional banks?
According to Thomas Vles, GoDutch’s fair banking model offers several advantages over traditional banks, including speed, convenience, and a personal approach.
New users can easily sign up for a payment account using GoDutch’s web app in just a few minutes, and they will receive their Dutch IBAN within three business hours.
Immediately after registration, users can make payments using Mastercard on their mobile devices, and physical cards are delivered within a few days.
Additionally, GoDutch offers a wide range of essential business banking features, including cost-effective global transfers, bulk payments via file uploads, SEPA direct debits, and the option for additional payment cards for employees.
Scaling its fair banking model internationally
The company aims to extend its operation beyond the Netherlands, with plans to scale its fair banking model internationally.
“We have access to local IBANs through our partners in the Netherlands, Germany, France, Spain, and soon Italy and Belgium. Thanks to our unique and innovative setup, we face minimal regulatory challenges in expanding within Europe,” he says.
However, according to Vles, several factors will drive the decision on which countries to choose first, with the competitive landscape being the most critical consideration.
“To fully stay committed to transparency and sharing in other countries, we face limitations with the current regulatory framework. While the future remains uncertain, if we achieve continuous and significant growth, becoming a fully licensed bank ourselves is a possible scenario. This would be the only way to ensure complete transparency,” he adds.
Partnership with Swan, continuous fraud monitoring, and more
In security terms, GoDutch has collaborated with the French payment services provider Swan for instant transaction processing, compliance, and risk management.
Additionally, the company has implemented continuous fraud monitoring to shield users from phishing attacks, while card transactions are protected using Mastercard SecureCode.
Funds are securely held in segregated accounts by one of the safest banks in Europe, providing an additional layer of protection, he adds.
The EU’s Deposit Guarantee Schemes Directive (DGSD) applies to Swan’s business accounts, protecting funds deposited in the account up to €100,000.
Funding and growth trajectory
GoDutch recently completed an undisclosed seed round with strategic partners.
The company plans to initiate fundraising for its Series A once specific milestones in user acquisition, revenue generation, and key banking performance indicators are achieved.
“Based on our performance in the first two days, we are exceeding expectations and aim to achieve these milestones in the next 2-3 months,” he concludes.
Read the orginal article: https://siliconcanals.com/news/startups/new-kid-on-the-block-godutch/
