The rise of challenger banks and the future of SME banking – Interview with Penta Co-founder and CMO Matteo Concas

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I recently had the pleasure to have a conversation with Matteo Concas, co-founder and CMO of Penta, a fast-growing digital platform for business banking. Since the launch in Germany in 2017, Penta experienced strong growth with more than 10,000 SMEs already using their digital banking solutions. In August the company raised over €8 million in a funding round led by HV Holtzbrinck Ventures, alongside Finleap and Fabrick, which are the leading shareholders of the platform. HQ’d in Berlin, with offices in Belgrade and Milan, the company recently announced its official entrance in the Italian market, with the aim to acquire 5,000 customers within the next six months.

In the interview we talked about marketing and growth, his work with Penta, his experience as Italy’s General Manager of N26, the state of Fintech and open banking with the foreseen radical transformation of banks and the arrival of neobanks.

Ciao Matteo, very glad to have you here. Could you kindly give us a brief introduction of yourself?

Ciao! I’m an entrepreneur in the Fintech space after 8 years of experience in investment banking M&A and management consulting. I started as General Manager Italy at neobank N26, based in between Germany and Italy, setting up the go-to-market strategy and growing the customer base to 100,000 clients in 13 months thanks, between others, to the use of social media influencers – something quite unusual in an industry like the banking one. After N26 I founded a neobank for SMEs in Italy together with Finleap, a leading Europen Fintech venture builder, and Fabrick, a tech platform for banks and fintechs owned by Banca Sella. The venture then merged with Penta in 2019 after Finleap bought it from the initial investor.

From management consulting and investment banking to working with startups is quite a big leap. Are you satisfied with your decision? What was the most difficult part of that transition?

The learning curve is quite steep in terms of having an understanding of multiple types of operating processes important in a company, from marketing to operations. My first year in N26 was quite a journey, with every day an opportunity to experiment with new challenges and solve problems. The hands-on experience you get in a startup is extremely rewarding, but I’d say I appreciate it more thanks to the solid foundation I’ve accumulated in the previous 8 years in a much more structured environment like it was JP Morgan for me.

You have been appointed Italy’s General Manager of N26 while still in your twenties before the company became Europe’s most valued digital bank and one of the most successful Fintech startups in the world. It must have been exciting, right? What are the biggest struggle and the most valuable thing that you got from that experience?

What a ride we had in 18 months! The stress to achieve results (customers!) and break into the market with all the eyes on you it was scary and exciting at the same time. The objective we set for ourselves was to reach 100k clients in a year. At month 10 we were still at 40k, so you can imagine the mood in the office… but my team and I had a clear strategy and we were working towards it with full commitment and were able to stay focused and not panic. At month 13 we reached the 100,000th client after a successful social media influencer campaign that was built on top of the positioning achieved in the first 10 months. Learning was: believe in yourself and work hard on your strategy – solid foundations usually pay out in the medium to long term.

And now you are managing marketing and communications of Penta, again a digital bank, but this time specifically targeted to SMEs. Can you explain a bit more about Penta’s offering? You just reached the 10k customers’ milestone and you have just launched in Italy, what’s next?

Traditional banks have historically served small businesses with retail-designed products, and neobanks have always focused on retail as well – disrupting an industry and setting expectations high for the entire market in terms of digital products. Penta is filling this void, by integrating banking with business cloud software like accounting and expense management. Entrepreneurs know that they have to digitise their company, in operations, marketing and banking too. It’s all linked, and Penta is an ingredient to achieve digital transformation success.

From what you have seen so far, what works best in terms of marketing activities? Many differences from what you have seen before with B2C and now with B2B?

Consumers and small businesses share many touchpoints in online marketing, and you can spend effectively for both target groups. And that is the challenge we are taking on, acquire customers (SMEs) online at a fraction of the cost of traditional players, and then work with them in offering always new services that we can monetise, also with the help of advanced CRM software.

There’s an always-increasing number of challenger banks out there now. While the appetite, both from users and investors, at the moment doesn’t seem to slow down, thinking more long term, how do you think it will be possible to differentiate?

Collaboration and curation. Collaboration with other players, both banks and fintechs, to achieve greater localisation of the product between the different geographies or industries. Still, challenger banks do not offer a wide spectrum of financial services like loans, mortgages, investments – especially those in Pan-European countries. Curation comes then after, being able to efficiently segment the customer base and offer relevant products digitally.

From a broader point of view, how do you envision the future of banking? How PSD2 / open banking will impact that?

Building on the previous question, I see a point in the future where we won’t talk about banking per se, as banking will be embedded in services that offer something more than just money. What I mean is not the disappearance of banks, quite the opposite, they will evolve in being less of a bank, and more a service company, each one with a specific value proposition. An example could be a bank that focuses on the full value chain of real estate, helping not only clients by providing a mortgage, but offering a seamless experience where a client can sell a flat and buy a new one in a few days, without the multiple frictions they still have to go through nowadays where it takes months to be able to complete the whole process, which is usually very stressful. That’s where banking will go.

Talking more in general, do you see hope in the development of the Italian startups’ ecosystem? What would you “steal” from Berlin, or other places where you lived and worked, and bring it to Milan?

I’d steal the great chemistry and balance they have created between entrepreneurs, capital from VCs, and talents. We still don’t have this in Milan, and it will require some time to get there. There is a positive spirit in general and optimism between the people around tech and innovation, that we don’t necessarily see in Milan and Italy where more traditional jobs are usually sought by fresh graduates.

Any podcasts, publications or books that you particularly like and that you would like to suggest?

I’m an avid reader of Monocle, a print magazine that covers various topics from Affairs to Design and helps me keep an eye on areas I don’t see every day in the Fintech or startup’ environment.

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