New banks aim to change market

Three new retail banks are set to open in the Czech Republic this year, and though they're all miniscule in comparison to the established foreign banks on the market, their style and fee structures may give those well-rooted institutions a run for their money.

Zuno Bank, Air Bank and Equa Bank will all open their doors to new clients this year, with each bank vying for the deposits of dissatisfied bank customers.

"Although each of these banks has a different kind of strategy in terms of products and clients they want to target, the main goal is to change the character of the market and stir it up," said Tomáš Potměšil, performance and technology adviser at KPMG Czech Republic.

Zuno Bank appears to be the first out of the gate, having already registered 18,000 customers and 125 million euros in deposits since it launched in Slovakia in December 2010. Owned by household name and Austrian parent Raiffeisenbank, the concept for Zuno was born out of the financial crisis as a way to increase deposits and hedge the parent bank at a time when asset liquidity was sinking.

Much like Polish mBank, which opened in the Czech Republic in 2007, Zuno will appeal to younger account holders who prefer to do most of their banking online and will only offer limited branch service, and target mainly retail clients who only need simple banking services, not financing or cash management.

"Thousands of young people are entering the market each year, and this is a potential for new banks to ... offer them their services, which they claim are better and simpler than classic banks' products," said Martin Olejník, an analyst with banking and insurance advisory company Scott & Rose.

Zuno spokeswoman Pavla Renčínová said another central part of the bank's business model is to provide low-cost and transparent services and fees.

"We won't be free of charge in all cases, but always transparent," Renčínová said. "When a client performs a transaction on the Internet, he or she will always see the price for that service beforehand, but in most cases, they will see 0 Kč."

Bank fees will likely be a primary motivation for customers to move their accounts elsewhere. Scott & Rose found that fees at some of the country's largest banks - Česká spořitelna, GE Money, Raiffeisen, Volksbank, LBBW and others - have been on the rise recently.

"Bank fees and average costs for account maintenance in the Czech Republic and Slovakia are still high," Olejník said. "New banks will come with their products with no or very low fees, and they'll bring the average costs down."

A second competitor for retail banking clients is Air Bank, owned by PPF Group, whose majority stake holder is Czech businessman Petr Kellner. Set to open sometime this fall, Air Bank will have easily accessible physical branches, but also wants to offer convenient Internet and mobile banking.  Air Bank has a simplified business model: Focus exclusively on retail clients and demystify traditional fee structures with an easy, two-tier fee system where clients can choose either a lower monthly fee with transparent pricing for some services or a higher monthly fee and more services for free.

Equa Bank, formerly known as Banco Popolare, has ambitious growth plans and wants to win more than 300,000 customers in five years. The re-imaged and renamed bank will start out with the current seven branches of Banco Popolare and will launch a new technology platform in September. Equa Bank also plans additional services for business clients.

Whether these banking newcomers will lure a substantial number of customers away from the existing banks remains to be seen, but Potměšil said if nothing else, they'll level the playing field.

"They might also change the style of current big players," he said, "since they will have to face the competition from these new players."

Emily Thompson can be reached at
ethompson@praguepost.com