Export product Five Degrees is expanding ”The new bank is a financial supermarket”

In a highly competitive and innovative Dutch FinTech scene, Five Degrees stands out as a young IT organisation that is getting the better of major international players, not only in but also − and increasingly often − outside the Netherlands. A state-of-the-art application for the banking sector, a challenging Dutch market and a clear vision on the future of banking make Five Degrees an exceptional Dutch export product.
The company assists banks to take on the challenges of a changing world. Their state-of-the-art platform offers ambitious banks the opportunity to offer their clients an innovative digital experience. No other market is so competitive as the Dutch FinTech market. No wonder that Five Degrees is in demand beyond the Netherlands.
Figures produced by Eurostat show that the Netherlands ranks third in the world in terms of the adoption of online banking. With an adoption rate of 85 percent, the country is only surpassed by Norway (90 percent) and Finland (86 percent). Big Dutch banks are often dismissed as conservative and old-fashioned, yet from an international perspective this is not justified. Dutch banks are in fact very progressive. “The Netherlands is the breeding ground for new ways of banking”, according to Martijn Hohmann, CEO of Five Degrees. “It is an ideal place to be active as a vendor to banks. Here in the Netherlands we are ahead of the game because we are challenged to get the best out of ourselves all the time.”

Not a single Dutch bank shuts itself off from innovation. That is simply not an option if they want to meet the demands of their customers. Solid FinTech solutions will assist banks to adapt and change the way they operate. “You can’t be fully digital when you work with an IT platform from an era when internet did not yet exist”, says Hohmann, who at the same time observes that banks in other countries do not yet feel the same urgency as Dutch banks. “They are however on the threshold of these developments.”

International expansion

Banks feel the need to become ‘future proof’. To do so they are looking for the right expertise and guidance. Hohmann’s Five Degrees was established in Breukelen in 2011 and has since supported 12 banks to optimise their digital offering. The company is the undisputed leader in the area of digital banking software. This is an exceptional feat in a world where the big international players are active and, moreover, where references play a key role.

One of the best-known achievements by Five Degrees is the establishment of Knab Bank, a new bank completely set up with the aid of the Five Degrees solution known as Matrix. Rather than just helping new banks, the company offers the most value to existing, medium- sized banks. Many argue that these ‘old’ banks are doomed, but at Five Degrees they think this is nonsense. Banks such as Van Lanschot, Aruba Bank and Leaseplan Bank have reinvented themselves as banks of the future with the support of the Five Degrees team.

The company also started to support banks outside the Netherlands. This is hardly surprising given its success stories have not remained unnoticed. Today, Five Degrees already is an established name and finds itself on the eve of a major international breakthrough. “This year we have our first go-live in the UK and expect at least two new clients in this market coming in 2017. Apart from this, we will expand into other European countries in the near future”, says Peter-Jan van de Venn, the company’s Chief Commercial Officer. Given its new clients and those still to come, Five Degrees needs to expand its staff. At present the company has a workforce of 120, working from three locations, but next year this is expected to rise to at least 160.

Marketplace banking

Five Degrees believes that the role of banks will change. Hohmann speaks of ‘marketplace banking’: in his opinion the bank of the future will act as a go-between and as an ‘orchestrating hub’ for all kinds of financial services. Each of these can be coupled or decoupled easily. “To accommodate this banks need to transform into something like an app store. With our core platform our clients can add third-party apps to effortlessly expand their service offering and hence adapt to the ever changing needs of both their existing customer base and new audiences”, says Hohmann. “Our system Matrix acts as the foundation and provides a real-time, basic banking framework that can be configured as time progresses and situations change.” Hohmann predicts that banks will morph into financial supermarkets. “They will serve as data custodians, with big responsibilities associated with security and privacy. On product level they will focus on shelf and channel management.”

Better and Faster

Last month, Five Degrees had the pleasure of welcoming a new investor, Karmijn Kapitaal (see insert). With this new shareholder, Five Degrees will be able to gear up and invest in both product development and market expansion. “We aim to offer a platform that can bring a banking proposition to market in as little as a fortnight. That’s the dream. We can now build a bank from scratch in six to nine months, but this period can be shortened significantly”, states Hohmann. And what does he expect will change for the Five Degrees team? “It will be easier for us to attract top talents who used to want to work only for corporates. We’ll continue to grow, especially abroad. We will, because banks all over the world face the same problem.”

Karmijn Kapitaal invests in Five Degrees

“Karmijn Kapitaal invests substantially in FinTech company Five Degrees”, the two companies announced last month. The FinTech company provides software and other IT solutions to banks like Knab and Van Lanschot. It will use the investment to realise its goals in international growth and product development. Martijn Hohmann, CEO of Five Degrees, comments: “The funding will give us the room to invest in our international ambitions. We see the United Kingdom as an important growth market and have appointed a dedicated business development team locally already. We want our business partners to be able to implement our software even faster than today.”