Original text here from Patrice Bernard (LinkedIn)
While the official announcement cautiously mentions "the study of a project to cease operations," it's fairly obvious that La Banque Postale has decided to end its digital banking venture, Ma French Bank. The reasons cited highlight how a traditional institution can completely miss the mark in targeting its audience in such endeavors.
Following the trend of most financial institutions in France to create a completely online (or mobile) brand, Ma French Bank was launched in 2019. According to Agefi, it accumulated about 300 million euros in losses by the end of that year. This cost and the lack of medium-term profitability prospects are the main reasons for its planned closure, despite claims of "undeniable success with customers."
More broadly, the leaders believe that achieving economic balance would require continued high-level investment, which is incompatible with the company's strategy. The focus now is to strengthen the modernization of the traditional structure, which will be offered as an alternative to existing customers. This alternative seemingly promises, somewhat inconsistently, an advantageous combination of state-of-the-art digital tools and an extensive physical network.
The main flaw in this reasoning lies in the time frame considered. For a neo-bank, regardless of its origin, a five-year period is too short to hope for any visibility on its viability, which will only come after 10 to 15 years unless there's already a serious customer acquisition problem. Similarly, a budget of around 300 million over such a period does not seem excessive.
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However, the deeper issue lies elsewhere and was present from the project's inception. When La Banque Postale suggests that what its subsidiary lacks to strengthen its market position is a more comprehensive range of products and equipment options (which it also considers one of the best assets of its traditional model), it highlights its misunderstanding of competitive differentiation in today's financial industry.
Indeed, while a rich catalog is a long-term essential goal, initial attraction and the (mass) acquisition of early adopters must begin with an exceptional user experience. Of course, Ma French Bank's obvious obstacle, launching in 2019, was entering an already crowded field where it was not only difficult to stand out from well-established disruptors but also from major brands that had worked to catch up.
In this battle, it had a potentially formidable asset in its parent company's incubator, Platform58, which could have provided weapons inaccessible to "normal" startups for developing an original banking approach. Unfortunately, hesitations and operational delays did not allow this opportunity to materialize. In conclusion, Ma French Bank appears to be a tremendous waste... which seems indeed preferable to discontinue.
