Investors sought for start-up bank in Ireland

Wanted — investors willing to pump €100m into a new European bank that picked Ireland as its first market. Strategic partners only, hedge funds, private equity and institutions need not apply.

American marketing expert Travis Ledwith and German banker Thomas Buemsen have been quietly making that unlikely-sounding pitch to telecoms and technology firms and other hand-picked investors for the last few months.

Now the duo are kicking off formal fundraising that they hope will allow them to cash in on Ireland’s newly-concentrated banking market, the turnaround from economic crisis, and the Dublin technology hub that will help them break new ground.

“Most of the clients had a negative experience with their existing bank,” said Mr Buemsen. “Danske Bank is leaving, ACC is leaving, they have huge losses. All the other banks that were state owned are still state owned… It [personal banking] is an area of banking which was neglected in the last couple of years.”

If their plans for Flip Bank succeed they’ll become the first new retail player in Ireland since Postbank’s shortlived venture in 2007 and the first to offer cutting-edge technology like an app that allows customers to scan and upload cheques instead of physically depositing them.

They want it to be a “lifestyle bank”, tailored to making your life easier, a concept similar to the one used by a Thai bank called K Bank. They hope the Irish operation will be open by 2015 and are already thinking further afield, with plans to replicate the model in Italy, Spain, and in Germany, where they want to take advantage of a large banking market they say is lacking in innovation.

Brand new banks have been few and far between across the developed world. Jason Quarry, head of Oliver Wyman UK, cites several barriers to entry — the lack of an existing brand, customer inertia over switching bank accounts, not having an existing balance sheet and cash flow, and the need to develop the complex operating platform needed to run a bank.

“However, you can turn each of those on their head and turn them into an advantage,” he said.

He said markets seeing light at the end of the tunnel after high defaults were particularly ripe for new entrants.

“There is a role for new niche players in the Irish banking market,” said Ciaran Callaghan, analyst at Merrion Stockbrokers.