TechCrunch » Mobile: Russian Mobile-First Banking Startup, RocketBank, Banks $2M From Runa Capital

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thumbnail Russian Mobile-First Banking Startup, RocketBank, Banks $2M From Runa Capital
Oct 2nd 2013, 13:14, by Natasha Lomas

RocketBank

Another startup seeking to shake up the banking market with a convenient, mobile-first approach has bagged $2 million in seed funding from Runa Capital. Russia’s RocketBank launched its service in July 2012 and has since accrued “a few thousand” users. Its iOS app includes the ability to pay a person without having to know their bank details — instead, users can pick who they want to pay from their phone address book or enter an email address or e-wallet number.

RocketBank is not a bank itself, rather it’s a mobile app with banking abilities — much like an MVNO is not a mobile network operator but can still offer cellular services by piggybacking on carriers’ networks (h/t to my TC colleague Steve O’Hear for that analogy). RocketBank is currently partnering with Intercommerz Bank in Russia to power transactions and store customer accounts. Its users get a platinum Visa debit card and its iPhone app to do all their personal banking.

Services RocketBank currently offers its users include free card loading and cash withdrawal at any ATM worldwide, money transfers, expenditure analysis, a discount guide, application support, and an air miles program (users making card purchases with RocketBank’s card get 1.5% of the value of purchases in air miles). It charges users a fixed monthly fee of 290 rubles (approx. $9) for the service.

Notably the business model does away with the variable complexities of standard banking costs and expenses — such as transfer fee charges — and replaces them with this “light banking” model (aka the fixed $9 fee), a pricing structure that may not be free but is at least transparent.

What RocketBank users do not get (apart from free accounts) are branded bank branches that they can go into to talk to RocketBank staff face-to-face — making the app-based service more likely to appeal to a younger demographic.  ”Great design and latest technology are the most convenient way to interact with our target audience,” said Victor Lysenko, CEO of Rocketbank, in a statement.

RocketBank — and other startups in this mobile-first banking space — have spotted an opportunity to do something traditional banks are typically failing to do fast enough: build slick mobile-focused banking services.  By pushing faster to develop banking apps and mobile services that app-loving consumers crave, they have a chance to steal a march on banking giants and build customer momentum, especially in markets where traditional banks are still fiddling around mobile’s edges.

RocketBank says it’s banking (pun intended) on the viral appeal of its mobile address book money transfers to help spread word of its app from user to user “when outreaching to the European markets”. Fuelled by its new funding round, it’s planning to enter several new markets next year, and spend on further developing the functionality of its app — moves it’s hoping will enable it to bump its user-base up to the ”tens of thousands” in 2014.

Other (European) mobile-first banking startups that spring to mind include Avuba, which pitched at TC’s Berlin meet-up earlier this year, and  Centralway-backed Numbrs. The ambitions of the latter appear the broadest of the three, with the stated aim of ultimately enabling users to manage data and conduct transactions across multiple bank accounts, rather than just manage one account.

RocketBank specifically likens its approach to banking startups in other markets, including Simple.com (U.S.), moven.com (U.S.), FidorBank.de (Germany), and holvi.com (Finland).

Prior to today’s seed round, RocketBank’s first VC investment, founders Victor Lysenko and Oleg Kozyrev (who were both among the founding team of Groupon Russia), put in $200,000 to get the idea off the ground.

The pair came up with the idea for RocketBank after Lysenko’s bank card was blocked during a trip to the U.S. and he was unable to reactivate it because it was a national holiday in Russia. That led them to research the Russian financial services market and unearth a distinct lack of “quality online and mobile banking services” — providing the business opportunity for RocketBank to step in.

Commenting on the funding round in a statement, Ilya Zubarev, senior partner, said: ”Runa Capital invests in technology projects that can compete in global markets. Rocketbank is exactly such a company with a strong team, innovative approach to banking, and its own philosophy of service. We are confident that Rocketbank has the potential to gain recognition among millions of clients around the world.”


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