Poland, an Unexpected Fintech Leader in Europe

polish neo banks

Over the past decade, Poland’s banks have consistently been at the head of the pack in Europe in terms of digitalization. Poles are thirsty for innovation and the country can be held up as an example to Western Europe

Poland is a fast-growing market with a very innovative approach towards new solutions and technologies, that’s why the country, once part of the Soviet Union, is today one of Europe's leaders in digital banking.

According to data, retail banking in Poland is chasing the European average in terms of the percentage of people with bank accounts, but the country is at the forefront in mobile solutions and contactless payments.

How was that possible? How has this country witnessed the boom of digital banking? What has happened since the fall of the wall? Let’s start from the beginning.

The Polish retail banking sector is very young. Its evolution following the transformation towards the free market economy in 1989 is unbelievable. In the early 90’s, Poland only had two banks with 400 branches between them. After the fall of communism, the era of capitalism began. Due to the open market, the previously barren field has grown by 70 new banks, which started intensive efforts to attract customers. In the last 20 years, foreign capital was flowing in and the biggest global banks brought their know-how and technology. But the Polish are moving forward. Traditional banking is evolving.

Today few countries can lay claim to having a banking system more intent on pushing the boundaries of technology further into the unknown than Poland. Boasting such a huge digitized network, with millions of its citizens regularly logging on to online and mobile banking channels, Poland’s banking system is renowned for its forward-thinking approach as well as its willingness to adopt and even introduce some of the most highly sought-after digital financial solutions. 

Smart solutions for Smart Banks

In the country, almost every bank has a mobile app and mobile banking adoption is almost 15% (at mBank, the biggest Polish neobank, it’s over 30%). Data has shown how Poland is the most advanced European country regarding NFC card payments, moreover, there are also lots of mobile payments initiatives - the most important countrywide mobile payment standard (BLIK) set up by a joint venture initiative between the six biggest polish banks.  What is really interesting is that Polish banking has never slowed down.  Nor in the pandemic year, nor the 2008 financial crisis. Continuous economic growth caused an increase in demand for new banking products and services. The banks have gladly responded and continue to respond to this demand, creating constantly new solutions and modern payment methods for their clients.

The result was the astonishing development of other branches of the economy too. For example, Poland is leading European charts in terms of online shopping, contactless payments, and distance to cash payments, while the level of financial inclusion in Poland is growing year on year. Every fourth Pole pays for his purchases in the same way every day, which is a number three times higher than the European average and 20 times higher in comparison to contactless transactions made in Germany, data said.

Neobanks? They Are Not so New in Poland!

And now, mobile banking applications are unlikely to replace the still popular debit and credit cards. In this sector, PKO Bank Polski and ING Bank Slaski established market leadership with their mobile apps. PKO Bank Polski, for example, which has more than 9 million consumer and business customers, launched its own mobile in 2017.  The new app called IKO, is the most popular mobile banking application in Poland. In February 2019, For the second year in a row, the IKO PKO Bank Polski application was named the best mobile application in banking in the world by the annual "Mobile Banking Apps" report. The Polish bank outperformed such giants of the banking industry as JP Morgan Chase, Barclays or Bank of America.

Last year, based on feedback from more than 140,000 users, IKO ranked No. 1 in Google Play, Apple App Store, and Windows Phone Store, with ratings at about 4.7 out of 5. In 2018, Retail Banker International, a global editorially independent retail banking briefing service, evaluated 100 applications from banks all over the world and selected IKO as the best mobile banking application.

PwC's report "Financial Sector increasingly fintech" clearly shows that the “use of banking mobile applications in Poland (over 61% of phone owners have it) is growing significantly above the European average (40% of phone owners)”.

What’s Next in Polish Fintech?

Katarzyna Prus-Malinowska, head of electronic banking at Bank Zachodni WBK, underlined to the media how “Over the last few years the Polish retail banking market has experienced an upswing in the area of products available online and via mobile devices”. It means that “the current Polish market is characterized by a positive attitude on the part of banks towards fintech companies, and a mutual desire to collaborate”. Several banks already cooperate with fintechs in various ways, ranging from cooperation contracts with providers of technological solutions to innovation labs, direct investment, or acceleration programmes. The largest Polish bank, PKO BP, runs an acceleration program called “Let’s Fintech with PKO BP”.

Another large bank, Pekao, runs an innovation lab in which new solutions in the area of biometrics and artificial intelligence, are being developed and tested by fintechs and start-ups. Pekao also organised a series of hackathons where young people receive assistance from mentors in developing software solutions, reports said.

As we mentioned before, Poles are now thirsty for innovation. The majority of Polish banks compare favourably to their European counterparts in terms of their use of cutting-edge digital solutions. In particular: their card, online, and mobile payment technology is very advanced, and can be held up as an example to Western European countries.