🇮🇸 Indó is challenging the Icelandic banking sector

Haukur Skúlason doesn’t come across as the stereotypical CEO of a bank. In lieu of a business suit, he is wearing flip flops, a colorful t-shirt and a knitted sweater that barely covers up his tattooed arms. Indó’s office is a small, two room space above an appliance store, fittingly located up the road from Iceland’s financial district Borgartún.

There are not many startup banks out there and when Skúlason started pitching his idea of founding a challenger bank to take on the big three that dominate the Icelandic banking sector, investors were, perhaps predictably, skeptical. 

“People thought we were mad and we were told that we had no idea how expensive this was going to be and that the banks were too big to take on and that they would never allow the competition, etc.” says Skúlason. “We then found an investor who believed this was something that needed to happen, and if we wouldn’t do it, then someone else might just pull it off.” 

Skúlason spent a decade working in the banking industry and it was his intimate knowledge of its inner workings and a dislike of the culture, the fees and large overhead that inspired him and his partner Tryggvi Björn Davíðsson to found Indó.

“We don’t want to be a bank that just charges its customers slightly less, we want to change the banking culture completely,” says Skúlason. “And we want to force the industry to change, to provide similar rates to ours and for their customers to benefit.” 

The bank doesn’t charge any transaction fees, nor any monthly or yearly fees on debit cards. 

It seems reasonable to assume that people would be reluctant to move their account. But Skúlason says this myth that he believes has been soundly debunked. “There is this cliche that people are more likely to get divorced than to change their bank, but we have proven that this is not the case.” 

Indó opened its doors to customers by the end of January and in that short time has acquired over 32 thousand accounts for Icelandic households, an impressive feat in a country of less than 400 thousand. 

“The Central Bank releases data on the number of debit cards and according to those numbers our market share is around 12 to 15 percent of the total , which is growth that is hitherto unrivaled,” says Skúlason.

Currently, Indó doesn’t offer any kind of loans, but the aim is to roll out the first of many lending services already this winter. 

Few countries were hit by the 2008 financial crisis as hard as Iceland, with the entire banking sector going bust and requiring a government bailout. Gallup polls have shown a deep distrust of the industry persists among the population, with only 20% answering that they trusted the industry.

Earlier this year, one of Iceland’s three biggest banks Íslandsbanki was embroiled in a serious privatization scandal that led to a host of resignations among its executives and a 1.2 billion ISK fine (9 million USD) from the Financial Supervisory Authority. Unhappy customers might choose to stop doing business with a bank found guilty of financial violations and Indó might establish itself as an alternative. 

The way Indó manages to cut out fees is by lowering what Skúlason sees as unnecessary overhead. He claims that it used to be the case that banks believed it was important to own centrally located, grand headquarters to show that they were a stable and trustworthy company, but for a new tech savvy generation this is no longer the case.

“This idea probably made sense in the 1920s, but this is not the case anymore. I think this mentality is simply tacky and I’ve not met a single person who thinks that the new downtown headquarters of Landsbankinn is a good idea, people just tell me this is crazy. People are paying higher interest rates on their loans so a bank can build a luxurious building by the ocean.”

As a new startup Indó is looking to grow and is open to new investors, as long as they want to be a part of the culture the bank wants to foster. 

“This is not about excessive profit taking, this is about change, we want away with all these ridiculous fees,” says Skúlason. “We are very picky about our investors and they need to buy into the concept.”

Changing the culture of the world’s most all encompassing industry might seem like an impossible task, but startups are about disrupting systems and Indó has already put the flip flops on and taken its first steps towards a new way to do business.