European neobank Bunq BV is expanding into the United States with the formal filing for a banking license with the Federal Deposit Insurance Corporation (FDIC) in the state of New York, the company announced on Tuesday.

Bunq Seeks US Expansion

Established in 2012, Bunq is headquartered in The Netherlands and operates across Europe with a banking license obtained from the home country. It recently became a profitable company by turning a gain of 2.3 million euros ($2.50 million) in the fourth quarter of 2022.

According to the official announcement, the neobank will target 5 million European expatriates and businesses in the United States. It has chosen the potential customer base because of the banking difficulties the group is facing in the US.

"Speaking from personal experience, getting a bank account in the US as a European citizen is a headache," said Ali Niknam, the Canadian-Dutch Founder and CEO at Bunq.

"Throughout bunq's history, we've always focused on making life easy for digital nomads in Europe. We can't wait to bring our user-centered philosophy stateside, giving a community of location-independent people an effortless way to bank on the go."

A Growing Number of Depositors

According to the official numbers, Bunq has deposits of around 2.3 billion euros as of 14 March, 27 percent higher than the end of 2022. The deposit increase is continuous, as the figure jumped by 64 percent in 2022. The platform's net fee income increased by 37 percent between September and December 2022.

Bunq operates a 'freemium' platform. Its essential services are free, but users must pay between 3 to 18 euros a month to access advanced features. In addition, it is offering an interest of 1.56 percent to the Dutch depositors, more than the country's three top established lenders.

A Challenging Time in Banking

The digital bank is entering the US market at a time when the country witnessed the collapse of three banking institutions in a span of four days. Silvegate Bank went into voluntary liquidation, while the other two, Silicon Valley Bank and Signature Bank, went under FIDC receivership and were then bailed out.

"When things are bad, that's the best time for us," Niknam added. "That's when people reconsider their choices, which is precisely the moment we need to get a foot in the door."

Moreover, the Dutch neobank is writing mortgage loans. However, most of its reserves are stored at the European Central Bank's deposit facility, which, according to Niknam, assures depositors.

Bunq, which raised $228 million in 2021 at a $1.9 billion valuation, is one of the many European neobanks that is growing aggressively. It is competing with big names like UK's Revolut and Germany's N26, which are also seeking expansion.

Furthermore, Revolut, at a valuation of $33 billion, is seeking a US banking license, while N26 ended its US ambitions in 2021.

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