Cake has a unique business model. In contrast to traditional banks, we do not get our income from Cake users but from Cake’s commercial partners.
Business model to support the mission
Our mission is to improve the financial well-being of consumers. On the one hand, we do this by helping consumers to have a better understanding of their finances and, on the other hand, by making bank accounts profitable again.
In this earlier interview, 2 of the Cake founders already explained how we got to this point.
In order to achieve our mission, we first carefully analysed the financial world and then decided that we were going to shake up the business model completely. We believe that things can be done differently. We decided to rewrite the rules.
Almost every financial player active on the market today generates its revenue from its customers. Banks charge interest, monthly fees for current accounts and trivial fees left and right.
The business model we have set up is built on top of the existing financial players. A new business model that supports our mission. A business model that only makes us money when it is profitable for our users and our customers. This way we align our interests with those of the Cake users and commercial partners.
If you want more information about this you can read the following article we recently published: Why we share our revenue with our users.
But what about those commercial partners? What exactly do they pay for? Which information do they receive in return? And how do you as a Cake user earn money from it?
We are happy to explain!
Insights and statistics
Let’s start from the beginning. When the transaction data of a Cake user comes to us (via the link with his or her bank), we remove all identity data and aggregate it with the anonymized transaction data of all Cake users. We have described this in detail earlier using an example and a video.
Cake’s commercial partners have access to a securely closed platform (the Cake for Business platform) where they can consult statistics and reports created from the anonymized transaction data of all Cake users together. We already have over 1.7 million transactions in our database for a total value of over 520 million euros.
To gain access to this platform, they pay a monthly fee to Cake. You can compare this with a subscription to Spotify or Netflix, but with more zeros. If they stop paying, their access to the platform ends.
All individual transaction data always stay on our servers and never go to the commercial partners.
They can view reports through the platform that cover all Cake users together. For example, below is a report in which we analyse the average spend of all Cake users at all food retailers in Belgium.
But it can also cover large subgroups of users. For example, a commercial partner can make a report based on all Cake users who make purchases from DIY stores, like in the report below.
A paying partner can set up all kinds of filters himself in order to come to the desired report. He can filter by type of purchases, regions, age of users and period of purchase.
When it comes to subgroups, it is important to know that we only show reports when there are enough users generating the data of the report. For example, if someone requested a report on all 40 year olds who made a purchase in a specific bookstore in a small village last week, we probably won’t be able to show that report because there are not enough users to keep those reports anonymous.
On the one hand this guarantees the privacy of the users, but on the other hand such a report is not worth much. Insights are only useful for companies to draw conclusions if they are based on a sufficiently large group of users. If not, they can simply be attributed to coincidence. Only when there are enough users a pattern can be seen and that is ultimately what interests brands and retailers.
Because your anonymised transaction data in some cases is processed in those reports, we think it is only fair to compensate you for this. Your piece of the cake, so to speak. We do this by distributing half of all income we receive thanks to the sale of insights to all active Cake users on a monthly basis. Fair is fair! 🙌
In addition to examining their market, a commercial partner can also set up cashback offers for users of the Cake app. These are processed immediately when something is purchased from them and paid for with a bank account linked to Cake. This allows them to launch fun campaigns via Cake to introduce new customers to their brand or stores and to reward loyal customers extra, at a next payment or simply with each purchase.
For example, the healthy food retailer Foodmaker gives a cashback of 10% on the purchase amount of the first purchase.
But commercial partners can also decide to reward loyal customers by giving them a cashback for every purchase. For example, AVA gives all Cake users a 1% cashback on the purchase amount each time they purchase something in the store or the webshop.
These campaigns can be set up entirely by the commercial partners themselves via the Cake for Business platform.
Since campaigns can be targeted specifically to groups of Cake users, based on their anonymized transaction history, the offers in the app will be different for each Cake user. Depending on whether or not you fit into the target group of the commercial partner.
But who are these commercial partners? Who do we work with?
You will see some of the commercial partners appear in the app when they set up campaigns for which you are a potential customer. You may already have seen that Foodmaker, AVA, Lukoil, Eneco, Bolt Energie, Lensonline and Cheaptickets are partners of ours.
But if a partner doesn’t set up campaigns and only purchases insights and reports from us, then as a user you won’t see that in the app.
Commercial partners ensure that the app remains free and that you can even earn something. By responding to the offers and also by just using the app. That’s why it’s very important that we have enough partners.
Our business development team, led by Tom, takes care of this.
Of course, they don’t just accept all customers. We explicitly exclude partners that are active in the following sectors: gambling industry (betting offices), casinos, lotteries, porn and sex industry, weapon industry and drugs. And we strictly adhere to that. This is also stated in the book of procedures that is part of our license from the National Bank of Belgium. But even outside the categories that we explicitly exclude, we remain critical about which partners we work with.
If the collaboration with a partner stops, he no longer has access to the platform and can no longer set up campaigns or generate reports.
It is not only our commercial partners who find the insights they can get from the Cake transaction data interesting. The press is also discovering increasingly what Cake has to offer. Because the transaction data is collected in real time and is based on real behavior and not on what people say they have bought (for example in an online survey) they are very valuable to see certain trends.
The past few weeks, for example, there have been many questions from the press about the effects of the corona crisis on Belgian buying behaviour.
However, journalists do not get access to our platform. We build these reports ourselves where necessary, and try to help them identify and understand trends correctly. The press does not pay for this at the moment.
This is an example of one of those charts we recently delivered to the press:
This chart shows which spending categories have declined (left, the losers) and increased (right, the winners) since the start of the Corona crisis. The size of the circles reflects the relative size of the category: the larger the circle, the more money was spent in that category. For example, we see that 40% more was spent on food (Groceries) than before the crisis, and that in total the most money was spent in that category. In addition, we see that spending on fuel (Gas and Fuel) is much lower than before the crisis (a decrease of about 55%) and that total spending in that category is also relatively small.
Want to see more analyses on the effects of corona on spending behaviour? Make sure to read this blog post.
But also trade organizations like Gondola and Comeos like to make use of the Cake analyses. Such as this analysis that Gondola made based on Cake figures to measure the effect of the reopening of the do it yourself stores.
The more Cake users there are, the more diverse transactions we can analyze and the more valuable and reliable the information in the reports will be.
And that makes Cake attractive to new commercial partners. They provide new cashback offers and new revenue through the insights we redistribute across the Cake users.
And so our unique business model keeps moving and creating added value for everyone!
🚀 Did you know Cake was awarded Belgian Startup company of the Year? 🥳
Read all about it in this article.