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mBank: Poland's Digital Banking Pioneer
How a Communist-Era Export Financier Became Europe's Most Admired Digital Bank
I. Introduction & Episode Roadmap
Picture this: November 25, 2000. It's late evening in Warsaw, and a small team of bankers at BRE Bank sits nervously watching their monitors. At the stroke of midnight, they're about to launch something unprecedented in Poland—a bank without branches, existing purely in the ether of dial-up internet connections. When mBank went live on November 26, Poland's internet penetration stood at a meager 5-6% of households. The conventional wisdom in banking said you couldn't build a serious retail franchise without bricks and mortar. The team at BRE Bank disagreed.
Twenty-five years later, in 2024, mBank S.A. achieved the position of 6th largest bank in Poland with a market share of 7.32%. Founded in 1986 as Bank Rozwoju Eksportu, the group has evolved into Poland's fifth-largest universal banking entity by total assets, loans, and deposits as of June 30, 2025, reporting consolidated total assets of PLN 256.2 billion. It serves 5.8 million retail clients and 37,000 corporate clients, leveraging a digital-first approach that includes 4.0 million active mobile banking app users as of mid-2025.
The central question of this story deserves careful consideration: How did Poland's first internet bank—born as a side project of an export financing institution during the dying days of communism—survive foreign currency crises, foreign ownership uncertainty, and waves of fintech disruption to become one of Europe's most admired digital banks?
The answer lies in understanding four critical inflection points: the original bet on digital when others couldn't see it; the German capital that turbocharged expansion; the Swiss franc mortgage disaster that nearly destroyed everything; and the ongoing struggle for strategic independence under Commerzbank's shadow.
This story spans Communist-era origins, a digital revolution that preceded the smartphone age, the catastrophic Swiss franc mortgage crisis that's cost the bank nearly PLN 18 billion in provisions, and an uncertain future hinging on whether UniCredit swallows Commerzbank. Along the way, we'll examine what mBank's journey reveals about the nature of digital transformation in banking, the perils of foreign currency lending, and how to navigate existential crises while never losing sight of innovation.
II. Communist-Era Origins & Post-Soviet Transformation
December 1986. Poland remains firmly behind the Iron Curtain, yet the cracks are widening. Solidarity, the independent trade union that would help end communism, had been suppressed but not destroyed. The economy staggers under the weight of foreign debt and inefficiency. Into this improbable environment, a peculiar institution emerges.
BRE Bank was established in December 1986 as Bank Rozwoju Eksportu S.A. (BRE Bank), a state-owned specialized financial institution aimed at supporting the development of Polish exports during the late communist era. The bank's founding responded to Poland's need for dedicated export financing mechanisms, including credits, guarantees, and documentary operations, to facilitate international trade amid economic challenges under the Polish People's Republic.
Why create a specialized export bank in 1986? The Polish authorities recognized a fundamental problem: despite having industrial capacity, Polish enterprises struggled to compete in Western markets partly because they lacked sophisticated export financing. Western companies could offer better payment terms to buyers; Polish firms couldn't. BRE Bank was meant to close that gap.
The bank was founded in 1986 as Bank Rozwoju Eksportu (Export Development Bank), a joint-stock company. This corporate structure—unusual for a state enterprise—would prove prescient. When the communist system collapsed just three years later, BRE Bank's joint-stock form made it easier to privatize.
The transformation came swiftly. Three years later BRE Bank was granted credit lines from the World Bank and IFC and became a member of SWIFT. These international connections signaled credibility and opened access to global capital markets—crucial for an institution that would soon need to compete in an entirely new economic reality.
Poland's shock therapy reforms under Finance Minister Leszek Balcerowicz in January 1990 transformed the economic landscape overnight. State enterprises found themselves competing in market conditions. Banks that had operated as quasi-governmental fund allocators suddenly needed to price risk and attract deposits competitively. In 1990, BRE Bank was privatised through public offering. This made BRE one of the first Polish banks to undergo privatization, positioning it for the capital market access that would later prove critical.
The BRE Group set up its first subsidiaries: Biuro Maklerskie BRE Brokers (now mBank Dom Maklerski) and BRE Services (now mLeasing). The diversification into brokerage and leasing services reflected management's understanding that the new Polish economy would need a range of financial services beyond traditional banking.
Since 1992, it has been listed on the Warsaw Stock Exchange. The public listing disciplined management, provided a currency for acquisitions, and gave the bank a profile that attracted international partners—including, crucially, German ones.
The early 1990s proved formative. BRE Bank developed expertise in trade finance, capital markets, and corporate banking. But it remained a niche player, serving businesses rather than ordinary Poles. That would soon change, thanks to an audacious bet and a strategic partner with deep pockets.
III. The Commerzbank Partnership: German Capital Meets Polish Ambition
The strategic partnership that would define mBank's trajectory for the next three decades began almost casually. In 1994, it signed an agreement on strategic partnership with Commerzbank. Germany's second-largest private bank saw Poland as the crown jewel of Central and Eastern Europe—a market of 38 million people, geographically proximate, with deep historical ties to Germany and enormous growth potential.
For Commerzbank, the logic was straightforward. Western European banking markets were mature and fiercely competitive. Margins compressed relentlessly. Poland offered higher returns, faster growth, and the opportunity to build something substantial before domestic competitors could react.
For BRE Bank, Commerzbank offered something equally valuable: access to capital, international expertise, and credibility with Western investors and counterparties. A Polish bank with a German strategic partner could punch above its weight in deals and gain technical capabilities that would take years to develop independently.
With the majority takeover of Poland's BRE Bank (today's mBank) in 2003, Commerzbank significantly expanded its regional engagement. The acquisition represented a decisive escalation of Commerzbank's commitment.
By September 2003, Commerzbank increased its stake to over 50% of BRE Bank's share capital and voting rights, consolidating control and integrating the Polish entity into its Central and Eastern European operations. This shift enabled access to Commerzbank's resources for technological and operational enhancements, while BRE Bank retained its listing on the Warsaw Stock Exchange.
This arrangement—majority control with continued public listing—proved important. BRE Bank gained access to parent company resources while maintaining the transparency and market discipline that comes with public reporting. Polish regulators and politicians could see what was happening inside the bank. International portfolio investors could participate in Poland's banking growth story.
Commerzbank's ownership stabilized at approximately 69% by 2010 and has remained the dominant holding since, with the German parent providing strategic oversight amid Poland's banking sector liberalization.
The partnership produced mixed results. On the positive side, BRE Bank gained access to funding lines, technology platforms, and risk management frameworks that enhanced its capabilities. Commerzbank's imprimatur opened doors with multinational corporates operating in Poland.
Yet tension existed beneath the surface. German oversight sometimes clashed with Polish entrepreneurial instincts. A management team eager to move quickly found itself explaining decisions to Frankfurt. The cultural gap between methodical German corporate governance and scrappy Polish startup energy created friction.
One particularly consequential area of German involvement: funding for foreign currency mortgage loans. mBank received about 7 billion CHF in short-term loans from its parent company Commerzbank to finance its foreign currency mortgage loans. Initially – in 2006 and 2007 – the loans from Commerzbank were granted with a very low interest margin of 0.15%. However, the margin was increased to approximately 2.0% when they had to be renewed. This funding arrangement would later become the source of enormous problems—but in the mid-2000s, it seemed like a competitive advantage enabling mBank to offer attractive mortgage rates to Polish homebuyers.
IV. The mBank Revolution: Building Europe's First Internet Bank
The year 2000 changed everything. While the dot-com bubble inflated and burst in the West, BRE Bank's management saw something different: an opportunity to reinvent retail banking from first principles.
In 2000, BRE bank started operations in the retail banking segment, launching mBank, the first Internet bank in Poland. In 2001 it launched its second retail arm, MultiBank.
In November 2000, BRE Bank S.A. launched the mBank brand to enter Poland's retail banking market, introducing the country's first fully internet-based bank that operated without physical branches. The service debuted on the evening of November 25–26, targeting individual clients and small enterprises with online-only access to accounts, transfers, and loans via a web platform.
This model leveraged emerging internet penetration in Poland, estimated at around 5–6% of households in 2000, to offer lower fees and 24/7 availability compared to traditional banks reliant on branch networks. mBank's launch emphasized simplicity and innovation, with core features including instant account opening online, no minimum balance requirements, and integration of payment services like direct debits, appealing to tech-savvy users amid Poland's post-communist economic liberalization.
The bet was audacious. In a country where internet access remained rare and expensive, where most Poles had never made an online purchase, BRE Bank was asking customers to trust their money to a website. The skeptics were legion.
Yet the team understood something crucial: Poland's banking market in 2000 remained appallingly customer-hostile. In 2000, management at BRE Bank SA (mBank Group before consolidation and rebranding) looked around and saw how poor the typical banking experience was worldwide. In Poland, banking customers had no choice but to wait in long lines for services. The management team embraced digital to create both significantly more satisfying customer experience and more efficient operations.
Anyone who visited a Polish bank branch in the late 1990s can testify to the experience: surly tellers, endless paperwork, incomprehensible fees, restricted hours. mBank offered the opposite: available 24/7, transparent pricing, no lines, no paperwork beyond what regulations required.
The branchless model wasn't just about customer experience—it was a fundamentally different economic equation. Being an online banking pioneer also has had an impact on our business. mBank is one of the most cost-efficient banks in Poland. With a cost-to-income ratio that equals circa 38 percent (as of third-quarter 2019), we are an example to follow. This was due to our unique business model—from the very beginning based on internet processes and limited physical expansion.
In 2000, under the BRE Bank umbrella, mBank launched as Poland's first fully online retail bank, offering branchless services accessible solely via internet or phone, which marked a pioneering shift toward digital banking in the region and rapidly attracted over 18,000 customers in its initial months.
By 2001, management added MultiBank, a second retail brand targeting more affluent customers who wanted a blend of digital access and occasional in-person service. The two-brand strategy allowed BRE to segment the market while leveraging shared infrastructure.
mBank, founded in 2000 as a pure-play Internet bank, has grown almost entirely organically to become the fourth largest retail bank in Poland and one of the most admired consumer brands. mBank's Internet Banking service and branches are consistently placed among the best in Poland and worldwide.
The organic growth story deserves emphasis. mBank is a story of success. We have managed to become Poland's fourth-largest bank without a single acquisition. I believe this organic growth has been possible because of the specific culture this organisation has. Very vibrant, full of new ideas, ready for collaboration, still searching for new opportunities.
International expansion followed. In 2007 it started its retail operations in the Czech Republic and Slovakia. The proven model could be replicated in neighboring markets with similar characteristics: growing economies, underserved banking customers, and rising internet penetration.
The period from 2000 to 2007 represented mBank's golden era of growth. Customer acquisition proceeded relentlessly. Market share expanded. The core business model proved robust. But storm clouds were gathering. The very success that drove growth—particularly in mortgage lending—contained the seeds of a crisis that would consume the bank for more than a decade.
V. The Swiss Franc Mortgage Crisis: mBank's Existential Threat
No discussion of mBank can avoid the Swiss franc mortgage catastrophe. It represents one of the most consequential risk management failures in European banking history, and mBank sat squarely in the crosshairs.
mBank is one of the top three Polish banks that have been granting foreign currency mortgage loans. Between 2002 and 2014 mBank granted more than 70,000 such loans. A great majority of them are Swiss Franc linked.
The appeal of Swiss franc mortgages to Polish borrowers was straightforward: dramatically lower interest rates. In 2008, for example, the annual interest rate in Zlotys was around 8.7%, compared to the one in Swiss francs 4.4%. For a family stretching to afford a home, that difference translated to meaningfully lower monthly payments.
mBank marketed Swiss Franc linked loans as much cheaper to their local equivalents. Indeed, the LIBOR rate was lower than the Polish WIBOR rate. However, when adjusted for foreign exchange effect, the cost of these loans, and especially the amount of the debt, become excessive.
The banks—including mBank—did warn customers about foreign exchange risk. But the overall belief back then was that the Polish economy could only go up faster than the old economies like Switzerland. These banks warned consumers about the risk, but the risk was perceived as very low, and chances seemed higher that people would make a profit than that it would lead to a loss.
Bear in mind that for example, mBank had 51.6% of its mortgages in Swiss-denominated loans. The concentration was staggering.
The first shock came in 2008. As a consequence of the 2008 financial crisis, Swiss Franc has significantly strengthened to Polish zloty. In case of some loans granted by mBank in 2008, their value increased twofolds.
But the truly devastating blow arrived on January 15, 2015. Switzerland announced scrapping its currency peg with euro of 1.20 to the euro. The Swiss franc jumps 20%. Polish Zloty to Swiss franc jumps from 3.5 to 5 Zloty overnight. Since the collapse of Lehman Brothers, the impact was even bigger when Zloty stood at 2.18.
Polish families woke up to find their mortgage balances had exploded. Someone who borrowed 300,000 zloty equivalent in 2007 might now owe 500,000 or more—while their home's value hadn't changed. The mathematics became impossible. People who had made every payment on time were suddenly deeply underwater on their mortgages.
The funding arrangement with Commerzbank compounded mBank's problems. Since many of the early loans granted by mBank to its customers had a margin of around 1.0%, these loans have become margin negative (i.e. unprofitable) for mBank.
For a number of years mBank was able to manage this loan unprofitability by charging debtors installment fees, so-called "spreads". These spreads were used by mBank to compensate low interest rates. However, in July 2011, the Polish banking law was amended to eliminate such additional payments.
For the most affected banks – Millennium, mBank and Getin Noble – their foreign currency loan portfolios are larger than their tier one capital.
The litigation wave began slowly but accelerated relentlessly. European and Polish courts increasingly sided with consumers. By the end of Q3 2024, Polish banks had reported a staggering 120,500 active lawsuits – an increase of over 14,000 cases compared to the end of 2023. Polish common courts ruled in favour of consumers in approximately 97% of verdicts.
The verdict in Poland was "contract invalidation", as if the mortgage transaction had never happened. In result borrowers are being refunded with all the payments they made to banks and banks should get the initial value of loan principal. Very often the net result leaves the borrower with property and decent amount of cash from the bank.
The financial toll on mBank has been staggering. mBank reported a third-quarter 2022 net loss after booking a 2.3 billion zloty legal provision.
Total provisions for legal risk related to foreign currency loans stood at PLN 4,930 million as of June 2025, providing a CHF coverage ratio of 167%. The bank booked PLN 544 million in FX-related legal risk provisions in Q2 2025, bringing the cumulative value of all such provisions since Q1 2018 to PLN 17.7 billion.
That figure—PLN 17.7 billion, approximately €4 billion—represents one of the most expensive risk management failures in European banking. It consumed years of profits and delayed dividend payments. It forced management to focus on crisis management rather than growth. It created uncertainty that depressed the stock price and complicated strategic planning.
VI. Brand Unification & the Digital Transformation Era
Even as the Swiss franc crisis unfolded, mBank's management refused to abandon innovation. The 2013 rebranding represented both a fresh start and a doubling-down on digital identity.
In 2013, MultiBank, BRE Bank and mBank were replaced by the single mBank brand.
In November 2013, BRE Bank S.A. rebranded to mBank S.A., emphasizing its digital-first identity and aligning corporate structure with the mBank retail brand launched in 2000. Concurrently, mBank rolled out "new mBank," a comprehensive digital platform overhaul introducing over 200 features, including enhanced mobile capabilities and user-centric interfaces modeled on e-commerce experiences. This initiative marked a pivotal shift toward full digital transformation, reducing reliance on traditional infrastructure and prioritizing remote self-service channels.
The rebranding unified what had become a confusing brand architecture. Customers no longer needed to understand the difference between mBank, MultiBank, and BRE Bank. Everything became simply mBank—a name that emphasized mobile, modern, and minimal.
In 2014, mBank launched Orange Finanse, a mobile retail bank. In 2015, mBank entered into long-term cooperation with AXA Group. These partnerships extended mBank's reach through telecommunications and insurance channels.
When mBank redesigned all of its customer-facing processes in 2012, it rapidly iterated design and testing of over 1700 drafts of user interface and user experience models with designers, programmers, and customers. This approach resulted in more than four hundred final UI/UX models and the development of over two hundred new features.
The MIT Sloan Center for Information Systems Research studied mBank's transformation and identified it as a model for digital banking. Today at mBank, employees share responsibility for using digital to simultaneously improve customer experience and reduce costs.
The rise of digital means fewer silos: at mBank it is hard to distinguish who is from IT and from other parts of the business. This organizational integration—breaking down barriers between technology and business—proved essential to rapid innovation.
The 30-second loan became mBank's signature product. A customer could apply for credit through the mobile app and receive approval in half a minute. No paperwork. No branch visit. No waiting. This wasn't a gimmick—it represented genuine process innovation enabled by real-time data analysis, automated decisioning, and integrated systems.
More recent innovations continued the pattern. mBank won Forrester's Technology Strategy Impact Award 2025 for EMEA, recognizing its modernization of core banking systems and adoption of hybrid cloud and generative AI technologies. The bank also became the first in the world to offer a smart payment ring with health and activity tracking features, developed in cooperation with Mastercard and NiceBoy.
mBank, Poland's first digital bank, is this year's recipient of Forrester's Technology Strategy Impact Award for EMEA. The bank is being honoured for successfully executing a comprehensive five-year modernisation strategy that has transformed its core banking infrastructure while maintaining operational excellence. Additionally, mBank continues to lead in cybersecurity innovation, proving that technology-led transformation can deliver measurable business outcomes without compromising stability or customer trust.
The recognition validated mBank's sustained commitment to digital excellence even through crisis years. Management could have retreated to defensive positions, cutting technology investment to preserve capital amid Swiss franc provisions. Instead, they continued building, betting that digital capabilities would determine long-term competitive position.
VII. The Commerzbank Sale That Never Happened
September 2019. Financial markets are calm. Poland's economy hums along. And Commerzbank drops a bombshell.
In September 2019 mBank's parent company Commerzbank announced they wanted to sell their 69.3 percent stake in the bank. In early 2020, Commerzbank then abandoned their plans, as they were not able to sell under favorable conditions due to the COVID-19 pandemic.
The context matters. Commerzbank had been struggling with its own strategic challenges—compressed margins in German retail banking, the legacy of the 2008 Dresdner Bank acquisition, and pressure from activist investor Cerberus. Management decided that concentrating resources on the core German market made more sense than maintaining emerging market exposure.
Commerzbank announced in September 2019 its intention to sell its majority stake in mBank. At the time the main objective of the sale was to significantly reduce risk-weighted assets and to release capital within the Group for a faster implementation of the Commerzbank 5.0 strategy. In the meantime, Commerzbank has achieved sufficient flexibility with regards to its Common Equity Tier 1 ratio.
Multiple potential buyers circled. The process attracted interest from international banks seeking Polish exposure and financial sponsors seeing value in a turnaround story. Valuations were discussed. Due diligence proceeded.
Then COVID-19 struck. Financial markets cratered. Deal-making froze. Polish mBank S.A. ("mBank") will remain part of the Commerzbank Group. Commerzbank has decided to retain its majority stake of 69.3% in its Polish subsidiary and to terminate the sales process. Under the current market conditions which are dominated by the coronavirus crisis, a transaction doesn't seem feasible at reasonable terms.
The aborted sale created strategic ambiguity that persists today. mBank operates knowing its parent might exit at any moment if conditions align. This uncertainty affects everything from long-term planning to employee retention to counterparty relationships.
The UniCredit factor adds another dimension. Italian banking giant UniCredit, led by aggressive CEO Andrea Orcel, has built a significant stake in Commerzbank itself, creating the possibility of an indirect path to mBank ownership.
UniCredit would also take control of mBank, Commerzbank's Polish subsidiary, allowing it to re-enter the largest CEE market after it exited during its own restructuring.
Commerzbank's takeover would enable Orcel to create a new banking giant in Germany by merging it with UniCredit's German lender HVB. Such a move would also facilitate UniCredit's growth in Poland, where Commerzbank owns mBank.
In July 2025, UniCredit announced that it had increased its stake in Commerzbank to 20%. The German government has resisted the takeover attempt, but the European Central Bank has given UniCredit approval to buy up to 29.9% of Commerzbank, potentially paving the way for CEO Andrea Orcel to pursue a takeover of Germany's second-biggest listed bank.
From an industrial perspective, the interest is significant: the deal would bolster UniCredit's presence in Germany and reopen access to the Polish market via mBank.
The saga illustrates a fundamental tension in European banking: cross-border consolidation makes economic sense but faces political resistance. mBank's future remains hostage to decisions made in Frankfurt, Milan, and Berlin—none of which prioritize Polish market considerations.
VIII. Modern Era: Emerging from Crisis & Future Trajectory
After years of provisions and losses, mBank has finally glimpsed the light at the end of the Swiss franc tunnel.
mBank has made significant progress in reducing its exposure to Swiss franc mortgage loans and the associated legal risk. The value of CHF mortgage loans decreased to PLN 4,468 million as of June 2025, a dramatic reduction from PLN 19,177 million in 2015 and PLN 6,142 million at the end of 2024.
The bank has successfully concluded 28,733 settlements with CHF loan customers as of June 2025, up from 17,016 a year earlier. New CHF-related court cases have been declining steadily, with only 202 cases involving active contracts in Q2 2025, compared to 1,006 in Q2 2024.
The number of settlements with borrowers has steadily increased, reaching 30,735 by September 2025.
The bank expects that legal risk costs related to FX mortgage loans will materially burden the financial results for the last time in 2025, suggesting a resolution to this long-standing issue is approaching.
This projection—that 2025 marks the final year of material Swiss franc provisions—represents a watershed moment. If correct, it means mBank's earnings power will finally be visible without the distortion of enormous one-time charges.
The underlying business has performed remarkably well despite the crisis. mBank Group delivered its strongest quarterly results to date, achieving record revenues, record operating profit, and a record pretax earning. Total revenues reached PLN 3.2 billion, marking a 5.5 increase quarter over quarter and a 10.6 rise year over year.
mBank posted a record Q2 2025 net profit of PLN 959M, up 36% QoQ, driven by 10.6% YoY revenue growth and strong fee/trading income.
mBank expects 2025 to be its best year, with total revenues projected to exceed PLN 12 billion, assuming stable interest rates in Poland until year-end. The bank anticipates that 2025 will be the last year with material costs related to legal risk from foreign currency loans.
The operational efficiency metrics underscore mBank's digital advantage. Cost efficiency measured by the cost-to-income ratio was at 29.2% in Q3 2025, compared to 28.2% in Q2 2025. Normalised cost-to-income ratio in Q3 2025 (including ÂĽ of contribution to the resolution fund) stood at the level of 30.7%.
A 30% cost-to-income ratio compares favorably to most European banks, many of which struggle to get below 60%. The digital model's structural cost advantage continues to deliver.
Credit quality has also improved. The share of CHF mortgages in mBank's total loan portfolio has dramatically decreased from 23.6% in 2015 to just 0.2% at the end of Q1 2025.
This progress in addressing legacy issues has contributed to credit rating upgrades from all three major agencies. S&P Global Ratings upgraded mBank to 'BBB+' on February 27, 2025, Moody's Ratings issued an upgrade on April 10, 2025, and Fitch Ratings upgraded the bank to 'BBB' on April 22, 2025.
The macroeconomic backdrop supports continued growth. Poland's economic outlook remains supportive, with GDP growth projected at 3.8% in 2025 and 3.5% in 2026, providing a favorable environment for the bank's continued expansion and profitability.
The European Bank for Reconstruction and Development (EBRD) has revised up its gross domestic product (GDP) growth forecast for Poland to 3.5 per cent for 2025.
Poland's position as the largest economy in Central and Eastern Europe, with strong fundamentals, EU membership benefits, and a growing middle class, provides mBank with a favorable operating environment that many European banks would envy.
IX. Playbook: Business & Strategic Lessons
What can investors and business students learn from mBank's journey? Several lessons emerge clearly.
Digital-First from Day One
mBank's branchless model, launched when Polish internet penetration stood below 6%, demonstrated that digital transformation works best when you build natively rather than retrofit. Traditional banks attempting to digitize face the "innovator's dilemma"—their existing branch infrastructure becomes a liability rather than an asset, but they can't easily abandon it without alienating current customers.
Created in 1986, and beginning its retail-banking business in 2000 upon launching the first fully internet-based bank in Poland, mBank has embarked on a relentless expansion to become the country's largest organically developed retail bank, with an enviable standing today as the fourth-largest universal banking group by total assets and fifth by net loans and deposits. Underpinning this phenomenal growth trajectory is the culture of continuous innovation that has earned the bank its reputation as a market leader, a digital pioneer and an icon of mobility.
mBank's cost advantage—a normalized cost-to-income ratio around 30% versus 50-60% for traditional banks—isn't primarily about technology spending but about what you don't spend: real estate, tellers, branch managers, paper processing. These structural savings compound over decades.
Platform Thinking Before Platforms Were Cool
mBank understood early that banking would become about ecosystems, not just products. The mOkazje marketplace, video banking consultations, peer-to-peer transfers, and integration with third-party services reflected thinking that most banks only embraced a decade later.
mBank amplifies the customer voice by encouraging everyone across the bank to share responsibility for the customer experience. At every decision point for a new feature, team participants are expected to "put themselves in the customers' shoes" and estimate what quantifiable value the feature will provide. No single team is responsible for the customer experience; instead, "everyone is responsible."
Crisis Management: Navigate the Storm Without Abandoning Innovation
The Swiss franc catastrophe could have consumed all management attention and every available zloty. Some banks in similar situations did exactly that—they hunkered down, cut investment, and hoped to survive. mBank took a different path: it provisioned aggressively for legal risk while continuing to invest in digital capabilities.
The 2013 rebranding happened despite the gathering Swiss franc storm. Technology investments continued. Product innovation proceeded. Management bet that the crisis would eventually pass and competitive position in that future state would depend on capabilities built today.
Foreign Ownership: Benefits and Constraints
Commerzbank's involvement provided capital, credibility, and capabilities that accelerated mBank's growth. But it also created dependencies—particularly the Swiss franc funding—and strategic uncertainties that persist today. The attempted 2019 sale and ongoing UniCredit drama illustrate how minority shareholders and local management can find themselves observers in decisions that determine their future.
The Perils of Currency Mismatch
The Swiss franc mortgage disaster offers a universal lesson about foreign currency lending to unhedged borrowers. It seemed attractive when Swiss rates were lower than Polish rates and the zloty was strengthening against the franc. But currency markets can move violently and for sustained periods. When they do, borrowers who cannot service debt in their income currency face impossible mathematics. The resulting defaults, litigation, and political backlash can dwarf the original profitability of the lending business.
X. Porter's Five Forces & Hamilton's 7 Powers Analysis
Porter's Five Forces Analysis
Threat of New Entrants: MODERATE-HIGH
The competitive landscape within the Polish banking sector has not changed much over the past few years. The group of major commercial banks remained unchanged, concurrently increasing its market share slightly, indicating a trend toward growing concentration.
Traditional barriers remain substantial: banking licenses, capital requirements, regulatory compliance costs, and the need for deposit insurance participation. But fintech and embedded finance lower barriers for specific product niches. Payment apps, lending platforms, and neobanks can cherry-pick profitable segments without building full banking infrastructure.
Bargaining Power of Suppliers: LOW-MODERATE
Capital markets provide funding with multiple alternatives. Technology vendors increasingly matter, but competition among them remains robust. The key supplier relationship—Commerzbank as provider of CHF funding—proved problematic when margins expanded, but this specific dependency has largely resolved as the franc portfolio shrinks.
Bargaining Power of Buyers: MODERATE-HIGH
Despite the rise of online banking, BLIK remains the leading payment method in Poland, and its popularity seems to be intact for now.
Polish consumers have become sophisticated and price-sensitive, comfortable switching between digital providers. Open banking regulations reduce switching costs further. Banks must compete on experience, convenience, and pricing rather than relying on inertia.
Threat of Substitutes: HIGH
Fintechs, payment apps, neobanks, and embedded finance providers all offer alternatives for specific banking functions. A consumer might hold deposits at one institution, pay with BLIK (owned by a consortium of banks), borrow from a fintech, and invest through a digital platform—never engaging with a traditional universal bank for any single function.
Competitive Rivalry: HIGH
PKO Bank Polski, founded in 1919, is the largest bank in Poland, with a market share of 15.70% as of September 2024. It boasts total assets of PLN 512 billion, reflecting an 8.2% year-on-year increase, and serves 12.1 million customers.
The top five banks—PKO BP, Bank Pekao, Santander Bank Polska, mBank, and ING Bank Śląski—compete fiercely across all segments. State-controlled PKO BP enjoys advantages of scale and implicit government backing. The market share in the area of consumer loans increased to 19.41 percent and in the area of mortgage loans to almost 26 percent.
Hamilton's 7 Powers Analysis
Scale Economies: MODERATE
mBank benefits from Commerzbank's infrastructure for certain functions while its digital model inherently scales better than branch-based competitors. The ~30% cost-to-income ratio—significantly better than industry averages—demonstrates these economies, but mBank lacks the absolute scale of PKO BP.
Network Effects: MODERATE
The mOkazje marketplace creates some network effects. BLIK integration benefits from broader ecosystem adoption. But these effects remain modest compared to pure platform businesses. Banking's network effects tend to be local and limited.
Counter-Positioning: STRONG
mBank's original digital-first model was counter-positioned against traditional banks that couldn't easily cannibalize their branch networks. When mBank launched in 2000, competitors faced an impossible choice: match the digital offering and undermine expensive branch infrastructure, or cede the digital space. Most chose the latter.
Switching Costs: MODERATE
Multiple product relationships—mortgages, deposits, loans, cards—create stickiness. Integrated personal finance management tools increase engagement. However, open banking regulations reduce switching friction, and younger customers show less loyalty than previous generations.
Brand: STRONG
mBank's market leadership, including its position as the strongest banking brand in Poland.
The pioneer reputation in digital banking creates trust, particularly among tech-savvy consumers. Multiple innovation awards reinforce positioning. The brand represents modernity in a way that legacy bank brands struggle to match.
Cornered Resource: MODERATE
mBank possesses digital talent and an engineering culture that's difficult to replicate. However, talent is mobile—the prior President, Cezary Stypułkowski, departed in July 2024 to become CEO of Bank Pekao S.A.—demonstrating that even senior leadership can move to competitors.
Process Power: STRONG
Decades of digital-first operations created embedded organizational capabilities that competitors cannot easily replicate. The single platform architecture enabling rapid feature deployment, the 30-second loan approval process, and the integration of customer feedback into development all represent process advantages built over 25 years.
XI. Bear vs. Bull Case & Key KPIs to Monitor
Bull Case
The Swiss franc crisis is finally resolving. The bank anticipates that 2025 will be the last year with material costs related to legal risk from foreign currency loans. If correct, 2026 earnings will finally show mBank's true earning power without provisions consuming the majority of profits.
Poland's macroeconomic outlook remains favorable. GDP growth will strengthen to 3.2% this year, supported by falling inflation, lower interest rates and rising public investment. Private consumption will remain solid, supported by real wage growth and falling interest rates.
Return metrics demonstrate underlying strength. The mBank's return on equity improved to 19.9% in Q2 and return on tangible equity reached 25.3% in Q2 2025.
Best-in-class digital capabilities position the bank for continued market share gains. As banking moves increasingly digital, mBank's 25-year head start in building capabilities creates durable advantages.
Potential for Commerzbank to finally divest could unlock strategic optionality. A new owner—whether a financial sponsor, a strategic acquirer, or a management buyout—might pursue growth strategies that Commerzbank's conservative oversight has constrained.
Bear Case
Ownership uncertainty continues to create strategic constraints. Commerzbank holds a majority interest of almost 70% in mBank. Every major decision requires Frankfurt approval. Long-term planning becomes difficult when the controlling shareholder might exit at any moment.
The UniCredit situation adds complexity. Almost all of the headline-grabbing proposals of the past year have failed or are stalled. UniCredit SpA's interest in Commerzbank AG has run into opposition from Berlin. But if UniCredit eventually succeeds, mBank would become a subsidiary of a subsidiary—three levels removed from ultimate decision-makers in Milan.
Concentrated market with state-backed giants poses challenges. PKO Bank Polski's market share in the area of consumer loans increased to 19.41 percent and in the area of mortgage loans to almost 26 percent. The bank achieved a 19.6 percent increase in income from core activities and demonstrated high cost efficiency. Competing against a state-controlled national champion with scale advantages and implicit government support requires constant excellence.
Fintech and embedded finance continue to unbundle banking services. The products where mBank earns margins—payments, consumer lending, small business services—face competition from specialized providers with lower cost structures and focused value propositions.
Regulatory environment in Poland remains unpredictable. The credit holiday imposed during COVID—essentially forcing banks to forgive interest for a period—demonstrated that Polish authorities can and will intervene in banking markets when political pressures demand it.
Key Performance Indicators to Monitor
Given mBank's specific situation and strategic position, three KPIs deserve particular attention:
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CHF Provision Levels and Settlement Progress: Track quarterly provisions for FX mortgage legal risk and the pace of settlements concluded. The thesis that 2025 represents the final year of material provisions depends on continued progress here. Any reversal—higher provisions, slowing settlements, new adverse court rulings—would undermine the recovery story.
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Cost-to-Income Ratio Evolution: mBank's structural advantage lies in operational efficiency. Monitor whether the ~30% normalized cost-to-income ratio can be maintained or improved as the bank grows. Rising costs without corresponding revenue growth would signal competitive erosion. The ratio also provides the best single measure of whether digital advantages remain intact.
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Commerzbank/UniCredit Ownership Developments: Strategic clarity—or uncertainty—around ownership fundamentally affects mBank's ability to plan and execute. Track stake changes, regulatory approvals, political statements from Berlin, and any announcements regarding potential sales or strategic reviews. Any change in the ownership structure represents the largest potential discontinuity in mBank's trajectory.
Material Legal and Regulatory Considerations
The Swiss franc mortgage litigation remains mBank's most significant legal overhang. While the bank has provisioned extensively and management expresses confidence that 2025 marks the final year of material provisions, the average waiting time for a ruling in a CHF mortgage case now stands at 550 days. This backlog underscores the need for procedural reforms to expedite the resolution of CHF mortgage disputes. A draft amendment proposed by the Polish Commission for the Codification of Civil Law is expected to take effect in 2025, aiming to streamline legal proceedings and reduce court congestion.
Additional adverse rulings from the CJEU or Polish Supreme Court could require additional provisions. The class action ruling in July 2025 demonstrated that risks remain. Listed lender group mBank, the Polish unit of Commerzbank, lost its appeal against a ruling that had annulled the loan contracts of a group of clients with CHF mortgages. According to mBank, almost half of clients that was part of the class action have already settled with lender. mBank has faced a 3.4 percent drop in its shares following the verdict.
Investors should treat management's guidance on provision adequacy with appropriate skepticism. The history of Swiss franc mortgage provisions across Polish banking demonstrates consistent underestimation of ultimate costs. While the trajectory appears favorable—declining lawsuit filings, increasing settlements, shrinking portfolio—final resolution depends on court decisions that remain outside management control.
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