FinTech in Germany
Chronicle by Wolfgang Krause; Venture Partner at Seventure Germany
In an interesting article about the German FinTech published by Chris Skinner for BANK NXT, “Three of Europe’s most innovative banks are in Germany”, 3 German banks were praised to be the most innovative FinTech banks in all of Europe. Fast growing Numbers 26, the newly founded Solaris Bank (both based in Berlin) and the Fidor Bank (Munich). I personally would add Wirecard (Munich) AG and SWK bank (Mainz) to that list as well.
Interesting, especially since you would rather think that this is more of a London thing.
In fact in the last few years Germany has had a few new next generation banks emerging: It appears that the Bafin (the German regulatory body) has an increasing flexibility to give away banking licences to facilitate the transition from additional off line banking services to the new FinTech online world.
Of course all these new banks have different business models:
The visionary Fidor bank already launched its B2B and B2C FinTech offers in 2007.
Wirebank has been already an established multinational player when the bus word FinTech came up and has served for a long time as the cradle for white label FinTech start-ups.
Numbers 26 is positioning itself as a true next generation Pan European mobile retail bank. Right now still using Wirecard as its banking platform a banking license is expected to follow soon.
Recently founded Solaris Bank just got this license in record speed. Being part of the FinTech incubator Finleap it is now offering white label banking services within its group as well as third party providers.
The SWK Bank is having a comprehensive B2B white label offer as well as its own online banking retail offer.
As different they are. They have got one thing in common:
They are building the critical mass of banking infrastructure to help German Fintech start-up to launch innovative next generation services in Germany and European wide.
They serve as FinTech hubs aggregating payment services like Transferwise or Barzahlen, saving platforms like Global Saving or Savedo insurance aggregators like Knip or Clark to one single offering which may become the next generation of virtual full service banking providers in the future.
And this is not only about the aggregation of services. This is also about building the technical infrastructure who will allow to exchange all relevant information to process these services. Because these services need a next generation of open APIs, backend systems or authentication methods to serve the customer end to end online. E.g. with the emergence of video identification provided by companies such as IDNow or WebID even the opening of a bank account has become a true online experience.
Of course this is a major threat to the traditional banking system since they are all buried under legacy IT systems most of them developed in the 80s.
However, spill over effects to traditional banks will happen as well as they will have the opportunity to benefit from these technologies to modernize their traditional banking services.
Of course it remains to be seen whether Germany can be on the front line of FinTech in the near future. But the first groundwork is done.
About the author
Wolfgang Krause joined Seventure Partners in 2008 as a Venture Partner. He is in charge of sourcing, and managing Seventure’s ICT portfolio in Germany. Wolfgang is based in Munich.
Over the last 20 years, Wolfgang worked in the information and telecom industry, both in business development functions and as an early stage investor. He was a partner at TeleSoft Partners a Silicon Valley based VC fund, a partner at Deutsche Venture Capital (Munich) and Altos Advisors (Munich). During this time he was a board member at Apertio (sold to Nokia Siemens Network), Sigma-C (sold to Synopsis) and LASOR AG (sold to ISRA AG).
Wolfgang started his career at Mannesmann Telecommunication with different operational roles in Germany (Mannesmann Eurokom) and France (Cegetel/SFR). Wolfgang holds a MBA and PhD degree from University of Munich.