2019 Fintech Review Germany Talkshow by Startuprad.io (VIDEO) www.invest-in-hessen.com

2019 Fintech Review Germany Talkshow by Startuprad.io (VIDEO)

The tradition

This is a Startuprad.io tradition. Every year close to Christmas Joe gets together with smart people from the German fintech scene and talks about what was going on. Usually, the discussion drifts fast in a talk show and does not stick to the usual news format. None the less it is very informative and there are great ideas for fintech entrepreneurs and investors here.

Trust is repeated positive experience – Frank Schwab during Startuprad.io’s 2019 Fintech Review

This episode was made possible by Hessen Trade and Invest, learn more at www.invest-in-hessen.de

To digitize the relationship with clients in banking, that will be the unicorn – Paolo Sironi during Startuprad.io’s 2019 Fintech Review

Our Guests

(in alphabetic order)

Mario Hachemer, CTO Fastbill (https://www.linkedin.com/in/mahachemer/)

Luka Ivicevic, Co-Founder / Chief of Staff at Penta (https://www.linkedin.com/in/luka-ivicevic/)

Frank Schwab, Co-Founder Fintech Forum (https://www.linkedin.com/in/frankschwab/)

Paolo Sironi , Author and Thought Leader IBM (https://www.linkedin.com/in/thepsironi/)

Host:

Jörn “Joe” Menninger, Founder and Host Startuprad.io
joe@startuprad.io / Twitter  / LinkedIn / Video Interview (2018)

To succeed in Fintech you need to digitize the client relationship – Paolo Sironi during Startuprad.io’s 2019 Fintech Review

Further Reading

During the discussion we are touching:

Challenger Bank / Neo Bank https://en.wikipedia.org/wiki/Challenger_bank

Share of Wallet https://www.investopedia.com/terms/s/share-of-wallet.asp

Tiktok https://www.youtube.com/watch?v=mQEGJMmqBTw

Mortgage: https://www.investopedia.com/terms/m/mortgage.asp
related:
Mortgage market shares in Germany. Statista has only numbers for 2015, but online banks had a 40% market share: https://de.statista.com/statistik/daten/studie/661264/umfrage/entwicklung-der-marktanteile-der-vertriebskanaele-in-der-deutschen-baufinanzierung/

Goldman Sachs’ Marcus: https://www.marcus.com/us/en
Related:

https://www.fool.com/investing/2019/12/09/why-is-goldman-sachs-investing-in-marcus.aspx

Having a good user experience is ok, but it will not lead to a transformation people will do banking – Paolo Sironi during Startuprad.io’s 2019 Fintech Review

 

 

PSD2

Was Lukas forecast a spot on, or will it take more time?

  • In an article published in Heise, the author argues that the biggest winners of PSD2 will be the large internet companies like Google, Facebook or Apple https://buff.ly/2Pg1ZkG Given the recent success of Apple Pay in Germany, he may not be too far off.

Companies / Fintechs / Banks

Established Credit Rating Bureau Schufa buys into the core of banking with FinAPI:

(Jan) Established German credit scoring agency Schufa takes over munich-based fintech FinAPI. FinAPI allows to access current accounts http://ow.ly/P7RR30n4x1M

 

Market / Global

Subjective point Joern: It feels like the blurring of fintech and banking continues. There are now cross mergers all over, admittedly more fintechs investments by banks than otherwise, but it keeps blurring. Do you think in 5 years one will still distinguish beyond the point regulated or not?

Also: Fintech becomes really european, think expansion of N26 to UK or Klarna to Berlin.

 

Fintech Trends: Five Insights For Now And The Future | Deloitte US https://buff.ly/34ckc6W

Financial firms are jumping into fintech

Potential blockchain benefits are growing

Regulators are showing interest in fintech

Implementation can lead to operational challenges

The industry is realizing this is a marathon, not a sprint

 

A look at the UK, since the system is more mature. Neobanks are currently looking like they are not winning writes Sifted – What does this indication mean for the German challengers?

“NeoBanks / Challenger Banks Are they going to make it?” From Sifted.com
-Traditional banks — Nationwide Building Society, HSBC and NatWest — still have the highest net switching gains

-Contrary to media hype, people aren’t leaving Barclays for Monzo. Most are leaving to go to Nationwide and HSBC. Indeed, Nationwide saw more net gains than Monzo and Starling combined, showing the big banks have still got “it.”

– Nonetheless, the two digital banks came in fourth and fifth respectively for net gains. To their credit, they’ve overtaken several big banks like Lloyds and RBS who are losing current account customers overall.

– Monzo also trails just behind HSBC for net gains, and could well overtake it in the coming quarter

– Metro Bank – the brick and mortar challenger bank that faced accounting issues earlier this year – did not provide their switching datahttps://buff.ly/2RxZ5JF

Related point from Frank Schwab:
„The path towards profitability of NeoBanks / FinTech“

We haven‘t seen much yet …

 

In financial services the psychological play is very different [from ecommerce] – Paolo Sironi during Startuprad.io’s 2019 Fintech Review

 

Global Ranking of #Fintech #Hubs is good for Germany https://buff.ly/2Ym7VeQ

Global Positions:

  1. Berlin
  2. Frankfurt
  3. Hamburg
  4. Munich
    Out of 238 cities. Not bad, but there is room for improvement. 

 

Deutsche Bank has asked, “will fiat currencies survive,” in what it calls the “multi-trillion dollar (or bitcoin) question.”

“The forces that have held the current fiat system

together now look fragile and they could unravel

in the 2020s. If so, that will start to lead to a

backlash against fiat money and demand for

alternative currencies, such as gold or crypto

could soar.

Link opens PDF https://buff.ly/2Phpg4s?utm_source=-custom-by-source-0-

 

Frank’s point of PayPal becoming a lender in the US
PayPal and Square quietly grow small business lending using data as their edge over banks https://buff.ly/2qXNcyh

 

Fintechs succeed because they are not overvaluing the trust – Mario Hachemer during Startuprad.io’s 2019 Fintech Review

 

Market / Germany

  • There is a study by the online bank comdirect, which is a subsidiary of Commerzbank, headquartered close to Hamburg.

Almost 900 Startups, of which are 202 proptechs, 172 Financing startups, 114 insurtechs, 96 investments, 76 Blockchain, 72 accounting and 166 others (ID, API/Banking, Accounting, Gastro, Regtech, …). Payments are losing considerably in startup count and popularity

124 of those fintechs have been founded in 2018

25% fintech sector growth since 2017

Market / Germany / Local Hubs

Germany leads the way as banks might embrace crypto – NEDEROB

https://buff.ly/380B6Z9

Next year Germany is very likely to accept a law that will make it possible for institutional banks to offer crypto services, including bitcoin custodial wallets. Handelsblatt reported the news earlier this week. This would make Germany the first major European country to embrace cryptocurrencies at an institutional level, and likely more countries will follow. Because the Germans have been the leading force behind the European economy for decades.

 

I think in 2020 we will see fintechs and neobanks opening up branches – Luka Ivicevic during Startuprad.io’s 2019 Fintech Review

 

Hamburg

83 Fintechs (comdirect)

Related:

WELT writes about the deterioration of the city of Hamburg, as a financial hub within Germany and Europe https://buff.ly/2NYGJhn Banks and insurance companies are shedding headcount

 

Munich

105 Fintechs (comdirect)

I think in 2020 we will see much more shakeout [of fintechs in Germany]. Many runways running out – Mario Hachemer during Startuprad.io’s 2019 Fintech Review

 

Frankfurt

106 Fintechs (comdirect)

Deutsche Bank started Fyrst. Anyone heard anything?

 

Berlin

295 Fintechs (comdirect)

 

Other cities / hubs (according to comdirect)

Cologne 35

Düsseldorf 20

Stuttgart 12

Leipzig 7

Dresden 6

Dortmund 6

Essen 6

Bremen 6 

 

295 Fintechs (comdirect)

 

Financing

What did the underperforming IPOs (WeWork, Uber, Slack) do to the exit route for fintechs?

  • E.g. The Spectacular Rise and Fall of #WeWork by Bloomberg on YouTube https://buff.ly/36HaxYt

 

  • #US venture capitalists: here are 10 tips if you want to make it in Europe | Sifted
  1. The first piece of advice is to get out of #London

https://t.co/76JMPQQ220 #VentureCapital #VC #Europe

From our October news:

As #neobank #valuations bubble up, some investors think there’s an even better bet in #fintech https://buff.ly/33MPBgB

“…Based on current valuations and recent funding rounds, it is clear that there are still plenty of smart people who see immense promise for neobanks in the West. Eighteen of Europe’s biggest fintechs are now valued at more than $1 billion, according to Richard Diffenthal, a partner at Hogan Lovells. Investors are lining up to give them even more money.

Eugene Danilkis, founder of Mambu, takes a more nuanced view. The company makes “core engine” software for banking, and it’s used by digital upstarts like OakNorth and N26 as well as traditional institutions. The company’s software sits in the background and provides servicing for accounts—things like calculating interest—while clients still build their own apps and develop their own credit models and analytics. …”

 

Venture Capital Investment

Fintech Investments in Germany only going to a few startups, but in 9M of 2019 almost 1.300 mn Euros (1.438 mn US$) in 103 Financing rounds. 

Study comdirect: 

  • 8 fintechs with more than 100 mn investments. 
  • The No 1 fintech (N26 most likely) raised almost 600 mn Euros, which is 13% of the total fintech funding since 2012. 
    • Which leads to approx 4,6 bn Euros investments in German fintechs since.
  • Half of the investments go to the top 20 Fintechs

 

Half of VC investments in German fintechs go to a select group of startups

  1. N26 / 2019 / 412 Mio. Euro
  2. N26 / 2018 / 130 Mio. Euro
  3. Friday / 2019 / 114 Mio. Euro
  4. Kreditech / 2017 / 110 Mio. Euro
  5. Wefox / 2019 / 110 Mio. Euro
  6. Raisin (Weltsparen) / 2019 / 100 Mio. Euro
  7. Deposit Solutions (Zinspilot) / 2018 / 86 Mio. Euro
  8. Kreditech / 2015 / 83 Mio. Euro
  9. Solarisbank / 2018 / 57 Mio. Euro
  10. Smava / 2018 / 54 Mio. Euro

https://financefwd.com/de/comdirect-barkow-studie-konsolidierung/

 

#Shmaybe Unicorns from January

  • After N26 became a unicorn, Gruenderszene has other German #fintechs with the potential to become a #unicorn on their list:

 

March #Buy a bank

  • Raisin, the marketplace for savings and investment products, acquires Frankfurt-based bank MHB Bank https://buff.ly/2IWK55n now the lines between the former enemies fintechs and banks are blurred.

 

April had lots of news of #N26

  • Handelsblatt writes that N26 had a special audit by BaFin (German finance watchdog) and found problems with staffing, management of outsourced services and technology. Some banks also see more N26 accounts used in fraud  https://buff.ly/2uTqdGn?utm_source=-custom-by-source-0-

Related

  • Customer service of N26 has deteriorated – examples collected by Gründerszene found. All got started with an entrepreneur who had stolen 80.000 Euros, could not pay salaries and was locked out of his own account https://buff.ly/2OAArV2

Related

  • N26 client gets 80.000 Euro stolen and the only way to communicate is via chat. Customer service is unable to help. He can not pay his employees or his suppliers. No one is there to talk to him since N26 stopped the phone support https://buff.ly/2uyrh2l

Related

Related

Another topic at N26:

Summer News (July, August, September)

ScalableCapital, Germany’s largest #Roboadvisor raises 25 mn Euros in a Series C round  https://buff.ly/2GRvPHG

 

  • Wirecard vs Financial Times

Related

    • Wirecard sends letter to „Financial Times“, to stop publishing articles and conduct an internal investigation. It appears #Wirecard got hold of an audio recording of #shortsellers discussing the unfavorable article days before FT publication  https://buff.ly/2XXMGTF

Related

Finally: 

    • No results are known yet, but this is quite interesting. Especially since FT had some problems with Wirecard reporting in the past, and they are not usually an outlet known for sloppy reporting
  • Check24 Attack 

We live in interesting times – Startupradio will keep you updated on this

  • #Check24 used to be the top dog for #B2C #financialservices platform. Now #Finleap is rolling out the challenger Joonko https://buff.ly/2ZAJ0ag

 

November News: A lending platform raises a credit fund

  • Frankfurt-based lending fintech creditshelf raises a diversified credit fund, which enables qualified investors to invest private debt of German SMEs. The European Investment Fund is the anker investor with 30 mn Euro. The majority of the investments will be conducted via their lending platform https://buff.ly/32GNQ3q

 

  • InsurTech ottonova raises additional 60 mn Euros #VentureCapital for private health insurance in Germany, currently less than 500 clients writes  deutsche-startups https://buff.ly/2pR08J8

 

December: Germany has a new fintech unicorn

  • Omers Ventures, Merian Chrysalis, Samsung Catalyst and others invest 110 mn US$ #VentureCapital in #Berlin-based wefox, valuing the fintech likely beyond 1 bn USD. Investments in wefox now total  270 und USD. https://www.deutsche-startups.de/2019/12/11/wefox-unicorn/

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