German challenger banks: who’s who (and what’s their tech)
Dynamic Deutschland! With several new entrants looking to prosper in the German banking sector and be part of the Zeitgeist; FinTech Futures has created a list of the known challengers to date and the technology they are using.
We’ll be revisiting and updating this list on a regular basis. If you have any additions to the list, please get in touch with our editorial team.
Last updated: 31 October 2019
The challenger bank based on blockchain, Bitwala was founded by Jörg von Minckwitz, Jan Goslicki, and Benjamin P. Jones in October 2015.
With retail customers in all 31 countries of the European Economic Area (EEA), Bitwala offers a free current account with a built-in bitcoin wallet as well as BTC trading options. Bitwala enables its customers to trade bitcoin directly out of a current account, hosted by Berlin-based solarisBank.
Bitwala charges a 1% fee for bitcoin trading, while the current account (B2C) and the Bitwala Debit Card come free of charge.
In August 2019, Bitwala received a €13 million Series A funding round, led by Sony Financial Ventures and NKB Group. The funds were used to start offering Bitcoin accounts for businesses.
The bank is the name in Germany for Hello bank! – a digital direct bank – which in turn is part of BNP Paribas. It was launched in Germany in 2013 and offers online products, such as credit cards, loans, savings and insurance.
The roots of the bank in Germany is Cortal Consors, a European broker in consumer investing and online trading, owned by BNP Paribas. In 2013-2014 it was rebranded and joined different parts of BNP Paribas’ businesses in Europe. In Germany, it was merged into Consorsbank. In 2016, Consorsbank also absorbed DAB Bank, a German bank that BNP Paribas bought in 2014.
In 2017, German fintech firm figo’s technology was the backbone for the launch of Consorsbank’s MultiBanking service.
Customers can now use accounts and deposits they have with other banks after logging into their online banking.
In 2016, FinTech Futures did a case study on Consorsbank – and its pursuit of app-iness.
Digital-only Fidor was founded in 2009, and is based in Munich. The bank holds a full banking licence and uses its own in-house developed technology, which it also licenses to other financial institutions (such as Penta Bank – see below) via its technology arm, Fidor Solutions.
In 2016, Fidor was acquired by BPCE, France’s second largest banking group, but remained as an independent business. However, the relationship did not prove successful and BPCE set out to sell Fidor in H2 2018. Fidor’s founder and CEO, Matthias Kröener, left the company in spring 2019.
In 2017, it partnered with Eight Inc to launch Fidor Market, its digital marketplace. The two firms said they are jointly designing Fidor’s customer experience for the community-based marketplace for financial services. The project was initially launched to Fidor’s customers in Germany as a beta test, followed by a global roll-out. Fidor Market is a standalone market infrastructure and white-label solution for distribution partners.
At the beginning of August 2019, Deutsche Bank started digital bank, Fyrst, designed to offer the ‘promise of security’ to freelancers, founders and entrepreneurs as the first digital bank specifically for self-employed workers.
One of Fyrst’s main aims is to compete with smaller fintech suppliers for large-scale institutes.
It is not to be confused as an additional digital bank, rather it is an offer from the private and corporate bank, Deutsche Bank.
Fyrst will compete with services such as Finnish bank, Holvi, who recently announced Germany as one of their core markets and focuses on creating advocacy among freelancers and small digital businesses by offering services such as tax calculation.
Other potential competitors include Berlin-based, Kontist and Penta.
Helsinki-based Holvi, established in 2011, offers a business current account and a debit card, Holvi Business Mastercard.
It launched in Germany in 2016. The same year it partnered with SumUp for the German market – combining SumUp’s mPOS offering with Holvi’s online business account – to serve SMEs and the self-employed in the country.
Also in 2016, Holvi was acquired by BBVA.
The entire infrastructure is hosted in the cloud with Amazon Web Services (AWS) from a data centre in Ireland.
Hufsy, a Denmark-based fintech start-up focused on SMEs, expanded into Germany in 2017. Its banking partner in the country is solarisBank.
Its banking offering is tailored for start-ups. “It is a one-point entry and therefore an easy and timesaving way for small businesses to handle finances,” Hufsy explained. It also uses artificial intelligence (AI) tools.
Back in 2017, the company said it will focus on Berlin, as its research found that 30% of German start-ups are in the country’s capital and the region has 177,000 SMEs.
Hufsy’s founders are software engineer Rafal Lipinski and entrepreneur Maria Flyvbjerg Bo.
In September 2019 the bank closed its accounts and shut down, with executives stating that there was after researching the market there was no reason to continue operations.
Based in Berlin, insha is a digital offshoot of Istanbul-based Albaraka Türk Participation Bank and was first developed in mid-2017.
Kemal Payza, API program manager at Albaraka and previously business development manager, leads the project, and has put together and 20-person team across insha’s Berlin base and Albaraka’s Istanbul HQ.
Albaraka Türk Participation Bank and solarisBank underpin technology and infrastructure for insha. Its debit card is provided by Mastercard.
Berlin-based banking app provider Kontist was founded in early 2016 by Christopher Plantener (CEO), Alexander Baatz, Sebastian Galonska and Madison Bell.
It offers a German IBAN, Mastercard, integrations with accounting systems (FastBill and Debitdoor), and deposit insurance. It is a partner of solarisBank, which holds a full banking licence.
In October 2018, Haufe Group provided an undisclosed amount of Series A funding and acquired a stake in Kontist. The two partners’ first task together was a technical integration of the online accounting software Lexoffice and the Kontist bank account. Users get automated accounting, a real-time estimate of tax payments due, and an integrated Mastercard for expenditure management.
The bank has got the backing of Founders, a company builder and VC in Copenhagen that develops software solutions for the self-employed and SMEs. Founders provides financial, development, marketing and administrative support.
Moneyou, ABN Amro’s digital banking subsidiary, launched its Tikkie mobile payment app in the German market in 2018.
The app and its underlying software were jointly developed with Munich-based FinTecSystems.
Tikkie can be used by anyone, regardless of who they bank with, and only the person receiving the money needs to have the app. Once they enter their name, mobile phone number and the IBAN number, they are ready to start sending payment requests via WhatsApp, Facebook Messenger, Telegram, QR-Code or text (SMS).
Payments are executed as direct transfers from accounts at any bank in Germany.
In September it will launch Moneyou Go, a new payment and savings app. It is free for German customers. Moneyou says this payment proposition is developed together with Bankable.
Berlin-based mobile banking challenger N26 is one of the more active banks. It has taken its business fully across 17 European countries, including Spain, Italy, Greece, Ireland and Slovakia.
It was founded in 2013 by Maximilian Tayenthal and Valentin Stalf. In 2016, it received a full banking licence from the German regulator, BaFin, and changed its name from Number 26 to N26.
N26 provides a free basic current account and a debit Mastercard card for its customers. Additionally, customers can request overdraft protection, investment products, and premium current accounts.
N26 works with TransferWise on cross-border money transfers. It also partnered with Raisin – to enable N26 customers to save money and choose interest rates from banks across Europe, as well as integrated Vaamo into the N26 app to enable customers to invest their money and manage a customised investment portfolio.
For its back-office processing, N26 uses Mambu’s core banking system, supplied on a hosted basis.
In March 2018, the bank closed a €110 million Series C funding round as it sought to consolidate its presence in Europe and expand to the US. This was followed by a $300 million Series D round in early 2019.
Berlin-based Penta is a digital bank account for “high-tech” start-ups and SMEs in Germany, founded in spring 2016. In early 2018, it raised a €2.2 million seed round. The investment was led by Inception Capital, a fintech-focused VC based in the UK.
Penta was acquired by European fintech ecosystem Finleap in April 2019. As a result, the bank started a collaboration with Beesy, another Finleap portfolio company that provides digital business banking for freelancers in Italy.
Its technology is provided by another German bank, Fidor (see above), and it also uses the Banking-as-a-Platform service from yet another local start-up, solarisBank (see below), which holds a full banking licence. All deposits are held at solarisBank.
Penta says it differentiates from its competitors by offering third party products only. These include automated accounting, international transfers and cash flow management.
London-headquartered Revolut was founded in 2015 and sees itself as a digital banking alternative designed for a global lifestyle. It offers fee-free spending, interbank exchange rates, free international money transfers, and different currencies in-app.
It applied for a European banking licence in 2017 (the licence was granted in late 2018). The same year, it launched in Germany.
In April 2018, it raised an additional $250 million in Series C funding, which saw the fintech valued at $1.7 billion – a five-fold increase in less than a year.
Earlier in 2018, it fully launched its open API – allowing users to integrate Revolut for Business accounts with third party software and in-house systems.
It also built its own in-house processor, following a string of outages caused by its third-party provider, Global Processing Services (GPS); and brought the card issuing function in-house, ousting its external supplier Wirecard.
In early 2019, Revolut signed an agreement with regtech start-up ClauseMatch to adopt its technology to streamline management of internal policies, controls and regulatory compliance, following a two-month trial period.
Not long after it was rocked by compliance and culture criticisms, and saw its CFO resign.
In June 2019, Penta’s digital business account provider integrated the Debitoor invoicing program.
Silicon Valley Bank (SVB) arrived in Germany in May 2018.
It was granted a lending licence by Germany’s banking regulator, BaFin, and is based in Frankfurt. It is a subsidiary of California-based SVB; and is the bank’s second European location (the first one was the UK). It is also in China and Israel.
SVB already has several German tech firms on its client list, including HelloFresh, Lilium and Babbel.
It will offer lending to growth stage technology and life science businesses in Germany, as well as financing acquisitions and working capital.
For its tech, SVB is a long-standing Oracle customer, including the Flexcube core banking system, business process management (BPM), content management and ERP software and middleware products. It also uses ACI Worldwide’s software for online banking.
Berlin-based solarisBank was founded in spring 2016. With support from local fintech incubator FinLeap it launched the “first” global banking platform, called Solaris – a Banking-as-a-Platform (BaaS) service. The service is used by other challengers and start-ups today, including Penta (see above).
FinLeap brought the team of entrepreneurs together, provided seed funding and support during the development phase for solarisBank.
The bank offers a B2B2C (business-to-business-to-consumer) product. It is a modular-based toolkit offering account and transaction services, compliance and trust solutions, working capital financing and online loans. In addition, it offers payment and escrow services – all accessible via APIs.
It holds a full banking licence and has passporting rights across all EU states. As of mid-2018, it is active in seven countries and has over 60 corporate clients using its banking platform.
In spring 2018, it completed a Series B funding sound, raising €56.6 million for further international expansion (it has raised more than €92 million since its launch). Among the investors are ABN Amro, Visa, BBVA and Japan’s SBI.
In June 2018, solarisBank teamed with Poland’s Alior Bank, Germany-based online marketplace for savings products Raisin, and Mastercard to unleash a pan-European digital bank.
Tomorrow claims to be the first sustainable mobile banking offer, which only finances sustainable projects.
Using the banking infrastructure of solarisBank – the first digital banking platform to gain a full banking licence – Tomorrow offers a mobile current account with a debit card.
The company says that customer deposits will only be used to finance renewable energies, organic agriculture, microcredits and other sustainable projects – it promises not to invest in armaments, coal-fired power or genetic engineering. In addition, each payment goes to support a reforestation project.
In the future, Tomorrow aims to develop a comprehensive financial platform, including savings and investment options, that have been selected against systematic sustainability criteria.
Tomorrow is a brand of the social business company, Goodfolio GmbH.