Booming in the German fintech industry
Slips the Hamburg API service provider Figo (so the company of Fintech mastermind André Bajorat) under the roof of the Berlin incubator Finleap. This merges Figo with his daughter Finreach Solutions, which creates the largest German B2B Fintech with 90 employees behind the Solarisbank, which also belongs to Finleap. The contracts were signed yesterday late in the evening, and employees are to be informed this morning.
According to insiders, the distribution of shares has been hard-fought in recent weeks. It is likely that Finleap will hold the majority stake in the joint venture – and that it will retain a minority interest in the existing Figo shareholders (including, for example, Deutsche Börse and Berliner Volksbank). As part of the merger, there should be a capital increase, which is reported to participate in addition to Finleap and Figo-owner. CEO of the new company will be former Finreach Solutions CEO Markus Dränert. At his side as product manager Taner Akcok (previously also Finreach) and as risk CEO Cornelia Schwertner (previously Figo). Figo-Vordermann Bajorat will retire from operational management after a transitional period, but will subsequently join the board and take a leading position within the Finleap empire.
For Finleap, the integration of Figo means a departure from the previous mantra to develop finance startups themselves, instead of buying them or bring them through a merger into their own company empire. Since 2014, Finleap has raised around a dozen startups, including the B2B Insurtech Element, online insurance broker Clark, B2B Robo-Advisor Elinvar and Solarisbank. However, an API specialist, as Figo is one, was not yet part of the Finleap Empire. Instead, the ventures buy the expertise they need for their own services, not just from Figo, but from other API fintechs such as FintecSystems.
Last summer, Finreap’s Finreap had given Finreap a strategic reorientation: the provider of account switching services (as Finleap CEO Ramin Niroumand explained in a conversation with “Finanz-Szene.de” at that time) should become a platform, which provides banks with the most diverse features or, if required, even complete solutions. ” Through the integration of Figo (the Hamburger bring in addition to their API competence incidentally also a PSD2 license in the joint venture) is now this approach again a bit more pronounced: “Our goal is in Germany and beyond to become the leading To become a fintech platform that provides its customers with high-quality software as a service applications and API solutions, “said Dränert to” Finanz-Szene.de “yesterday evening. He emphasized that the potential customers are not only to be found among banks and insurers: “Our target group are all companies that have end consumers as customers and want to offer them innovative financial solutions – so that the end customer can raise all his financial potential”.
If we understand it correctly, Finreach and Figo commit themselves to an idea similar to the US Fintech Plaid (funded in December with $ 250 million), the Swedish Fintech Tink (funded in February with 56 million euros) and the Dutch technology service provider Backbase: The API specialists are no longer just about offering individual services such as account information or payment initiation – they want to become open-banking platforms that help their B2B customers sell a whole bundle of fintech products. Applications can relate. In this country, especially the Munich API specialist NDGIT steers strongly in this direction. Its “banking as a service” platform can put banks as a middle layer over its own core banking system – and then dock third-party fintech providers such as Robo-Advisor, online broker or Personal Finance Manager.
One thing is clear: there is a lot of imagination in API banking, as demonstrated by the extremely high funding for plaid and tink for B2B conditions. But: The market is also highly competitive. At the national level, Figo’s competitors include not only the already mentioned FintecSystems, but also, for example, BANKSapi or finAPI. The latter (ie finAPI) was taken over by Schufa shortly before Christmas – that was already a sign that the market is gradually consolidating. The local API specialists do not just compete with each other. According to information from “Finanz-Szene.de”, Commerzbank has not selected a fintech, but the billion dollar IT service provider Accenture as an API partner. And: Under the keyword “Berlin Group”, the German banking industry even develops its own API solutions for the PSD2 era.
The alliance of Finreach and Figo now offers both Fintechs the chance to step into the league of tinks and plaids. However: The company is also extremely ambitious and therefore risky. As can be seen from the Federal Gazette, Figo alone incurred a shortfall of 4.5 million euros in 2017 – an unusually high amount for a B2B fintech (although it is fair to note that part of the loss is due to the complex subject of the PSD2 license) , Also Finreach should be at least since the pivot last summer significantly cash flow negative. It fits that, according to research by “Finanz-Szene.de” before a year ago, there was already a capital feed from Finleaps. In other words, the combination Finreach / Figo promises success. However, given the expensive set-up (90 employees, spread over two locations in Hamburg and Berlin), it is also doomed to success.
Also published on Medium.