Germany: Challenger Digital Banks

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Germany: Challenger Digital Banks

Revolut, N26, Penta, Holvi, and Kontis are the top challenger digital banks in Germany. Newcomer, Fidor, has over 150,000 small business customers.

REVOLUT

  • Revolut was founded in 2015 and is based in London. In 2017, they reported $15.67 million in revenue, and $17.31 in 2018. From 2016-2017, their revenue growth was 443%. They offer personal and business products. Revolut launched in Germany in 2017.
  • Their market valuation is currently $1.7 billion, with $336.5 million in total funding over 12 rounds, with the last being March 27, 2019. They are a private company and considered a tech unicorn.
  • Revolut has completed a total of 350 million transactions at a total value of $48.9 billion.
  • Revolut states they have 7,000 new accounts opened daily.
  • They have nearly 20,000 businesses as customers, along with 4.5 million customers total. In the UK, they have 1.6 million customers.
  • Businesses may hold, receive, and exchange 29 currencies without charge.
  • Revolut claims they are ten times cheaper than a bank.
  • They have had significant reported losses.
  • Their business customers have an Open API to integrate their Revolut account into their current workflow and stack.
  • Revolut operates in Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom.
  • Their website may be viewed here.
  • N26

    • N26 is a Berlin bank that operates in 20 countries in Europe. They have 2.5 million customers worldwide and were founded in 2013. They are a Late Stage Venture and have raised $682.2 million in funding over seven rounds. Their latest round was July 2019.
    • N26 has a current market valuation of $3.5 billion.
    • In 2017, they generated revenue of 11.24 million Euros which was a 2000% increase over 2016.
    • In late 2018 they had two million customers. They currently have over 3.5 million. Their monthly transaction volume exceeds 1.5 billion Euros.
    • N26 offers banking for freelancers and the self-employed.
    • They operate in Germany, Austria, France, Italy, Spain, Portugal, Ireland, Greece, the Netherlands, Belgium, Luxembourg, Finland, Latvia, Estonia, Lithuania, Slovakia, and Slovenia.
    • N26 is planning to expand to the US in 2019.
    • Their website may be viewed here.
    • PENTA

    • Penta is a digital bank that targets SMEs located in Germany. They were founded in 2017. They are a private company that strives to meet all the needs of a SME business.
    • Penta has raised 17.2 million Euros over four funding rounds, with the latest being in August 2019.
    • There are currently 7,500 German businesses that use Penta.
    • Penta currently has a wait list with over 3,000 local businesses and boasts user numbers have increased over 900% in the last several months.
    • Penta offers a community driven approach that has made them very popular. Over 68% of Penta's new customers are businesses that have switched from their existing bank to Penta.
    • They offer multi-card support, which the older banks have struggled to deliver.
    • Their website may be viewed here.

    HOLVI

    • Holvi was founded in 2011 as a private company, and launched in Germany in 2016. They operate in Germany, Finland, and Austria. From 2017 to 2018 they saw year-on-year growth of 60%.
    • Holvi has raised 4.3 million Euros over six funding rounds. Their last round was in 2015.
    • The majority, 85%, of their customers are freelancers.
    • Holvi has over 150,000 micro businesses across Europe as customers.
    • They describe themselves as "a simple one-stop-shop for small businesses to collect income, manage expense and get an understandable real-time view of their company finances. New Holvi accounts can be opened in minutes online and Holvi customers don’t need a separate bank account."
    • Holvi was voted the "Hottest Startup in Helsinki".
    • E-Residents may business bank with Holvi.
    • Their website may be viewed here.

    FIDOR

    • Fidor was founded in 2009, and is based in Munich. They are a private company that offers retail and business banking.
    • They were founded in 2009, as a response to the banking crisis to re-establish lost confidence. One of the ways they do this is to let their customers participate in the decision-making processes of Fidor.
    • In Germany, they have 100,000 clients, and 300,000 community members.
    • In 2018, they had $29 million in revenue.
    • Fidor has published a Fidor Bank Moneyfesto.
    • Their website may be viewed here.

    KONTIS

    • Kontis was founded in 2016, in Berlin. They are a private company.
    • They focus on freelancers.
    • Kontis raised over two million Euros in funding over three rounds. Their last round was in 2018.
    • Kontis states that their bank account can figure taxes in real time.
    • Their website may be viewed here.

    MARKET INFORMATION

    • The global digital banking market is expected to grow at a CAGR of around 3.8% between 2019-2025.
    • The German SME market is $3.6 million.
    • If left unchecked, the digital "movers" could cause banks to forfeit between 5-15% of their interest and fee income over the next five years.
    • Micro-enterprises occupy between 82-95% of the business space in Europe. In 2016, there were 30.6 million.
    • The number of banks in Germany has dropped by 52% since 1995. There are currently 1,584 banks in Germany. The low interest rate regulations like Basel III have increased capital requirements and have put more pressure to consolidate.

    Research Strategy

    To locate the top challenger digital banks, we first located industry articles that stated who the best digital challenger banks were. To be included in the next stage of our research, a bank had to be mentioned multiple times. Once we had our list, we then researched each bank separately to obtain an across the board metric. This proved difficult, as some banks did not list their annual revenue. We believe this happened because some banks are operating at a loss due to how new they are. Our next approach was to order them by their customer numbers. This again proved difficult, as the biggest bank we researched did not separate their customer base, and some banks only do business banking. Active users and monthly transactions also ran into the same issues. To combat this problem, we holistically looked at all the metrics we obtained to get our top listings.

    To assess the market penetration, we began by locating industry reports and market studies. This did not give us enough information to triangulate a market share, as most of the information was global. Consulting business press releases from Globe Newswire, PR Newswire and from each business’ website gave us the bulk of our information. To finish our research, we researched available banking information from the government. Again, this gave us a few facts. Ultimately, we were able to put together a snapshot of the market, but not exact figures.
    Sources
    Sources

    Quotes
    • ""Challenger business banks include: • 01 | Revolut • 02 | Starling Bank • 03 | Soldo • 04 | Mettle • 05 | Countingup • 06 | Cashplus • 07 | Tide • 08 | Monzo • 09 | CardOneMoney"
    Quotes
    • "Valued at $2.7b, German digital challenger bank N26 is one of the most valuable tech start-ups to emerge in the last five years. N26 has impressed both its customers and critics with innovative features and has received several awards for its sleek and accessible interface. With 2.5 million customers across 24 countries in the Eurozone, N26 also has plans to launch in the US soon. Their unique ‘Spaces’are goal-tracking sub accounts for savings that’s used by 165k customers and currently holds €130m."
    • "Recently, N26 launched a tech hub in Vienna with a focus on protection against fraud and money laundering. Currently the 3DS Mastercard SecureCode adds an extra layer of security for online payments."
    Quotes
    • "According to the report, the global digital banking market was valued at approximately USD 6,620 million in 2018 and is expected to generate around USD 8,646 million by 2025, at a CAGR of around 3.8% between 2019 and 2025."
    Quotes
    • "The Online Banking Market size is expected to reach $29,976 million in 2023 from $7,305 million in 2016, growing at a CAGR of 22.6% from 2017 to 2023. Digital banking includes all kinds of online/internet transactions done for various purposes. It is the incorporation of new technologies, to deliver enhanced customer services."
    Quotes
    • "Penta, the German fintech startup that offers a digital bank account targeting SMEs, has raised €7 million in Series A funding. Backing the company once again is Inception Capital, with total funding now at €10 million since Penta was founded in May 2016."
    • "Launched in Germany in December, and powered by Banking-as-a-Platform solarisBank (rather than holding a banking license of its own), Penta is designed to meet the banking needs of small to medium-sized businesses, including startups."
    • "One of those is multi-card support to make it easier to manage company expenses. Dubbed ‘Team Access,’ the recently launched feature lets business owners issue multiple MasterCards to employees who need to make purchases on a company’s behalf."
    • "is seeing 68 percent of new customers switching from their existing business bank account, with the remaining 40 percent newly incorporated businesses."
    • "That suggests many German businesses aren’t satisfied with the banking status quo, even if they’ve already crossed the account opening hurdle. Specifically, I understand that multi-card support has been one of the main draw, the kind of feature that older banks with legacy software often struggle to deliver."
    Quotes
    • "Launched in May last year, Penta moved out of private beta in December with a wait-list comprising 3000 local businesses. The company, which has raised EUR7.2 million in funding since inception, currently counts 5,500 digital businesses like AirHelp, bepro11 and Global Digital Women as customers. "
    Quotes
    • "Fidor 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. "
    • "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. "
    • "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."
    • "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. "
    Quotes
    • "Business bank account Penta today announced a €7 million investment in a funding round led by Inception Capital. According to the Berlin-based startup, user numbers have increased over 900%, since the company’s last fundraise just eight months ago. This brings Penta’s total fundraising to €10 million."
    • "A transparent, community-driven approach and active commitment to great customer service has helped Penta win favour of the German business community since launching back in December 2017. In the beginning of this year, we mentioned Penta as one of “10 German startups to look out for in 2018“."
    • "68% of Penta’s new customers accounts are businesses who are switching from their existing bank to Penta, while the other 40% are businesses who are incorporating."
    Quotes
    • "N26 is a German Bank which now operates in over 20 countries in Europe, with plans to launch in the United States shortly. The bank has around 2.5 million customers worldwide."
    • "N26 is licensed by the German Central Bank and the European Central Bank and operates in Ireland on a European Passport (an EU law which allows a bank which is fully licenced in one EU country to operate all over the EU)."
    Quotes
    • "85% of Holvi customers are “solo-preneurs or freelancers”."
    • "Germany SME market= 3.6 million"
    Quotes
    • "Holvi has been providing business banking in Germany, Austria and Finland for over three years and has seen year-on-year growth of 60% from 2017 to 2018."
    • "CEO Antti-Jussi Suominen says: “2019 is set to be an exciting year for Holvi. Having become the leading business banking service for microentrepreneurs in our home market of Finland, and rapidly growing in Austria and Germany, we are setting our sights on the rest of Europe.”"
    Quotes
    • ". Left unchecked, the digital movers could cause banks to forfeit between 5 and 15 percent of interest and fee income over the next five years"
    Quotes
    • " Revenue£12.8 MFY, 2017 • Market Valuation$1.7 B2018-04-26 • Total Funding$336.5 M "
    Quotes
    • "Revolut is a digital banking alternative for instant payment notifications: free international money transfers and global fee-free spending."
    • "Founded Date Jul 1, 2015Founders "
    • "IPO Status PrivateCompany "
    • "Revolut currently supports spending and ATM withdrawals in 120 currencies and sending in 26 currencies directly from the mobile app. The company is based in Wharf, London and was founded in July 2015."
    • "Revolut has raised a total of $336.4M in funding over 12 rounds. Their latest funding was raised on Mar 27, 2019 from a Venture - Series Unknown round."
    Quotes
    • "A global business current account for easy international payments, with prepaid business cards and an Open API."
    • "Hold, receive and exchange 29 fiat currencies without any hidden fees"
    • "Transfer money to any other Revolut account (business or personal) instantly and for free. Save on transfer fees when you make payments to businesses around the world."
    • "Our Open API allows you to seamlessly integrate your Revolut business account into your workflow. Use it to automate cross-border business payments, send payouts to clients or employees and monitor transactions according to your business’ needs."
    Quotes
    • "Revolut for Business is currently available for companies registered and with a physical presence within the European Economic Area (EEA) and Switzerland. This includes the following countries: Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom "
    Quotes
    • ""SPEND IN OVER 150 CURRENCIES AT THE INTERBANK EXCHANGE RATE INSTANT SETTLEMENTS CROSS-BORDER PAYMENTS MULTICURRENCY CARDS INTEGRATIONS BUSINESS OPEN API""
    Quotes
    • "It has already attained the status of a tech "unicorn" - a term used to describe private start-ups valued at more than $1bn (£740m)."
    • "As of March, Revolut says it reached 4.5 million customers - 1.6 million customers are located in the UK alone."
    • "Revolut is currently valued at $1.7bn (£1.3bn) from its most recent fundraising. The three-year-old firm's growth has been impressive - its customer numbers trebled to 1.2 million in 2017, while revenues increased five fold to £12.8m. In September, Revolut said 7,000 new accounts were being opened a day, and that it was processing $3bn in transactions a month "
    Quotes
    • "On 22.2.2019, Revolut achieved 4,000,000 customers. It is signing up over 10,000 new customers every day, compared to around 7,000 day just six months ago. Revolut has boosted its Weekly Active Users (WAU) from 500,000 in July 2018 to over 1.2M in February 2019. Monthly Active Users (MAU) have increased from 900,000 to 1.9M in the same time frame. Revolut’s monthly transaction volume has also increased from $2.4B in July 2018 to over $4.6B per month."
    Quotes
    • "Feb. 2019 3.9 million $4 billion 1.8 million Oct. 2018 2.8 million $3 billion 1.2 million "
    Quotes
    • "Challenger banking service Revolut has reported its annual results for the year 2017, with some stark figures: the revenue has increased fivefold to £12.8 million ($16.8 million) from £2.4 million ($3.2 million) and the customer base has trebled to 1.3 million (from 450,000)."
    • "Monthly transactions volumes in 2017 grew from $200 million to $1.5 billion."
    Quotes
    • "$1.7 B Revolut Mkt valuation £12.8 M Revolut Revenue FY, 2017 Revolut Revenue growth (FY, 2016 - FY, 2017), %443% "
    Quotes
    • "PRIVATESTATUS 701-800EMPLOYEES LATER STAGE VCLATEST DEAL TYPE(Upcoming) $500MLATEST DEAL AMOUNT 21INVESTORS "
    Quotes
    • "N26 is a mobile bank helps customers manage their bank accounts through smartphones. Berlin, Berlin, Germany"
    • "Founded Date Feb 2013 Founders Maximilian Tayenthal, Valentin Stalf Funding Status Late Stage VentureLast "
    • "N26 offers mobile banking solutions to customers in the European Union through its subsidiary. It provides international money transfer, investment, overdraft, and cash withdrawal and deposit at stores."
    • "N26 has raised a total of $682.8M in funding over 7 rounds. Their latest funding was raised on Jul 17, 2019 from a Series D round. "
    Quotes
    • "Market Valuation$3.5 B2019-07-17 • Total Funding$682.8 M Customers: Dec, 2018 2 million "
    Quotes
    • "N26 Business banking for freelancers and the self-employed N26 Business is the free bank account for freelancers and the self-employed. Earn 0.1% cashback on all purchases you make, and enjoy free card payments worldwide "
    • "You reside in a country where N26 operates: Germany, Austria, France, Italy, Spain, Portugal, Ireland, Greece, the Netherlands, Belgium, Luxembourg, Finland, Latvia, Estonia, Lithuania, Slovakia, Slovenia "
    • "N6 Business is free to open online with no account management fees. It’s the easiest business bank account to open if you’re a freelancer or you’re self-employed."
    Quotes
    • "Since the initial product launch in 2015, over 3.5 million customers across 24 European markets have signed up for N26. "
    Quotes
    • "N26 generated revenues of € 11.24 million in 2017, with the largest part being commissioned (€ 10.02 million). This seems puny at first, but compared to 2016, if you just capitulate to the commission income, corresponds to an increase of about 2000 percent. With this you can get income per customer somewhere between 20 and 25 euros. In our view, that’s not all that bad, even if some well-established banks alone make clear about the account fees 120 Euro per year for normal customers. "
    • "According to our calculations, N26 won about 400,000 new customers in the year before last (2016)"
    Quotes
    • "In November, we launched N26 in the UK, our first non-Euro account and a major step forward in our global expansion. We followed this up by rolling out N26 in Denmark, Norway, Poland, Sweden, Liechtenstein and Iceland. And with new markets came new customers. In June we had 1 million customers, by December we counted more than 2 million customers across 24 countries, with monthly transaction volume exceeding €1.5 billion. We continue to be one of the fastest growing mobile banks in Europe and we’re not stopping there, with our sights set on the US in 2019."
    Quotes
    • "Penta is a digital platform for business banking aimed at SMEs and startups. Berlin, Berlin, Germany"
    • "Founded Date Dec 2017 Founders Aleksandar Orlic, Igor Kuschnir, Jessica Holzbach, Lav Odorovic, Luka Ivicevic, Sir Gabriel Holbach"
    • "IPO Status Private Company "
    • "Penta offers a digital bank account targeting startups and SMEs. The offering is designed to meet all of the banking needs of small to medium-sized businesses, including startups. The company is on a mission to build a platform of connected services around a bank account which would allow business owners to use one platform for all their financial needs. Penta is designed to let business owners save time and money on banking so that they can focus more on their core business. "
    • "Penta has raised a total of €17.2M in funding over 4 rounds. Their latest funding was raised on Aug 5, 2019 from a Series B round."
    Quotes
    • "Powering 7500+ Businesses Launched December 2017 Based in Berlin, Germany Raised € 10M+ from VCs and Business Angels "
    • "Penta launched in Germany in December 2017 and will be available in other European countries in the near future. In the first months after launch, Penta received an unbelievable amount of applications, and today, thousands of businesses all around Germany bank with Penta. Do you feel neglected by your bank? Go Penta!"
    Quotes
    • "Helsinki, Southern Finland, Finland Founded Date 2011 Founders Kristoffer Lawson, Mikko Teerenhovi, Teemu Hukkanen, Tuomas Toivonen IPO Status PrivateCompany "
    • "Holvi is banking for Makers and Doers - European entrepreneurs, sole traders and business owners. It’s a current account with its own IBAN number and it's designed to help you run your business in one place."
    • "Holvi is a Payment Institution, not an old-fashioned bank. We’re a modern money service for the new wave of Makers and Doers. They are building financial technology that has a purpose and makes a difference in your day-to-day life."
    • "Holvi has raised a total of €4.3M in funding over 6 rounds. Their latest funding was raised on Sep 1, 2015 from a Seed round."
    Quotes
    • "Holvi is a simple one-stop-shop for small businesses to collect income, manage expense and get an understandable real-time view of their company finances. New Holvi accounts can be opened in minutes online and Holvi customers don’t need a separate bank account. The company recently released Holvi Expenses iPhone app for managing expenses on the go. Holvi is regulated by the Finnish FSA. Holvi is has been featured in the Economist and Financial Times, voted as the hottest startup in Helsinki by Wired Magazine and chosen to be one of most innovative and disruptive brands in financial technology by FinTechCity London."
    Quotes
    • "• 100% digital business current account • Easy to set up! No need to visit our office – easily verified with your e-Resident Card from anywhere in the world. • A diverse set of business management tools that save you time and make your life easier "
    Quotes
    • "Founded in 2011 and based in Helsinki, Finland, Holvi is the world’s premier digital banking service for freelancers and entrepreneurs. Combining powerful money management tools with an easy-to-use business current account, Holvi offers an innovative banking experience that actually helps you run your business."
    • "Holvi is the world’s first financial service operating with its own Payment Institution License. We’re authorised for operations across Europe by the Financial Supervisory Authority of Finland (FIN-FSA)."
    Quotes
    • "Over 150,000 micro businesses across Europe. 60% year on year growth 201-2018 40% of customer growth in 2018 came from Germany. "
    Quotes
    • "Micro-enterprises, though small in size, have come to be known as the growth engine of Europe, forming a significant share of our entrepreneurial landscape. According to OECD statistics (2016), between 82% to 95% of the European business population are micro-enterprises, with self-employed individuals (a segment of micro-enterprises) numbering a whopping 30.6 million in the European Union in 2016."
    Quotes
    • "BBVA-backed start-up Holvi will expand its offering to micro businesses in Ireland, Italy, Belgium, France and the Netherlands after reaching a 150,000-customer milestone, reports Jane Connolly. Holvi has been providing business banking in Germany, Austria and Finland for over three years and has seen year-on-year growth of 60% from 2017 to 2018."
    Quotes
    • "Fidor Bank is a digital bank an effort to re-establish lost confidence in banking with new and customer-focused services. Munich, Bayern, Germany"
    • "Founded Date 2009 IPO Status PrivateCompany "
    • "Fidor Bank is a digital bank founded in Germany in 2009 in an effort to re-establish lost confidence in banking with new and customer-focused services, enabling its customers to actively participate in the bank’s decision-making processes. Our current portfolio of products in Germany covers retail and business banking ranging from basic bank accounts and savings bonds, to various lending offers. All accessible from the same bank account. In Germany Fidor currently has around 100,000 clients and more than 300,000 community members"
    Quotes
    • "• Income Statement • REVENUE: $29 "
    Quotes
    • "Our current portfolio of products in Germany covers retail and business banking ranging from basic bank accounts and savings bonds, to various lending offers. All accessible from the same bank account. In Germany, Fidor currently has more than 310,000 community members."
    Quotes
    • "Fidor Bank is a digital bank licensed in Germany and headquartered in Munich. The Fidor Smart Account is for retail and business customers in Germany and currently for retail customers in the UK. Fidor Bank fully embraces the 21st century and aims to build the first truly digital bank."
    Quotes
    • "28/07/2016 - Fidor Group, the German digital challenger bank and fintech pioneer, announced its acquisition by Groupe BPCE , the second largest banking group in France."
    Quotes
    • "Berlin, Berlin, Germany Founded Date 2016 Founders Alexander Baatz, Christopher Plantener, Madison Bell, Sebastian GalonskaOperating Status Early Stage Venture IPO Status Private Company "
    • "Kontist believes freelancers will shape the future of work, challenging corporate structures, embracing individuality and building successful businesses. Today freelancers don’t get the help they need, in particular when it comes to the complexity of their finances. Kontist provides the banking services freelancers deserve, making finances easy."
    • "Kontist has raised a total of €2M in funding over 3 rounds. Their latest funding was raised on Oct 2, 2018 from a Series A round."
    Quotes
    • "No need to stress - save time and money with the first business bank account for freelancers that calculates your taxes in real time, automates your accounting and spares the world tons of paper."
    Quotes
    • "The number of banks in Germany has dropped sharply in recent years, and by 52% since 1995."
    Quotes
    • "“Restructuring must be accelerated in the banking sector through further consolidation, cost-cutting, and continued development of fee-based income,” the IMF said in a report on Germany."
    Quotes
    • "Banks in Germany are divided into three separate tiers: private banks, publicly-owned savings banks (Landesbanks), and member-owned credit unions. The German banking system is made up of almost 1,800 banks, which include 200 private banks, 400 publicly-owned banks, and 1,100 member-owned credit unions."
    Quotes
    • "The need for a serious restructuring shows in the sheer number of banks operating in the country: there were 1,584 banks at the end of 2018, according to European Central Bank data, nearly four times as many as in France, which only counts 409. Germany’s population is only 18% larger than France’s."
    Quotes
    • "Pressure to further consolidate in the coming years stems from the low interest rate environment and banking regulation in recent years such as Basel III which increased banks’ capital requirements substantially. "