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Home » Daily Briefing » Daily briefing - 03 April 2019

Daily briefing - 03 April 2019


It's not insignificant that Germany's fintech capital is Berlin while its banking capital is Frankfurt. While the German press is absorbed in the slow-moving dinosaur rumble known as the Commerzbank takeover, Berlin's fintechs have been catching the attention of big dynamic Asian tech businesses such as Ping An and Tencent. As East Berliners note acidly, many of them grew up in the side of the city where it was easier to get to Shanghai than to Hamburg. In the great tech tradition, the Berlin tech scene has specialised in copycat businesses such as Rocket Internet, founded by Oliver Samwer, which established Jumia as Africa's leading e-commerce venture, which will soon IPO in New York. Then there's N26, challenger bank to the German giants, which took a big investment from Tencent this time last year. And last November, Ping An's Global Voyager Investment Fund last November led an investment round in fintech company builder Finleap, pledging to support the growing German business with its blockchain and AI expertise.

Now Finleap is opening its purse, acquiring SME banking startup Penta, which offers banking services to the "digital industry". Penta originated in Hitfox, another German company builder specialised in data and fintech, offering a heavily digital banking services to SMEs. There are layers upon layers at work here, as Penta uses the banking infrastructure of solarisBank, which is another Finleap portfolio business. "Launched in late 2014 by Hitfox Group and Ramin Niroumand, Finleap has developed 16 ventures from scratch, as well as acquiring a number of fintechs," writes TechCrunch. "Companies in its portfolio include banking platform solarisBank, of which Penta is a customer, and digital insurer Element, to name just two. Penta says that becoming part of the Finleap "ecosystem" will help the SME banking provider increase the speed at which it expands internationally. This will include launching in Italy in partnership with Beesy, a Finleap portfolio company focusing on digital business banking for freelancers."

With excitement building in South African finance as new challenger banks launch to take on the big four, Gerrie Fourie of Capitec says 'not so fast'. Capitec has been an outlier in building branches while other newcomers focus on the smartphone as the branch. But Capitec's customers, he says, mostly use feature phones. "The moment you go into the lower-income, financially illiterate, client base you will find that people still predominantly use feature phones," he said, writes "Fourie said this was reflected by the 4.4 million people who use Capitec's USSD service, compared to the 2.2 million who are on smartphones. 'When you talk to clients they say that 'smartphones eat data' and they cannot afford it,' he said. The average Capitec client spends between R20 and R30 on data and they cannot afford contracts." Michael Jordaan's Bank Zero seems to be premised on the new data offering of Rain. It will be interesting to watch how this shapes up.

Transferwise has proven to be an adept player in the fintech world, building partnerships, gaining a banking licence after several years of ridiculing banks, and opening an office in Belgium to mitigate the impact of Brexit on its London-based business. It has also surprised observers by making money. Now it's looking to expand further afield, and is raising money by selling a stake to investors. "TransferWise's last fundraising round came in 2017, when investors including Old Mutual Global Investors and Silicon Valley venture capital firm IVP contributed $280 million, giving TransferWise a valuation at the time of more than $1.6 billion," notes BankingTech. "The company booked an operating profit of 9.5 million pounds ($12.4 million) over the 12-month period ending in March 2018 on 117 million pounds in revenue."

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