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Home » Daily Briefing » Daily briefing - 10 January 2019

Daily briefing - 10 January 2019

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Weird things are happening in the world when German banking licences are suddenly the rage. And while London continues to attract the lion's share of fintech investment in the UK and in Europe, the German capital is stealthily becoming a fintech champion. This morning German fintech-turned-bank N26 announced a $300 million investment round led by Singapore fund GIC and New York's Insight Ventures. The new injection of money will value the business at around $2.7 billion, making it the most valuable fintech business in Europe. "While it's hard to top the incredible year we had, 2019 is also starting off on a high: We have closed our Series D funding round with an incredible $300 million," said the co-founders Maximilian and Valentin Stalf. "This figure represents the largest private equity financing round for a fintech business in Europe in recent years. With a valuation of $2.7 billion, it also makes N26 one of the most valuable technology startups around the world." Chief executive Valentin Stahl told the FT that the business is still lossmaking but is making money on a per-customer basis. "Mr Stalf also said about 30 per cent of UK users had signed up for the bank's premium account, which charges a £14.90 per month subscription fee and offers a metal debit card, plus perks such as travel insurance, discounted hotel bookings and WeWork membership."

Meanwhile, the UK's big banks are queueing meekly for German banking licences. RBS already has a Dutch licence and applied for a German banking licence in December to help expand its German operations. "Lloyds Banking Group is to set up three subsidiaries in Berlin, Frankfurt and Luxembourg, while Barclays is expanding its Dublin office," the BBC reported. "Under the plan, RBS will upgrade its current branch in Frankfurt with a new licensed unit. It will be responsible for processing and settling euro-denominated payments and offering loans to large German companies. It would also allow RBS to maintain its ties to Germany's central bank and continue benefiting from passporting rights that give financial services firms cross-border access to EU clients."

But Berlin's not about to outpace London anytime soon. Data compiled by Reuters suggests that London remains a premiere destination for fintech investment capital. "Eileen Burbidge, a partner at venture capital firm Passion Capital, said London was the leading hub for financial technology thanks to its position as one of the world's biggest financial centres, while its universities helped to create companies offering artificial intelligence (AI). 'We get a lot of calls and inquiries from investors in the U.S. and Asia looking for fintech opportunities,' she told Reuters. 'In fintech, AI and a few other sectors such as life sciences and robotics, London genuinely leads the world.'" Its lead in fintech remains strong — though we anticipate that China will catch and overtake the UK in all things AI-related. "In Britain as a whole, investment in AI rose 47 percent to 736 million pounds while 1.2 billion pounds went into the booming fintech sector and companies such as digital banks Revolut and Monzo," reports Reuters.

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