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The German FinTech industry is currently making an exciting breakthrough. The keyword is consolidation. Or to be precise, it is about acquisitions. The Berlin-based company-builder Finleap directly takes over the also Berlin-based smartphone bank Penta. What does the takeover mean for the FinTech industry?

The age of consolidation is dawning: FinTech buys FinTech

The German FinTech industry is currently making an exciting breakthrough. The keyword is consolidation. Or to be precise, it is about acquisitions. The Berlin-based company-builder Finleap directly takes over the also Berlin-based smartphone bank Penta. What does the takeover mean for the FinTech industry? 

The FinTech industry is just experiencing a sector consolidation induced by mergers and acquisitions. Takeovers have been classically carried out by private equity funds and big corporates, so far. But more and more FinTechs are participating in mergers and acquisitions. Besides the strategic deal with Penta, Finleap has previously merged their open-banking Fintech Finreach Solutions with the API service provider Figo. This merger was indirectly financed by a capital increase while the direct acquisition of Penta represents an expansion of Finleap’s own corporate portfolio.

What is behind the consolidation?

Products and services created by FinTechs were rather tailored to early adopters who are the first movers for new technical developments. This also applied to the FinTech industry up to now. But it is changing. FinTechs are leaving their niche and turn to the mainstream. Financial services are becoming more and more suitable for the mass market. By expanding their sales market, FinTechs can build a larger customer base, gain more trust and strengthen their ecosystem. The financial market differentiates further, not least because of mergers between FinTechs or through portfolio companies. Inorganic growth strategies for scalable business models will become more established. Investments are thought in a networked and interdisciplinary way in order to build up internal expertise.

A look into the future of a changing FinTech industry!

Financial startups are growing and evolving into established players, leading to more diversity in the financial sector. The FinTech industry is changing rapidly. Existing business models will also be redefined, particularly in the fields of asset management, payment and banking. Businesses will be refined, realigned or internationalized. But also new competitors are entering the FinTech market. Tech companies and global players without banking licenses – such as Google, Apple, Facebook and Amazon – are participating in the highly regulated financial industry. This results in more financial products and services. The tech world and the finance industry are continuously merging.

 

On 22 & 23 May the fintech world gathers in Berlin at the Digital Finance Conference. Join us when the leaders of the digital evolution of the global financial sector discuss the latest trends, technologies and business models at #digifin19.

 

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