German fintech startups are happily welcoming increased capital from banks: According to the Fintech Cooperation Radar by auditing and consultancy firm PwC, local banks invested directly in fintechs in 36 instances between January and July of 2019. That is nearly as many investments as in the entire years of 2017 (35) and 2018 (39). Insurance companies have also become more active: They invested in 20 fintechs by the end of July in 2019 and might just break the 2018 record (29), reported PwC.
The number of financial investments (56), however, still lags behind that of purely operational collaboration. The PwC report recorded a total of 83 such collaborations from January to July in 2019. Yet compared to the previous year, the gap between both forms of collaboration has narrowed significantly. For every direct investment in 2018, there were two and a half non-financial collaborations.
“With banks in particular, it looks like they are forging fewer new collaborations with fintechs as was the case in the two previous years. But when they do decide to work together, they seem to do so to a much greater extent,”
explained Sven Meyer, Leader Fintech at PwC in Germany. Meyer did go on to say it is however much too early to call it a trend reversal.
An overview of fintech collaborations
For the time period from January to July 2019, PwC recorded a total of 324 collaborations in the field of fintech. The auditors are expecting that to reach 555 for the entire year. That would be an increase compared to 2018 with its record-breaking 529 collaborations. The strong growth of previous years — with just 15 instances in 2013 climbing to 521 in 2017 – has stopped for the time being.
In total, PwC has recorded exactly 2,102 collaborations with German finance startups since 2013. With 693 instances, banks are the most important partners, with insurance companies in second place with 354 instances. Third place is taken by media companies with 127 fintech collaborations. Major TV corporations in particular stand out with what are known as media for equity deals. In such cases, normally it’s not money that’s pumped in, but rather an investment in the form of “free” advertising time.
Insurance companies lead in operational collaboration
Measured in terms of purely operational collaboration, insurance companies are even ahead of banks. In the time period from January to July in 2019, a total of 72 collaborations were reported, while for banks — of which there are significantly more of than insurance companies in Germany — only 70 were announced. Things looked much different in the previous year: In 2018, German banks concluded 137 operational collaborations with fintechs, while insurance companies concluded only 62.