German fintech startups are increasingly receiving funding from banks: As the Fintech Cooperation Radar from the auditing and consulting firm PwC shows, local banks invested directly in fintechs in 36 cases between January and July 2019. This was almost exactly the same number of investments as in the entire years of 2017 (35) and 2018 (39). Insurers are also becoming increasingly active: They invested in 20 fintechs by the end of July 2019, likely breaking the record set in 2018 (29), according to PwC.
However, the number of financial investments, at 56, still lags behind purely operational partnerships. The PwC study counted a total of 83 cases of this type for January to July 2019. However, compared to the previous year, the gap between the two forms of cooperation has narrowed significantly. In 2018, there were two and a half non-financial partnerships for every direct investment.
"Especially with banks, it looks as if they are entering into fewer new partnerships with fintechs than in the past two years. But when they do decide to cooperate, it seems to be with significantly greater consistency,"
explained Sven Meyer, Leader Fintech at PwC in Germany. However, Meyer added, it is still too early to speak of a trend reversal.
Fintech collaborations at a glance
For the period from January to July 2019, PwC counted a total of 324 collaborations in the fintech sector, and the auditors expect 555 for the entire year. This represents an increase compared to the previous record year of 2018, with 529 collaborations. However, the strong growth of previous years—from just 15 cases in 2013 to 521 cases in 2017—is over for now.
In total, PwC has counted exactly 2,102 collaborations with German financial startups since 2013. Banks are the most important partner, accounting for 693 of these, followed by insurers with 354. Media companies are in third place with 127 fintech collaborations. Large TV companies, in particular, often excel in so-called media-for-equity deals. In these cases, no cash is usually involved; instead, the investment is made in the form of "free" advertising time.
Insurers are ahead in operational cooperation
In terms of the number of purely operational collaborations, insurers even rank ahead of banks. They reported 72 collaborations between January and July 2019, while banks—of which there are significantly more than insurance companies in Germany—only reported 70. The previous year, the picture was quite different: In 2018, German banks entered into 137 operational collaborations with fintechs, while insurance companies only reported 62.
