Financial institutions collaborate primarily with fintech companies on payment systems and credit solutions
German Banks and Fintechs Join Forces to Transform Payment and Credit Services
In a move to drive the payment industry forward, the Payment Exchange 2025 event will bring together innovators in the cooperations between banks and fintechs. The event, scheduled for March 12 & 13, 2025, at Tipi am Kanzleramt, Berlin, will focus on strategic partnerships and new technologies that are reshaping the payment landscape.
Recent years have seen a surge in strategic partnerships between German banks and fintech companies, particularly in the Payment and Credit sectors. These collaborations are centred around embedded finance, open banking, and digital innovation, aiming to enhance payment and lending services.
Embedded finance and open banking are key drivers of these partnerships. Banks are increasingly partnering with fintechs to integrate payment and lending capabilities directly into non-financial platforms, creating seamless customer experiences and expanding distribution channels. This trend aligns with evolving regulatory frameworks, such as the second Payment Services Directive (PSD2) in Europe, which encourage data sharing and interoperability between banks and fintechs.
Regulations like PSD2 and strong customer authentication requirements have pushed banks to collaborate with fintechs for compliant, innovative payment solutions. Consulting firms note extensive cooperation between banks and fintech companies via outsourcing/insourcing models to develop payment transaction and e-money products.
In the Payment sector, focus areas include alternative payment methods, automated financial services, banking-as-a-service (BaaS), electronic payment processing, and card issuing within regulatory limits. Credit sector partnerships often manifest through digital financing platforms such as crowdfunding, crowdlending, and credit factories integrated with fintech tech stacks.
The United Volksbank Raiffeisenbank (VVRB) from the Odenwald has the most partnerships, working with 7 Fintech companies between 2021 and 2024. Other banks, such as Commerzbank, Sparkassen-Finanzgruppe, and Varengold Bank, each have 8 identified partners. Cooperation also extends to Dutch, Estonian, UK, Irish, Swedish, and American fintechs, with 3 Fintech companies each coming from Austria - Bitpanda, Credi2, and 21Bitcoin.
Over the past four years, there have been 82 cooperative partnerships between German banks and Fintech companies. Notable partnerships include Commerzbank, Deutsche Bank, and S-Kreditpartner offering their installment loans through the comparison platform Smava since 2020, and Varengold Bank acting as a fronting bank for Banxware, issuing loans and then selling them to a special purpose vehicle of Banxware.
The cooperative financial group of Volksbanken Raiffeisenbanken has the most cooperative partnerships, with a total of 37. Other banks, such as NRW Bank, have integrated their offers into platforms like Smava and Europace, while Fincompare and Finmatch have integrated their processes with KfW.
The Payment Exchange 2025 event promises to be a vibrant platform for discussing these strategic partnerships and the future of the payment industry. As the trend continues towards increased cooperation under evolving regulatory and technological frameworks, it's clear that the future of payments and credit services in Germany is one of collaboration and innovation.
- The trend of increased collaboration between German banks and fintech companies, as seen in the Payment and Credit sectors, is driven by strategic partnerships and new technologies that aim to reshape the payment landscape.
- Partnering with fintechs is becoming essential for banks as they strive to integrate payment and lending capabilities into non-financial platforms, creating seamless experiences and expanding distribution channels, particularly in light of evolving regulatory frameworks like PSD2.
- As the Payment Exchange 2025 event approaches, it will provide an opportunity for industry leaders to discuss these strategic partnerships and the future of the payment industry, which is predicted to be one of collaboration and innovation.
