Frankfurt Stefan Unterlandstättner tries to spread optimism. “We are the fastest growing online bank in Germany,” said the head of the direct bank DKB in an interview with the Handelsblatt. The institute gained a total of 200,000 new customers in the first half of this year.
Nevertheless, the growth of the Berlin direct bank has slowed down recently. The institute gained almost five percent fewer new customers than in the same period of the previous year.
In the case of securities accounts, DKB recorded an even more significant setback: 52,000 new accounts were opened in the first six months of this year, around 40 percent fewer than in the same period last year.
The financial sector has been facing major challenges for months. The Ukrainian war, high inflation and the sell-off on the markets are putting the institutes under pressure. In addition to the DKB, the competitor Consorsbank is also feeling the effects. In the first half of the year, the bank registered around 10,000 new customers, almost two-thirds fewer than in the same half of the previous year.
The ING only publishes concrete figures for the German business at the end of the year. However, the bank has already said goodbye to pure growth and instead counts the house bank customers who should bring more income. In addition to the classic current account, house bank customers use at least one other product range.
Comdirect, another large German direct bank, did not want to communicate any numbers when asked. She has maintained this approach since she was merged into the parent company Commerzbank about two years ago.
The fact that the established online banks were still able to grow at all during the crises is also due to the fact that the attackers from the fintech sector are currently having a much harder time.
Fintechs with growth problems
Because many investors are much more reluctant to finance the business models of financial start-ups after the past record year. A study by the management consultancy Boston Consulting Group (BCG) on private customer business in Germany states: “Funding rounds are becoming more difficult, ratings are falling, and employees are being laid off from companies that have only known growth up to now.”
According to the study, it can be assumed that there will now be a phase of adjustment and focus on profitability. The Berlin crypto bank Nuri only had to file for bankruptcy in mid-August because it had not received any fresh capital from investors. Two other German neobanks, Kontist and Penta, were bought up by foreign competitors. And the largest German neobank N26 has been struggling with growth restrictions imposed by the German financial regulator Bafin for months.
According to the management consultancy BCG, some fintechs will also withdraw. According to the study, it can be assumed that there will now be a phase of adjustment and focus on profitability.
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Despite the current problems, the authors of the study are convinced: Fintechs that survive these times will “emerge stronger” – and play a larger role in the market.
Such worries are alien to the established players. But the direct banks are also striving to increase the earnings per customer. Two years ago, ING initially rejected the goal of reaching ten million customers. Since then, the number of customers has fallen to around nine million, but almost every fifth customer is now a house bank customer. And according to the company, the trend is continuing.
In the private customer business, ING Germany increased its profit by almost two percent to 423 million euros in the first half of the year.
DKB’s ratio of house banks also increased. “We are approaching the 60 percent mark,” said Unterlandstättner. At the end of last year, it was just over 50 percent of the 5.2 million customers. The direct bank counts those among the house bank customers who receive their monthly salary in their account.
While the DKB increased operationally, the Berlin direct bank earned 56 percent less in the first six months than in the same period of the previous year. The reasons for this included the new challenges posed by the turnaround in interest rates when investing own funds and the increased administrative workload caused by more employees. In addition, the group is currently investing heavily in technical equipment.
The Consors brokerage appeals above all to customers with an affinity for the stock market, the traders: “Our customers invest heavily in ETF savings plans,” said Sven Deglow, CEO of Consorsbank. Consors belongs to the major French bank BNP Paribas.
Uncertainty in the stock market
Despite the crisis, the bank is not experiencing a trading slump, according to Deglow. Since the beginning of the year, customers have opened 25,000 new custody accounts at Consors. And that despite the fact that, according to Consors boss Deglow, there is “great uncertainty in the market”.
In a half-year comparison, this uncertainty is nevertheless clear, as was the case with the DKB. Because in the first six months of last year, Consors recorded 40,000 new depots. Since the beginning of the year, customer assets under management at Consors have also fallen by almost ten percent to around 69 billion euros.
The direct bank currently manages a total of 1.42 million securities accounts. According to Deglow, however, the number of transactions was higher than “the strong first six months of the past year”.
Market leader ING Germany also recorded growth in the volume and number of securities savings plans in the first six months of the year, as a spokesman announced.
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The local brokers are also feeling the effects of the market environment. For example, Flatexdegiro recently had to scale back its expectations for the current year. The listed Frankfurt online broker expects fewer transactions and 600,000 to 700,000 new customers, previously there was talk of up to 840,000.
Flatexdegiro CFO Muhamad Chahrour said retail investor trading activity has returned to pre-Corona levels. “This increases the pressure on business models with a focus on inexperienced first-time users, many of whom have completely withdrawn again.”
Fintech competition could still grow
The management consultancy BCG expects that the withdrawal of some fintechs will strengthen the existing ones. The Berlin neobank N26 had around seven million customers at the beginning of last year. Up-to-date figures do not yet exist. Competitor Vivid, also from Berlin, says it currently has over 500,000 customers.
The direct banks want nothing to do with growing competition from the fintech sector. “Our focus is quite different: We mainly offer securities trading,” said Deglow. Such a product is in fact missing from N26, although there are points of intersection in the current accounts.
Unterlandstättner also confirms: “In comparison, we only concentrate on the German market and also offer other products, such as construction financing and personal or car loans.” These would not usually exist with fintechs.
And yet the DKB boss does not want to rule out acquisitions from the sector now that valuations in the financial sector are plummeting. “Our systems cater to a lot more customers than we have in the past,” he said. “If opportunities arise, we’ll look into that.”
Unterlandstättner has already been able to lure at least a few employees from local fintechs to DKB: many would appreciate the advantages of working for an established bank.
More: Flatexdegiro increases profit – but the number of new customers and transactions is falling