It’s a truth universally acknowledged that fintech startups need banks and the services — not to mention the regulatory protections — they offer.
Berlin-based “fintech company builder” FinLeap has taken this to its logical conclusion by building a licensed bank for its startups to leverage. The result, called solarisBank, markets itself as a “technology company with a banking license,” an appellation many banks aspire to these days. Its offering is “banking as a service,” meaning an out-of-the-box solution for fintech companies to plug into.
The license was granted by the German regulatory body BaFin (Federal Financial Supervisory Authority), which operates under the authority of Germany’s federal Ministry of Finance.
The services provided by solaris include what you’d expect from a digital bank built for fintech startups: payments, transaction services, deposit and credit services, as well as compliance and KYC/AML solutions. Solaris already has a number of customers, according to a Techcrunch report.
“We are confident that most major internet companies will want digital banking solutions that expand their product range and offer it within a challenging regulatory environment,” FinLeap Chairman Jan Beckers said. “We haven’t seen a bank that offers a technology platform like ours and can partner with so many different kinds of companies and business models.”
Indeed, solaris seems to be offering a hybrid of what Web Bank, Cross River Bank, and The Bancorp offer in the U.S., which is wholesale banking services for fintech companies, and what API-driven services like Open Bank Project (also based in Berlin) and Plaid offer. These latter services (joined, until recently, by Standard Treasury, which was acquired by Silicon Valley Bank in August 2015) offer a simpler interface for fintech companies, so that the complexity of bank systems can be avoided.
Chris Skinner, author of Digital Bank (2014) has been discussing banking as a service — providing component bank structures — since 2009. Solaris is providing this in a modern API form. Skinner noted that PrivatBank in Ukraine and others offer similar services — all in Europe, alas. He is actively investigating solaris, as might be expected, and as he put it to Bank Innovation, his initial questions run along these lines: “Are they going to deliver something that is better than components I can get from Stripe, Lending Club, TransferWise, Venmo etc., e.g, there are already hundreds of APIs and components and apps out there – will Solaris offer a superior version of these things?” (He’ll soon find out — he’s in touch with the team — so expect to hear more from him on this.)
Unfortunately, it is difficult to imagine something like solaris taking place in the U.S., because banking licenses are so difficult to attain in the land of the free. But solarisBank has planted a flag, and U.S. fintech firms should be watching with interest as it moves forward.
Update: A cheering tweet fluttered across the screen soon after this story was posted:
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@BankInnovation We start in Germany but plan to operate internationally soon!
— solarisBank (@solarisBank) March 16, 2016