Solaris acquires Contis to form a Banking-as-a-Service champion

Solarisbank, the German banking platform is expanding in Europe. After raising €190 million in a Series D financing round, at a valuation of €1.4 billion, it announced the acquisition of its British competitor Contis.

FACTS

• Led by Decisive Capital Management, this fourth round of financing for Solarisbank, in which BBVA participated, values the fintech at more than 1.4 billion euros. It also received support from new and existing top tier investors such as Pathway Capital Management, CNP (Groupe Frère) and Ilavska Vuillermoz Capital, as well as existing investors such as yabeo Capital, Vulcan Capital and HV Capital.

• Including this Series D round, Solarisbank has raised over €350 million in total since its inception in 2016. This new round is subject to regulatory approval.

• The main objective of this new funding round is to finance the acquisition of Contis, a company founded in 2008 that has become one of the most comprehensive BaaS platforms in Europe.

• SolarisBank is growing at a rate of 40 to 60% per year. It has 50 "partners" including Trade Republic, American Express, BP, Samsung and Vivid and covers some 2 million customer accounts.

• Contis, on the other hand, is an important business in its own right, with some 200 clients covering more than 2 million users and 9.9 billion euros in transactions per year.

CHALLENGES

• Creating an integrated finance champion in Europe: The acquisition of Contis will give the German company a foothold in the UK as well as payment processing capabilities. Contis and Solarisbank form the undisputed leader in banking as a service in Europe. The collaboration will provide an unparalleled holistic offering in terms of market coverage and product offering. Solaris recently announced its official market entry in France, Italy and Spain, where it will offer local IBANs to its partners.

• Supporting the financial services disintermediation trend: Solaris provides a range of financial services through some 180 APIs that third-party and non-financial companies use to create end-user products (including banking, payment cards, loans, and know-your-customer services) that enable companies to focus their energy on creating more customer-friendly experiences. The company recently migrated its entire technology stack to the AWS cloud and moved all partners to its fully in-house developed core-banking system.

MARKET PERSPECTIVE

• Integrated finance or Banking-as-a-Service-the process by which some of the most complicated, yet mundane, aspects of financial services are built and wrapped in an API that anyone can implement in their own end-user products-has become a huge cornerstone of how financial technologies are built today.

• There is a lot of interest in integrated finance, and a number of startups are now providing fintech-as-a-service or banking-as-a-service tools to third parties. Other notable names in the same market segment include Railsbank, which also announced funding earlier this month; Rapyd, which raised a big round at a $2.5 billion valuation earlier this year; Unit, another bank-as-a-service startup that is growing; FintechOS; and startup 10x, which is targeting incumbents.