Just a week after Solaris was fined €6.5 million by German regulator BaFin for late submission of suspicious transaction reports, the German banking-as-a-service provider announces a strong €96 million in funding led by SBI Group and existing investors. The funding was much needed, not to pay the fine (at least let’s hope so), but to be able to onboard Solaris biggest customer, ADAC, the German automobile club. ADAC is currently offering a co-branded credit card with the German bank LBB, but due to a strategic shift, LBB has terminated their co-branded credit card deals, including ADAC. But let’s go step by step.
Solaris was not the first European banking-as-a-service provider (companies like Wirecard and Fidor were already offering such services before), but it was one of the driving forces in the late 2010’s. It received its bank licence at record speed in 2016, and for the years following that, it was the company everybody recommended when it came to banking-as-a-service providers (at least in Germany). This was obviously due to limited competition in combination with the collapse of Wirecard, but credit where credit’s due. Solaris was behind many of the local success stories, from business banking provider Penta to B2C neobank Vivid. But we all know where this ended and that neobanks are not very attractive customers for banking-as-a-service providers.
Therefore, Solaris has tried to enter the crypto and investment space with an as-a-service offering, but both of them have been shut down. What remains besides the traditional cards and accounts offering is the lending and verification product. Solaris pushed their verification product around the year 2020 quite a bit, but it got quiet around it. I am not sure if it’s still in high demand, but with the rise of many specialised players, especially for KYB, I would have my doubts.
Which brings us back to lending in combination with cards and, thus, to the co-branded credit deal with ADAC. You can argue that co-branded credit cards are not the most financially attractive deals since the brands negotiate hard on commercials, and the capped interchange in the EU is not helping either. But it might be the deal Solaris needs to move away from neobanks and closer to big brands. There are likely other co-branded credit card deals on the market, and I would assume that most of the Solaris sales focus will be on them. Therefore, I believe that announcements around new banking launches (such as Jimdo and Lexoffice in 2023) will reduce.
2024 is going to be a crucial year for Solaris and I will make sure to follow which path they are going.
