Fewer bankruptcies and takeovers: Fintechs defy the Corona crisis

In recent years, financial startups have seen a strong selection. In the corona pandemic, they are surprisingly crisis-proof. According to experts, there are several reasons for this.

Despite the Corona crisis, fewer young financial companies have disappeared from the market due to bankruptcies and takeovers. The strong selection among startups – the so-called fintechs – has been slowed down for the time being, according to a study by the auditing company PwC. In the first nine months of the year there were 26 business hires, in the whole of the previous year there were 57.

Some big fintechs got a lot of money from investors even during the crisis, said Sven Meyer, fintech expert at PwC. "They are now established figures in the financial sector and are accordingly crisis-proof." New foundations and young companies also help the relaxed bankruptcy law in the Corona crisis. In the first nine months, 20 financial start-ups were also taken over, shows the paper that is available to the German Press Agency. For the full year, this would mean an extrapolated 26 fintech takeovers, a decrease compared to the record figure of 31 in 2019.

"The corona crisis led to a lot of uncertainty among companies, especially at the beginning of the year," said Meyer. The wave of takeovers has flattened out. Since digitization has gained in importance with the corona crisis, it is likely to be a temporary effect. There had been a number of takeovers in the past few years as many fintechs swallowed up competitors. In addition, banks, IT companies and insurers bought financial start-ups or participated in them in order to bring fresh ideas into their own company under the pressure of digitization. At the same time, numerous young financial companies had to give up because their ideas did not prevail.

Financial startups want to use intuitive technology to make transfers, savings, loans or insurance faster and more convenient. They were quickly traded as a threat to banks. Recently, however, it became clear that only a few prevail – typical for a young industry. The most successful fintechs include interest portals, through which investors can compare the conditions of many banks and invest money more lucratively. Some investment robots that automatically invest wealth on the stock exchange and smartphone banks have also grown strongly. In May, the Berlin online bank N26 raised 92 million euros from investors in a financing round.

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