Founded in 2016, Berlin-based Solarisbank has been on a roll of late.
Last year, it raised €190 million in Series D funding, valuing the company at €1.4 billion, and acquired UK-based competitor Contis for an undisclosed amount. The joint partnership created combined 2021 net revenues of some €100 million.
The Banking-as-a-Service startup, which creates embedded finance API products now has 700 employees across Germany, UK, France, Spain, Italy, Lithuania, Ukraine and India. Their end-customer head count has reached five million, with Solarisbank opening one million new online accounts in 2021.
Its customers don’t need to apply for their own banking licences, as Solarisbank has one. Their clients include corporates like BP, Amex, and Samsung, online trading app Trade Republic, crypto startup Bitwala, and banking startup platforms Kontist and Penta. Depending on their needs, Solaris provides companies with modular infrastructure products that lets them integrate, for example, accounts, cards, IBAN numbers, or cryptowallets into their own offerings.
The galloping growth of Solarisbank in just a few years has been “extremely hard work, but very enjoyable," according to their CEO Roland Folz, and requires a balancing act between controlling processes and staying fast and agile.
Today, they announced the appointment of their new Chief Growth Officer, Chloé Mayenobe, who will spearhead expansion.
“Building a company from scratch is always a challenge, accelerating, and then coping with the growth — and the larger it becomes, the more painful mistakes become,” Folz told Tech.eu.
“A big focus for us in 2022 is to stabilise processes to make them extremely robust against any operational challenge, but at the same time, you don't want to become bureaucratic, you don't want to become a silo organisation.”
Folz joined Solarisbank five years ago, after a career in financial services that has spanned Unicredit Group, Direkt Anlage Bank, and Deutsche Bank.
He was CEO of the Mercedes-Benz bank, which he describes as one of the first successful embedded finance providers before the term even existed.
Solarisbank’s growth has also attracted the eye of Germany’s financial regulator (BaFiN), which announced recently it was appointing a special supervisor to the startup. BaFiN was left red-faced in the wake of the 2020 Wirecard scandal, when it was accused of ignoring warnings about dodgy accounting practices at the then-darling of the German fintech scene. The regulator recently got an overhaul and a new boss.
“Our objective will always be aligned because we want to make sure that Solaris is a safe organisation," Folz said. "It's an intense relationship, where I think all of us in the end share the same goal, i.e. we want to make sure that we keep fraudsters out.”
Growth in a post-Brexit Europe
The UK leaving the European Union created a well-documented headache for the finance industry, making it impossible for continental European banks to operate in the UK market, without applying for a banking licence there. By joining with Contis, Solarisbank was provided with access to an e-money licence in the UK.
The acquisition “complements the Solaris, full CRR banking licence, which we have expanded with branches into France, Italy, and Spain,” Folz explained. “Plus, of course, with passporting, you then can reach out into the remaining markets.. our goal is basically to offer a full European core banking solution.”
Folz said they are acting “very cautiously in moving the two fast-moving ships closer together”, so as not to slow the other’s growth. He said that in 2022, this means looking at areas of “low hanging fruit” that are of immediate benefit to both, for example on the commercial side by adding the products and services of the other company to the salesforces in the UK and the EU.
Even though the country borders within Europe may seem porous to citizens, each EU country throws up its own complex regulatory challenges for neobanks. For now, Solarisbank is not actively looking for any new acquisitions – they are prioritising stabilisation and growth in their EU markets.
IPO or no?
Solarisbank has been open about the fact it is eyeing an IPO. However, Folz said that it does not make such a difference for them if it is this year or next, as their growth trajectory is really good.
“I think, looking at recent market volatility, we have to be realistic,” he said. “What we can do is prepare ourselves, which we are doing… but then once we have put our ducks in line, then it's up to the shareholders to decide what is the best moment in time for a listing.
“It doesn't make sense to go out when you don't have investors that are interested in your company,” he added. “So I would say, let's wait and see how 2022 evolves, we will be ready, but we're not going to force ourselves onto a market that isn't receptive for listings.”
Growing at breakneck speed means hiring fast too, and, like for most growing scale-ups, that is a big challenge, especially given the competitiveness of big cities like Berlin. A couple of years ago, Solarisbank diversified its talent pool by hiring tech talent in Ukraine. And its partnership with Contis gives it access to their tech teams in India.
Even though a robust salary with shares is important, Folz believes that it’s about the overall package, including the company culture, freedom to innovate, and collaboration.
“For us, ‘remote first’ is the way we work,” he said. “It's one of the challenges going forward. I don't know how it will all unfold with Corona and remote and the degree of personal interaction that you have to have in order to maintain your culture. I would say there are more questions than answers right now.”
Folz expects a continued trend towards innovation and disruption in all the different financial services areas. As for the embedded finance sector, he is confident we will see deeper development of very specific client-centric solutions serving customer touchpoints, from hobbies, to e-commerce, to mobility and beyond. "If those include financial solutions, using a platform like Solaris allows you very efficiently to serve those target groups."