34 The European Business Review July - August 2019
The competition is smelling blood
for an opportunity to crack into this
economy and have been circling
their helpless prey for years. DiBa,
a German subsidiary of the Dutch
Bank ING has ventured in for the kill.
Its business volume and market share
in Germany is up in every segment
from 2012. It is now serving almost
10 million customers in a country of
80 million people and has grown from
a virtual standstill in 2002, when ING
acquired DiBa, to a top 10 German
Bank by balance sheet assets. DiBa
has embraced a new method of
delivering financial services, which
has totally escaped the traditional
private banks’ senior management.
Instead of operating with hundreds
of retail banks across the country,
DiBa maintains only three substan-
tial offices in Frankfurt, Hannover
and Nuremberg. Mortgages, current
and saving accounts and consumer
loans are delivered online backed up
with call and data centres to facilitate
client contact. As a result, its parent,
ING Group, has not only recovered
its pre-2008 financial crisis value but
even more impressively is now worththree times Deutsche Bank’s entire
global operations.
However, worse is to come for the
well-remunerated bank managers in
Frankfurt as they discussed their failed
potential merger of equal “sequel”.
A new business disruption is already
well under way in revolutionising the
industry at a time when they have
barely come to grips with the last tech-
nology revolution. Some borrowers
are becoming sceptical of traditional
banks and are flocking towards online
portals to raise their funding require-
ments. The recently published market
report by crowdfunding.de illustrates
the speed of this disruption. Since
2011, the compounded annual growth
rate of the crowdfunding industryin Germany exceeded 110%. To put
it differently, over the last 7 years,
the industry has on average doubled
every year and does not appear to
slow down soon.
Initially, the industry was almost
purely focused on providing funding to
corporations typically in their start-up
phase. In 2015, this segment still
made up over two-thirds of the entire
German crowdfunding market. A year
later, investors and borrows alike gained
confidence and trust in funding property
investments via online portals. Mortgage
type lending via crowdfunding exploded
and nowadays this segment makes up
over 70% of the entire industry.
In Germany, crowdfunding can
roughly be divided into providing for
real estate, corporations and energy
projects. As is frequent in early devel-
opments in a disrupted market, each
segment has small but very focused
service providers who aim to dominate
their segment before branching out into
a broader business model. In the largest
segment, real estate, a 2014 start-up
from Hamburg, Exporo is estab-
lishing a comfortable lead. However,
the business opportunity and margin
pressure on traditional rental and real
estate brokers such as Engel & Völkers
Capital have broadened the market and
will give the listed start-up Exporo liter-
ally “a run for their money”.
In the market segment for corpo-
rate start-up funding, Kapilendo and
Funding Circle lead a highly frag-
mented field for credit, mezzanine and
equity funding. The newest segment,
energy project lending is still in its
infancies but given the political deci-
sion and pressure in Germany on the
traditional energy firms such as RWE
and E.ON, one can expect a virtual
explosion of new energy projects
funded via the crowd.
What is most notable in the league
tables is the complete absence of anyThe competition is
smelling blood for an
opportunity to crackinto this economy and
have been circling their
helpless pray for years.
Fintech