‘Democratization of Finance:’ Affordable Products

Teamwork makes the dream work.

That’s what two of Europe’s largest FinTech firms and longtime German rivals Raisin and Deposit Solutions decided to do in June of this year, teaming up to form a new entity, Raisin DS, to boost products in the European savings and investment space.

Related news: Raisin, Deposit Solutions To Create Pan-European FinTech In Merger

The Berlin-headquartered group brings together Raisin’s business-to-consumer (B2C) savings marketplace and Deposit Solutions’ business-to-business (B2B) savings platform, providing an open banking infrastructure that benefits its roughly 400 partner banks and financial institutions across Europe, U.K., and the U.S., while serving over 550,000 direct customers in 30 countries.

“Combining two leading FinTechs in the space gives our clients and partners more choice [and] better offers,” Dr. Tamaz Georgadze, co-CEO of Raisin DS, told PYMNTS in an interview. “That was the major rationale behind the merger and why we are so passionate about it.”

The merger took place as Europe was — and is still — recovering from the pandemic, and Georgadze said it created a difficult situation for both bank partners clients and banks alike, as lockdowns forced people to save more, causing the net savings rate to shoot up in all geographies. In continental Europe the rate is at about 25%, he said, up from pre-pandemic levels of 8-10%.

And because consumers were not borrowing, liquidity demand nosedived, and coupled with the negative interest rate policy in the Eurozone requiring banks to pay interest on excess cash, it “created stress” in the system, he added.

“I think we’re coming out of this,” he noted, however, given the fact that lending is starting to pick up and savings rates are coming down to more normal levels, boosting offers on their savings platform.

And so far, it’s been a busy year for the savings and investment FinTech as it broadens its offerings and rapidly expands across Europe. A few weeks after the merger, Raisin launched in the U.S., making Dallas-based MapleMark the first U.S. banking institution to use Raisin’s term deposits.

Last month, the Berlin-headquartered group also signed a deal with Germany’s second-largest direct bank, Deutsche Kreditbank (DKB), connecting an additional 4.8 million German retail customers to the Raisin DS’ deposit and investment marketplace.

Earlier this year, the FinTech also launched a ‘hybrid-robo’ exchange-traded fund (ETF) trading platform in Germany, with over 200 ETFs and funds that give investors and neobrokers access to off-the-shelf ETFs. The firm plans to roll out across Europe, particularly in the U.K. as well as in the Netherlands where their business is rapidly growing with the recent launch of an easy access product.

Democratization of finance

Georgadze said partnering with these many banks comes with its challenges, and as much as the pandemic has accelerated digital transformation across various sectors and industries, some traditional banks have been slow to fully digitize their processes.

“We have discussions which are going on for two to three years, and even though the decision is positive, and they want to partner [with us], there is a lack of resources, and at the end we’re not on the priority shortlist,” he explained.

He noted that the prospects of improving efficiencies and saving on costs have not been enough to convince banks who have fears about regulatory compliance and are held back by the limitations of legacy IT systems.

That said, the pan-European group has improved in onboarding large partners since Raisin launched back in 2013, because “having done it 400 times, we know what to do to make partners’ lives easier,” he said, adding that what it often requires is guiding and supporting banks by simplifying or taking over some of the tasks so that it’s easier for them to navigate the process.

As the group continues its work with bank partners, he said the “democratization of finance” will move to the forefront, ensuring better and easy access to banking products for clients.

At Raisin DS, that means helping customers to invest digitally, rapidly, and with lower amounts at a reasonable price that means offering products, starting at 1 euro, 50 euros or 100 euros. It also involves making investment products available to the masses by using online robos and ETF savings plans to lower the hurdles that hinder clients’ ability to invest on the market.

“Those are the things we’re constantly thinking about, how to make financial markets available and simpler for the end customer,” he noted.

Embedded finance is another area where the group has an advantage, given that its marketplace is available both directly and in several partnership settings and contexts where the API is flexible enough to allow a lot of different use cases and iterations for various client segments.

For example, the platform partners with several Germany-based FinTechs, including digital wealth manager LIQID, which allows customers, who want to invest multiple 100,000 euros at once, to combine different products in a single view; with neobank N26, which allows customers to set up personalized subaccounts; and Scalable Capital, which gives customers a real-time indication of how many cents they have earned.

As Georgadze said, “what we like is how the contextual integration allows us to target the customer in the best way, exactly at the right moment, delivering a unique customer experience that is taken care of by us together with our product partners,” adding that “those are the things that excite us [and] that we want to continue building to make the experience better [for clients].



About: It’s almost go time for the holiday shopping season, and nearly 90% of U.S. consumers plan to make at least some of their purchases online — 13% more than did in 2020. The 2021 Holiday Shopping Outlook, PYMNTS surveyed more than 3,600 consumers to learn what is driving online sales this holiday season and the impact of product availability and personalized rewards on merchant preference.

By Anisa