by Alexander von Knoop
November 12, 2015

There are always new ideas in the FinTech industry. It is important that companies and main cities collaborate to reap the benefits

Especially this year, the FinTech industry is booming worldwide. The number of companies has rapidly increased in recent time. This will deliver benefits to the broader banking and payments industry as it infuses new ideas, technology, and talent while simultaneously encouraging established players to invest more in research and innovation to maintain their market-leading status.

Now, all over the world people love to talk up the success of its FinTech industry. In the first half of 2015 Berlin FinTech start-ups collected more venture capital (€1.4bn) then start-ups in London (€1.1bn), according to accountants EY. Its development is being fueled by Berlin’s entrepreneurial culture as well as Germany’s strong economy. The FinTech market in New York and Silicon Valley still towers over the European scene, of course, and the UK and Germany still trail Israel’s FinTech industry.

Successful FinTechs need a professional bank partnership

However, the chances for FinTechs are currently as good as never before – not only because of the investing capital. It’s because smaller banks are willing to work with FinTechs. The symbioses of these cooperation is that these payment partnerships are essential for start-ups that need to accept money across different sales channels if they are to grow as quickly as they want to. They need easy access to the right software technology and banking solutions as well as help with risk management, issuing cards and mobile payments and introducing value-added services such as loyalty schemes.

One of the leading German disrupters helped by Wirecard is Berlin-based Number26 which claims to offer Europe’s most modern current account on mobile and online. In July it launched an English-language version of its mobile banking app which had been running in Germany and Austria since January. And most recently Number26 went one step further to disrupt the traditional retail banking: They started a cooperation with a company offering a payment method called “barzahlen.de”. Now user of Number26 can withdraw money and deposit cash on their account at over 3,000 branches throughout Germany.

The range of ideas goes from crowdfunding to loans for students

At least since this well-known FinTech example, the entire industry is in a fever of ideas. There are more and more founders who want to bring out various solutions like crowdfunding platforms, loans for student, micro credits or other easy pay solutions.

These rise of FinTech companies in the payments marketplace will deliver benefits to the broader banking and payments industry as it infuses new ideas, technology, and talent while simultaneously encouraging established players to invest more in research and innovation to maintain their market-leading status.

But in the same way FinTechs and banks are working closely together, even cities like Berlin and London could benefit of each other’s advantages: Demonstrating high levels of FinTech innovation and investment there are calls for start-ups from both cities to perhaps find ways to work together. There could be a cooperation to enter each other’s market and the sharing of best practice.

London is a banking metropolis and berlin a center of creativity

Innovators could also share knowledge. London for example is known as a metropolis for banks while Berlin offers a more relaxed corporate culture which appeals to entrepreneurs. The German capital can also be a cheaper location for new businesses to launch.

One of London’s key advantages has always been the proximity of its financial institutions, and in Germany’s financial center Frankfurt there is also considerable investment in FinTech. In fact there is no shortage of innovators keen to challenge the traditional financial services model.