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Fewer acquisitions and bankruptcies in financial startups | Free Press

Frankfurt / Main (dpa) – Despite the Corona crisis, fewer young financial companies have disappeared from the market due to bankruptcies and acquisitions.

Strong selection among startups, so-called fintechs, has slowed for the moment, according to a study by audit firm PwC.

In the first nine months of the year there were 26 trading environments, in all of the previous year there were 57. Some big fintechs made a lot of money from investors even during the crisis, Meyer said. “Now they are consolidated figures in the financial sector and, therefore, crisis-proof.” New foundations and young companies are also helping to relax bankruptcy law in the Corona crisis.

In the first nine months, 20 financial start-ups were also acquired, shows the newspaper available to the German Press Agency. For the year as a whole, this would lead to 26 fintech acquisitions, a decrease from a record 31 in 2019.

“The crown crisis created a lot of uncertainty among companies, especially at the beginning of the year,” said Sven Meyer, a financial technology expert at PwC. The wave of acquisitions has stalled. Since digitization has gained importance with the crown crisis, it is likely to be a temporary effect.

There have been a number of acquisitions in recent years, as many fintechs swallowed up their competitors. In addition, banks, IT companies and insurers bought or participated in financial startups in order to bring new ideas to their own company under the pressure of digitization. At the same time, many 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 marketed as a threat to banks. Recently, however, it became clear that only a few prevail, typical of a young industry.

The most successful fintechs include interest portals, through which investors can compare the conditions of many banks and invest money in a more lucrative way. Some investment robots that automatically invest wealth in the stock market and smartphone banks have also grown strongly. In May, Berlin-based online bank N26 raised € 92 million from investors in a funding round.

The decreasing importance of bank branches in favor of online banking has been proven by numerous studies conducted by various clients over the years. The most recent study in this regard is a representative survey of the comparison portal Verivox among 1,005 people in Germany between 18 and 69 years old, which was carried out by the German Press Agency and which was reported for the first time by the “Süddeutsche Zeitung”.

According to this, 6 percent of respondents have never been advised or attended by an employee at a bank branch, 35 percent more recently more than a year ago. More than a quarter (27 percent) log into their own bank account online every day, and another 55 percent at least once a week. According to the survey, the coronavirus has intensified the trend: 28 percent use online banking more frequently today than before the outbreak of the pandemic.