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German fintech Deposit Solutions has raised $17 million from a number of investors, including PayPal co-founder Peter Thiel, at a valuation of $121 million.
It plans to use the money to further expand internationally with a UK launch planned for January 2017. Deposit Solutions currently operates in Germany and Switzerland.
Deposit Solutions provides a platform that is essentially a network of banks. Some banks — referred to by the company as "client banks" — are looking to shed excess liquidity from their books. And others — called "product banks" — offer desirable products like high-interest savings accounts, but need retail deposits. Deposit Solutions routes the excess liquidity from client banks to product banks.
Notably, the client banks’ customers determine which product bank gets capital. Let’s say that a customer has an account at Barclays, a client bank in this example. Through the Deposit Solutions platform that customer sees that N26, a product bank, offers a high-interest savings account. The customer can access the savings rate that N26 offers without actually having to open account — Deposit Solutions just moves the equivalent amount of capital from Barclays to Number26.
Here are the benefits of using the Deposit Solutions platform for all parties involved: Product banks with low deposits. Many banks, particularly those that recently launched, need retail deposits in order to start lending and generate revenue. But acquiring customers is expensive. Deposit Solutions’ platform provides a way for these banks to get deposits without having to acquire customers. It also allows them to gain access to retail deposits from across borders.
Client banks with excess liquidity. European banks have to keep a percentage of their assets at the European Central Bank (ECB) […]
