Europe’s love affair with business banking startups

This week business banking startup Penta, based out of Germany, launched its public beta program. Back in July, long time readers will remember we covered Tide, a similar player based out of the UK. Coconut is another having a crack, which we covered as part of our Nesta story earlier this year as well. This market is huge, fragmented and not served well by the existing players.

Penta, Tide and Coconut are all approaching this with a Square like mentality – start with startups and freelancers, who’s business banking requirements are still relatively lightweight, then grow with them. This is much easier than unseating a business banking relationship for a company in its growth phase, as for these businesses, access to affordable bank credit is critical, and not worth giving up a bad business bank account for, despite the tech-pain.

Penta’s backend banking piece and licencing is provided by another startup, 2 year old solarisBank. In March of this year, solarisBank raised €26.3 million to expand its banking platform to Asia. Interestingly, Penta isn’t the first business banking play using solarisBank’s rails to get to market. Hufsy, a Danish business banking startup, has partnered with solarisBank as part of its German expansion. It has a similar product offering to Penta.

But there must be something in the water in Europe, because there are more.

Belgium headquartered, but Polish by design, banqUP also plans on having a crack using solarisBank’s rails. Its pitch is fairly similar to the rest, although it likes to call its target market ‘millennipreneurs’. On that note, the Wall Street Journal recently issued an update to its style guide, which went viral on Twitter. For those of you reading this in the marketing department, be on notice that the term millennial may now be considered derogatory by those within its generational ‘bookends’. After years of snide posts written by baby boomers and Buzzfeed journalists, it appears the avocado lovers have simply had enough.

FairFX in the UK also plans on getting into SME banking, while iBanFirst is licenced by the Bank of Belgium for its BaaS play in FX.

No question the SME banking horse has definitely bolted. It will be interesting to see who wins the race, in Europe anyway.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business.

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