German fintech Solaris aims to triple revenue despite sector pressure

Berlin-based fintech Solaris is aiming to triple its revenue to €300mn in the next two years despite job cuts, struggling clients and a recent rebuke from its regulator.

Solaris, which has a German banking licence and offers white-label banking services to fintechs and corporate clients, has long been a poster child of Berlin’s buzzing start-up scene, having raised €400mn from investors including credit card group Visa and Spain’s BBVA.

Revenue doubled to €101mn last year, making it one of Europe’s biggest so-called “banking as a service” providers, and it acquired UK peer Contis in January. Although it recorded a pre-tax loss of €34mn in 2021, Solaris said it is on track to become profitable by the end of this year.

However, its rapid growth has recently hit a speed bump after clients such as online lender Nuri filed for insolvency and other cash-strapped fintechs reined in their growth plans as funding became more scarce. Financial regulator BaFin also this year rebuked Solaris for organisational flaws, parachuting in a special monitor, imposing tighter capital requirements and insisting on approving any new customers.

Departing chief executive Roland Folz, who will leave after more than six years at the top by the end of April, acknowledged that “2022 has been a very, very difficult year”.

His successor, Carsten Höltkemeyer, the former Germany chief executive of Barclaycard and currently the chair of Düsseldorf-based fintech auxmoney, will join the board in November before assuming his new role in May.

He outlined Solaris’s growth plans to the Financial Times in his first interview since the appointment was announced. “I see the potential of €300mn net revenues [by 2024], and of course have the ambition to achieve it,” he said.

Although he said meeting the goal would partly depend on wider market conditions, he said the bulk of the increase is already locked in for the group after it won Europe’s largest motoring association, ADAC, as a client. This will mean it will begin processing 1.3mn ADAC-branded credit cards from 2023, which alone will generate more than €100mn in additional annual revenue. Meanwhile, rising interest rates are predicted to add an additional €25mn per year.

However, Höltkemeyer said that he could not rule out additional job cuts on top of those already announced earlier this year, when the lender cut close to 10 per cent of its workforce of 750 employees. “At the moment, we are jointly evaluating the [headcount] situation and are assessing how to find the right balance between further growth and efficiency,” he said.

Pointing to his experience in dealing with financial regulators, Höltkemeyer said that he wants to make compliance “one of [Solaris’s] core competencies”, adding he welcomed the presence of the special monitor, as it meant an “intensive dialogue” with BaFin.