Open banking solution to reinvent the deposit business in Europe – Max von Bismarck tells the story of Deposit Solutions

By October 24, 2019 News

Deposit Solutions is an open banking platform that allows banks to offer attractive third party deposit products to their own customers through their existing accounts. Deposit Solutions works with many major banking and finance brands including Deutsche Bank, CreditPlus, FFB, and PBB Direkt. 

We had a chat with the Chief Business Officer & Managing Director of Deposit Solutions Max von Bismarck about the company achivements and aspirations and the latest banking industry trends. 

 —  Deposit Solutions has recently reached a unicorn status after the $55 million investment from Deutsche Bank. Big congratulations! What recent opportunities opened up for you since then? How do you plan to make use of this funding?

We are building a new infrastructure for the global deposits business that can be used by all market participants, such as banks, wealth managers, brokers, insurers, FinTechs or comparison websites, that want to offer their customers attractive third-party savings deposits products through the existing account relationships. 

By opening up for clients of ours to become shareholders, we now give the industry the chance to participate in the success of the infrastructure they use. The investment of Deutsche Bank is also a great opportunity, because on the back of it the bank has announced to extend its proprietary interest rate marketplace “DB ZinsMarkt”, for which they use our platform, to its subsidiaries Postbank and Norisbank as well as their business with corporate clients and their international businesses. 

For us, this will lead to an additional reach of 17 million savers to the more than 30 million our platform can reach  already, which is quite unique when you compare it to the customer base of a B2C interest rate market place. As for the additional funding, we are growing internationally, so we will use the funds to further execute our global expansion and to support the entry in new markets.

We brought a genuine innovation by introducing a new settlement standard for the deposits business that creates a win-win-win: banks in search of retail deposit funding can directly connect with other banks and platforms holding client relationships

—  What are the main benefits of “Deposit-as-a-Service” model for both banks and customers?

In order to source retail deposit funding, today’s banks no longer have to own and operate an entire traditional retail infrastructure. Instead, they can simply connect to Deposit Solutions’ Open Banking platform and gain access to an enormous international base of depositors. This is what we call “deposits-as-a-service”. 

The main benefit by sourcing deposits through our platform is that banks reduce their funding costs by expanding the addressable market while at the same time they don’t have to take care of customer acquisition, retention and service. They also increase the quality of their funding, since it is more diversified and independent from local markets.

—  What countries are you currently based in and what are your further expansion plans?

We have offices in Hamburg, Berlin, London, Paris, Zurich and New York and local representatives in half a dozen more regions. With our New York office, which opened one year ago, we have been one of the very first German FinTechs to set foot in the US. Since then, our team is preparing the market launch at full speed and we are expecting to go live in a couple of months. Even before that, we will launch our platform in Spain. But we are actually quite international already: today we work with around 100 banks from 18 different countries.

 —  You are the second most valuable German FinTech company — what do you think has been your key to success in this very competitive market?

We brought a genuine innovation to one of the most important product categories in finance by introducing a new settlement standard for the deposits business that creates a win-win-win: banks in search of retail deposit funding can directly connect with other banks and platforms holding client relationships. And platforms that want to offer their clients third-party deposits products can integrate these into their own client offering. We are also significantly improving the customer experience. And with USD 50 trillion globally, the market that we are engaging in is incredibly big. Deposits account for roughly 40 percent of a usual bank’s balance sheet and around 30 percent of private savings portfolios worldwide. 

In the future, we will see a bifurcation of the market - on one side, we will have product providers that specialize in developing financial solutions, without owning the client relationship. And on the other side, we will have client-centric platforms

 —  How do you think the banking industry will look like in 10 years?

I think that we will see a bifurcation of the market. On one side we will have product providers that specialize in developing and offering best-in-class financial solutions in every category, without necessarily having to own the client relationship. And on the other side we will have client-centric platforms, which can be banks but also non-banks, that want to fulfil all financial needs of their clients and focus on creating a great customer experience, without necessarily having to own the best products in every category. Instead, they are going to curate additional third-party-offers. We are supplying an efficient middleware. 

 —  Deposit Solutions has already participated in 7 NOAH events in London and Berlin! You are a true NOAH veteran! Why do you keep coming back to us and how has NOAH impacted your business through these years? 

NOAH has built a fantastic community of entrepreneurs, investors and other market participants. We are excited to be part of that community. We have had value add conversations every single time we have participated. By now it is starting to feel like a a class reunion of the European ecosystem that I am looking always forward to.

Book your ticket now to watch Deposit Solutions’ presentation live on 30 October at NOAH London 19 (see the details in our program).