At the beginning of September, the German regulator BaFin announced that there would be significant impairments in the processing of customer business at Postbank, the retail subsidiary of Deutsche Bank. BaFin, therefore, appointed a special representative for Deutsche Bank. However, Fintech experts say a special representative at Postbank does not go far enough. They are calling for a ban on new customers.
No Puppy Protection Needed
“More drastic measures have also been taken with fintechs in the past,” says Miriam Wohlfarth. It would only be fair if this were now also implemented in the same way for companies established in the financial sector, she adds. Wohlfarth has been active in the industry for more than 20 years and founded the fintechs Ratepay and Banxware.
Peter Grosskopf also sees more significant dimensions at Postbank: “The systemic relevance is much higher than for any other fintech. Established banks must not have puppy protection,” says the founder of the Defi platform Unstoppable Finance. Financial regulators repeatedly emphasize the principle of “same business, same risk, same rules.” However, there are strong doubts about this in the fintech industry. Many believe that the financial regulator is being disproportionately tough on young companies.
“Fintechs are always compared to the big, established banks. But that is why there must now be the same penalties in reverse,” Wohlfarth demands. BaFin head Mark Branson had already commented at the Handelsblatt banking summit on whether the supervisory authority is taking a more rigorous approach to fintechs: “This subliminal thesis that we are stricter with the small ones than with the big ones is not true at all,” he said.
Supervision is taking a very risk-oriented approach, he said. “Small businesses that grow quickly can bring big risks in certain areas like fraud prevention or money laundering, and that’s where there needs to be a response,” Branson stressed. Of course, if something goes wrong at a large institution, there needs to be a response. “We are on the road without discrimination,” the Bafin chief said.
Regulatory Actions For N26 And Solaris:
BaFin has taken action against the Berlin-based fintech N26 and the Berlin-based “banking as a service” specialist Solaris. The financial supervisory authority had identified deficiencies, some of them serious, at Solaris during an audit in 2020. It then sent a special auditor to the bank. In addition, since the beginning of the year, the institution has had to obtain permission from the authority before accepting new customers.
Specifically, Solaris must take measures “to ensure proper business organization in risk management and money laundering prevention and to limit risks,” BaFin announced in late January. N26 has had a BaFin special auditor at the company since November 2021. The financial regulator believes that N26 grew too fast for many years and did not develop its processes and controls accordingly.
Since then, the Berlin-based smartphone bank has only been allowed to add a maximum of 50,000 new customers per month. N26 “still has deficiencies in its systems for the prevention of money laundering and terrorist financing, despite some progress,” Bafin said as recently as mid-June this year.
The issues at stake in the Postbank case are different from those in the Solaris and N26 cases. In early September, Deutsche Bank had conceded a rebuke from BaFin for massive problems at its retail banking subsidiary Postbank. The supervisors have been observing “significant impairments in the processing of customer business at Postbank” since the turn of the year 2022/2023, it said at the time. Many users could no longer log in, their transactions were not displayed, and the institution’s telephone hotline was often unavailable.
