Solaris Bank Ends Months of Trepidation with ADAC Deal

At the Berlin fintech bank Solaris, many managers should be able to sleep more peacefully again – the most important deal in the company’s young history is about to be concluded. The accounts of 1.3 million credit card customers from the ADAC portfolio are to be transferred to Solaris this year, as the “ Handelsblatt ” first reported. A Solaris spokesman declined to comment on inquiries from Capital.

However, the ADAC published a message on its homepage stating that the technical migration of the accounts should take place in the third quarter of 2024. Until now, the Landesbank Berlin (LBB) acted as the issuer of the credit card with the yellow ADAC logo. “With Solaris we have found the ideal partner for the ADAC credit card program with which we can continue and further develop our portfolio,” said Mahbod Asgari, CEO of ADAC SE.

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ADAC deal as a liberation for Solaris

Even if the words of the automobile club boss read differently, the cooperation with Solaris is based on months of trepidation. Until recently, there was even speculation in financial circles about the possible failure of the deal. The credit card portfolio was originally supposed to be transferred to the Berlin-based fintech last year. However, the technical feasibility apparently turned out to be more difficult than expected. There were also still open financing questions.

On the ADAC side, for example, there are said to have been doubts as to whether Solaris is even able to securely manage the loans associated with the card portfolio amounting to around 500 million euros. To do this, the fintech has to comply with many regulatory requirements – and would probably have needed additional capital in the three-digit million range. According to the “ Financial Times ”, the ADAC has now looked for other partners, including Deutsche Bank.

According to the ADAC’s plan, this should take on the accounting risks. Solarisbank, in turn, would have continued to take care of the IT, issuing and processing of credit card transactions as a technology partner.

Whether this scenario actually made the deal possible remains to be seen. Solaris also left Capital’s questions about this unanswered. But one thing is clear: for the fintech specialist, which was founded in 2016, the cooperation with the ADAC is tantamount to a liberation.

Solaris acts as a banking service provider and offers young financial startups in particular a technical platform to, for example, issue debit cards or manage customer accounts. The Berliners benefited from the long-standing hype surrounding fintech start-ups and even became a unicorn in 2021 after a round of financing – a startup valued at billions.

But since then there have been more and more negative headlines. There were repeated problems with the financial regulator Bafin, and Solaris also posted high losses. In order to reach profitability, the company did not shy away from larger rounds of layoffs. The credit card deal with ADAC should now significantly ease the financial situation. Insiders expect additional income in the millions.

The deal is not only financially important for Solaris bank

It also marks a turning point in the banking fintech’s strategy. While the company has so far focused primarily on small financial startups, it will increasingly be acquiring large customers in the future. Solaris apparently wants to minimize the financial risks posed by the fast-moving fintech business.

It is initially worthwhile for financial startups to outsource expensive aspects such as a banking license to partners such as Solaris. However, if these fintech customers become too large, they usually prefer their own setup. Solaris loses its customers when it would actually earn money from them. Just a few days ago it became known that the fintech Vivid wanted to withdraw hundreds of thousands of accounts from Solaris .

Such scenarios should at least occur less frequently in the future. “We see that we have become too dependent on the fintech industry,” said Solaris boss Carsten Höltkemeyer at the Finance Forward conference last year: “With our offer we can also win other partners, especially corporates.” With Europe The largest automobile club now seems to have made a start.

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(Featured image by ulleo via Pixabay)

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