Banking for Small and Medium-sized Enterprises (SMEs), self-employed individuals, and freelancers has been identified by European fintechs as a growth sector in recent years. As a result, they have gradually gained market share from traditional banks. According to Jens Wohlfahrt, head of Fyrst, startups have largely achieved this through aggressive pricing strategies.

European fintechs have benefited from the increasing importance of digital channels for acquiring new customers. „The battle for customers is primarily being fought through online channels, such as comparison portals“, Wohlfahrt told Börsen-Zeitung.

Fyrst is Deutsche Bank’s digital banking offering for SMEs and self-employed individuals, which was launched in 2019. It essentially operates as a startup within the group. „We have a very lean structure, but rely on the established regulatory and compliance frameworks in the background. This is a key competitive advantage in the financing business“, explains Wohlfahrt. Currently, Fyrst has around 75,000 accounts, with a target of reaching 90,000 to 95,000 by the end of 2025.

Fyrst is part of Deutsche Bank’s corporate client segment, working in parallel with Postbank and the Deutsche Bank brand itself. Together, these three brands serve around 800,000 customers. Postbank offers entrepreneurs advisory services in addition to traditional banking services, as does Deutsche Bank. Fyrst, however, deliberately does not provide such services.

At Fyrst, account opening for individuals can take as little as ten minutes if everything runs smoothly, notes Wohlfahrt. In the digital banking era, the speed of account opening is a key factor in choosing a provider, as time is one of the scarcest resources for entrepreneurs and startups.

Many banking executives report that most customers now expect the core functions of banking to be fully digital and seamless. 24/7 customer support is also frequently demanded. On review platforms, low ratings often stem from poor customer service. Providers differentiate themselves primarily through their product offerings.

Revolut has become Europe’s most well-known neobank, now claiming 45 million customers worldwide. The UK-based fintech has been offering business banking services through „Revolut Business“ for several years. This initiative began about two years after the Revolut app launched, when around 5–10% of retail customers expressed interest in business services.

Revolut Business also emphasises an efficient onboarding process. „We can onboard new customers in less than a day because we have automated most of the process“, says James Gibson, head of Revolut Business, in an interview with Börsen-Zeitung. The entire process is handled internally.

Gibson remains vague about customer numbers. „Revolut Business is used weekly by hundreds of thousands of active customers. In Germany, it’s several tens of thousands“, he notes. In fall 2024, Revolut stated that it was gaining around 20,000 new customers per month, suggesting a total customer base of between 400,000 and 500,000. „Our goal for this year is to double the number of active customers in Germany“, says Gibson.

Revolut offers both a desktop and app version. The bank’s ability to win over customers from traditional banks is not a matter of chance. „Just because you offer online banking via a website doesn’t mean you are truly digital“, says Gibson.

Revolut Business targets a broad range of companies, from one-person businesses to firms with up to 500 employees. A self-employed freelancer has different digital banking needs than a mid-sized company with its own finance department, and international stakeholders requiring complex transaction management solutions.

One of Revolut’s biggest competitors in the business banking sector is French fintech Qonto, which gained a foothold in Germany by acquiring Berlin-based rival Penta in 2022. Today, the Penta brand no longer exists. According to CEO Alexandre Prot, Qonto’s typical customer has between one and 15 employees. The company itself has 1,600 employees across Europe, including 130 in Germany.

„Germany is our second-largest market after France“, says Prot. While many founders complain about Germany’s high bureaucratic burden, Prot does not see any major hurdles. „Compared to other European countries, operating a B2B fintech in Germany is not necessarily more difficult or less profitable.“ Like Revolut, Qonto emphasizes its 24/7 customer support, with most outsourced support teams based in Europe.

But fintechs like Qonto face a disadvantage compared to traditional banks: due to their limited balance sheets and lack of banking licenses, they cannot offer their own financing solutions. Many partner with external providers, such as Qonto’s collaboration with lending fintech Iwoca. Nonetheless, digital banking remains Qonto’s core business, Prot confirms.

Besides Deutsche Bank with its three brands, Commerzbank is one of the largest competitors among traditional banks. Its „Entrepreneur Customers“ segment serves founders, self-employed individuals, and businesses with annual revenues of up to 15 million euros.

In this segment, the bank serves a total of 900,000 customers, though this figure includes advisory services, which fintechs deliberately omit. This holistic approach is intentional: „We want to support our customers in their growth – not just with their banking needs, but beyond“, a Commerzbank spokesperson states.

„We are continuously optimising our processes in lending and payments, particularly with a focus on digitalization“, adds the bank. This includes expanding its „pre-approved loan“ offering, where customers receive instant approval for credit up to a predefined limit without needing to submit additional documents.

ING Germany has also sought to grow in business banking in recent years. In 2018, it acquired lending platform Lendico. However, despite its „digital-first“ infrastructure, which should make expansion into SME banking easier, ING has only attracted 13,000 business customers.

Nevertheless, this number has quadrupled since 2023 when ING had just 3,000 business customers. „Since September 2024, we have been offering our business account as a new flagship product, initially for self-employed individuals and freelancers. We will expand it with additional features this year“, an ING spokesperson says.

Despite the growing number of providers in the market, digital banking remains an easy industry to enter. Many new players are actively expanding in Germany. Dutch fintech Bunq, for instance, has 14.5 million users, though this figure includes retail customers.

Tide, a UK-based neobank specialising in business banking, already has one million users. Besides its home market, Tide also operates in India. Last year, it entered the German market, bringing in former PayPal executive Anna Fromme-Schoen to lead its expansion.