Opinion Piece by Pierre Antoine Dusoulier, CEO iBanFirst: When Wirecard conquers the Dax
It has been a long time since venture capitalists and actors in Silicon Valley have been turned to fintech… whereas traditional investors have until now remained more committed to the classic banking model. The replacement of Commerzbank by the fintech company Wirecard in the Dax stock market index shows that times are changing.
The banking world has been hit by a small earthquake: the fintech company Wirecard will replace Commerzbank – the second largest German banking institution – in the country’s main stock index.
How was this newcomer to the Dax able to carve out a place for itself in this very exclusive club?
One obvious reason: while Wirecard’s revenue and profit are at least 10 times lower than Commerzbank’s, its capitalisation is much higher. The value of the fintech company reached 23 billion euros, compared to 10 billion euros for the bank. In addition, Wirecard’s capitalisation is continuing to rise, where Commerzbank’s is gradually decreasing.
However, capitalisation is not always enough to enter the Dax; the objective of these exchanges is also to identify players who will remain in the indexes for a long time. If Wirecard has succeeded in doing so, it is because fintechs have now convinced us of their ability to operate in the long term, thus going beyond the realm of pure speculation; investors are counting on them to shape the banking landscape in the coming five or ten years.
A new banking model
What will this new banking landscape look like?
Most likely, banks, like hotels or taxi companies, will continue to hold the assets, the capital – in this case, the deposits of their customers. But they will have to work together with the multitude of digital players who will offer new banking services, without storing money themselves.
With open banking and the European DSP2 regulation, customers can already use fintech companies – whose offers are often more flexible, more attractive and more advantageous than those of traditional banks – to give payment orders to their banking institution, execute transactions, view their accounts… And we are still at the very beginning.
It would be logical that in the future a bank’s role will be reduced to that of a simple safe, as its customers turn to other, more competitive companies that offer banking services for their operations. It also makes sense that banks will lose value as they lose their added value…
We are now in a transitional phase: the two models, the traditional banks and fintech companies, still coexist… before the probable switch from one model to another will take place, as was for example the case when MP3s eventually replaced CDs. Does Wirecard’s entry into the Dax mark the precise beginning of this reversal of the balance of power? We will certainly follow this closely.
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