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Three Commerzbanks are worth less than One Stripe

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The big news yesterday is that Klarna is now Europe’s largest FinTech unicorn, valued at $5.5 billion, and the sixth largest FinTech unicorn worldwide (discounting Ant Financial, Ping An and co).

According to CB Insights, Stripe is the largest FinTech unicorn (USA, $22.5 billion), followed by One97 Communications (PayTM India, $10 billion); Nubank (Brazil, $10 billion) and Coinbase (USA, $10 billion). Then there’s Klarna who, in Europe, are closely followed by TransferWise ($3.5 billion), N26 ($3.5 billion), BGL Group (, $3 billion), OakNorth ($2.8 billion) and Monzo ($2.5 billion).

[NOTE: this list is pre-IPO companies and does not include companies that are now listed, such as Adyen]

It’s interesting to see these valuations, and the comparative valuations of centuries-old institutions called banks. Today, Commerzbank is worth just $6.8 billion, Deutsche Bank ($15 billion), Royal Bank of Scotland ($30 billion), BBVA ($33 billion), ING ($40 billion), Lloyds ($43 billion), Santander ($66 billion) and HSBC ($155 billion). The obvious difference is that these banks are centuries old with millions of customers and billons of capital, whilst the new kids on the block are a decade old or less, with a few million customers and some capital that needs refreshing on a regular basis.

Klarna is almost valued at the same level as Commerzbank whilst Stripe is worth three times as much. The combined value of our top six European FinTechs is half the value of an ING Group.

Interesting times indeed, and this reflects the analytics of the investment community. They have very different analytic metrics for FinTech start-ups, BigTechs and other techs, than they have for traditional firms. Traditional firms are measured on Return on Equity, Return on Assets, peer group Cost-Income Ratios and market shares. These are mature metrics of measurement that reflect in share prices.

The start-ups are viewed on potential and possibilities. There are no clear metrics, just hope and belief.  A little like bitcoin which some are now claiming is a safe haven for investors (WTF?), tech and FinTech start-ups are viewed as the manna from future heavens.

I have been questioning this quite a lot lately, writing about whether these $1 billion start-ups are Unicorns or Leprechauns? but it is a valid question. Intriguingly, another valid question is whether the banks are being valued correctly. When you compare an ING and BBVA who have been investing in digital transformation for over a decade with a Deutsche Bank or RBS, who have completely different issues to deal with, there is no comparison. Intriguingly, from discussions with many of these institutions, there’s also a great deal of frustration that their valuations are not reflecting their digital journeys.

As I also wrote recently:

Goldman Sachs CEO David Solomon is complaining that the bank is “getting absolutely no credit from anybody else in the investing community” on the firm’s digital banking efforts, and he has a point:

“If we were out in Silicon Valley and made 20% of the progress that we’ve made, we would get a lot of credit and people would be throwing money at us … but nestled inside little old Goldman Sachs, we’re just going to have to prove it over time.”

The clear contrast here is that the start-ups do not have to prove themselves today. They just need to show a projectile of possible growth and gain the funding to seize their opportunities. For a traditional financial firm, they have to work at it. They have to prove their strategies are working, that they’re separating from the pack, that they’re beating the new kids on the block at their own game, and that they are successfully turning the ship around from analogue to digital. Even after a decade, proving these points for a traditional financial firm is not easy, especially when the metrics are based upon their old metrics of performance and not on their future metrics of potential.

I really look forward to reflecting back on this blog in a decade or two, assuming I’m still around, and seeing what has happened to the investors role in the start-up versus incumbent debate.


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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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