Raisin, a German Fintech company, expects €50B in deposits by 2023.

Raisin, a German Fintech company, expects €50B in deposits by 2023.

The Blockchain Industry: A Promising Alternative for Banks

The blockchain industry continues to create waves in the financial sector, offering alternative funding options for banks as they navigate the end of cheap central bank cash. Raisin, a German fintech firm specializing in financial technology solutions, is at the forefront of this movement. Backed by notable financial services companies such as Goldman Sachs, Deutsche Bank, and PayPal, Raisin is poised to facilitate a surge in deposits this year. In an interview with Bloomberg, Raisin CEO Tamaz Georgadze projected that the deposits facilitated by the company will exceed €50 billion ($56 billion) by the end of the year, surpassing its current €43 billion mark. This growth is expected to come from both within and outside the euro region, with particular emphasis on the United Kingdom and the United States.

The Changing Landscape of Banking

Central banks around the world are raising interest rates and unwinding economic stimulus measures to combat inflation. While this presents profitable prospects, banks also face higher funding costs. Recent bank failures, including Silicon Valley Bank and Silvergate Bank, have led financial watchdogs to intensify their oversight of bank liquidity. This increased scrutiny has the potential to impact deposit brokers and marketplaces like Raisin.

Raisin: More Than Just a Deposit Broker

During the interview, Georgadze refuted concerns raised by a senior European official regarding the stability of deposits facilitated through Raisin. He clarified that Raisin does not fall under the definition of a deposit broker in the US, as its fixed-term deposits are not tradable securities. Furthermore, he highlighted that less than 1% of the company’s clients engage in constant fund transfers between overnight funds, commonly known as “interest rate hoppers.”

Contrary to the notion that deposits facilitated by Raisin are prone to rapid withdrawals, Georgadze argued that they tend to display greater resilience during times of crisis. Clients geographically distant from banks are less influenced by local events, reducing the likelihood of impulsive reactions. Georgadze stated, “These deposits are actually stickier than others in crises. The further away the client is, the more detached they are from events at the bank. They don’t look out the window and see a line of people outside a bank branch.”

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Raisin’s Competitive Edge

While banks experienced a considerable increase in net interest income last year due to interest rate hikes by central banks, the benefits were slow to reach retail clients. Smaller depositors were not offered the increased rates, prompting Georgadze to raise pertinent questions about the lack of higher rates for this segment. Raisin, however, has been able to outperform the market average by promptly implementing the rates set by the European Central Bank.

Expanding Horizons: Raisin’s Plan for 2022

Raisin has ambitious plans for expansion, aiming to onboard 25 to 30 new banks to its platform this year, with a particular focus on the United States. Georgadze stressed that deposits sourced through Raisin offer banks a more cost-effective funding option compared to bonds. This is of special significance in Europe, where banks are repaying hundreds of billions of euros in European Central Bank stimulus loans.

To further solidify its position in the financial market, Raisin secured €60 million in a series E funding round earlier this year. According to Georgadze, these funds will be used to increase the company’s product offerings and strengthen its market presence.

In conclusion, the blockchain industry, with Raisin at its forefront, provides a viable alternative for banks seeking funding options in a changing financial landscape. As central banks raise interest rates and financial watchdogs increase oversight, Raisin’s ability to facilitate deposits from clients around the world showcases its resilience and stability. With ambitious plans for expansion and a focus on cost-effective funding for banks, Raisin is set to make a significant impact in the blockchain industry and the financial sector as a whole.

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