The Berlin Nuri Bank is insolvent. Around half a million customers have an account with fintech, which specializes in cryptocurrencies. What the case says about the problems in the industry.
The message appears in a small, gray box on the homepage. “Nuri filed for bankruptcy on Tuesday, August 9, 2022,” says the Nuri Bank website. If you click on it, you will be greeted with the familiar first name: “We would like to inform you about an important development that affects neither our services nor the deposits and investments at Nuri.” According to the company, the reasons for the insolvency of the fintech, which was once ensnared by financiers, are the currently difficult market developments and the consequences for the financial markets and Nuri’s business.
“Guaranteed access to your money”
The Nuri Bank describes insolvency as a necessary step to ensure the continued operation of the app and the fulfillment of liabilities. All deposits and investments in a Nuri account are safe thanks to the partnership with Solarisbank AG. Nuri himself does not have a banking license but has been working with Solaris from Berlin since 2018. Solaris, in turn, is part of the Deposit Protection Fund, which legally protects customer deposits of up to EUR 100,000. According to the institute, the deposits managed by Nuri amount to 325 million euros. Nuri customers are promised on the homepage: “You still have guaranteed access to your money and can deposit and withdraw it at any time.” All amounts in the so-called wallets and vaults, in which cryptocurrencies such as Bitcoin and Ether are stored,
According to Nuri, crypto money is blocked on so-called Bitcoin income accounts. “Celsius’ payout freeze remains unchanged, and the payout function remains inactive,” the institute said. Celsius is a US partner company of Nuri Bank, which also filed for bankruptcy a few weeks ago. Nuri had referred customers to the Americans as part of the Bitcoin earnings accounts. These had lent their coins to Celsius, which in turn lent them to other investors – at an annual interest rate of three percent.
Combination of the crypto depot and bank account
Despite the Nuri bankruptcy, venture capitalist Jan Miczaika from HV Capital still sees a need for the business model. It is a mixture of online bank accounts, crypto wallets, and securities trading. This “combination of worlds and investment categories” is in high demand from customers, says Miczaika. This was shown by internal data from various holdings in fintech. HV Capital has a stake in Solarisbank, among others. The venture capitalist told Cityryde.com. about the insolvency of Nuri-Bank: “Nuri was very innovative when they started, but the market is saturated right now.” Nevertheless, such fintech still has opportunities.
Too fast growth with zero profit
The “neo-banking” expert Oliver Geiseler from the management consultancy Capco, which specializes in financial services, believes that the market is still not mature. Many companies have grown too quickly without being profitable – in order to win as many new customers as possible. According to Geiseler, the so-called neobanks and fintech have recently experienced tough times. “When valuations go down significantly, but the need for funding is still great, that’s difficult.” Some of these business models have also collapsed in the USA.
Courses that have fallen sharply
From the fintech specialist’s point of view, there is currently a “crypto winter,” which is reflected in the significantly lower prices. Because of the uncertain world situation caused by the Ukraine war, high inflation, and rising interest rates, customer funds have declined. The result: Providers like the Swedish financial services provider Klarna, once Europe’s most valuable start-up, collapsed in the rating by 85 percent. It is currently valued at $6.7 billion, down from a valuation of $45.6 billion in June 2021.
At least since the major central banks began raising interest rates, the wind has changed for the industry. Unfortunately, this may have contributed to the insolvency of the Nuri Bank. Apparently, the institute has not been able to find new financiers or buyers for months – a problem that many in the start-up scene are likely to face.