Riverty Secures Bank License in Luxembourg

Bertelsmann's fintech arm Riverty has obtained a banking license from Luxembourg's financial regulator, a move that positions it to directly challenge Swedish rival Klarna in the fast-growing 'buy now, pay later' (BNPL) market. The license, granted after a ten-month process, allows Riverty to offer a broader range of credit products and marks a new chapter for financial services within the German media conglomerate. Bertelsmann has committed a three-digit million euro amount as equity capital for the project, with additional investments flowing into building the bank infrastructure.

Carsten Coesfeld, the 39-year-old Bertelsmann board member and grandson of company patriarch Reinhard Mohn, called the license a testament to the company's success in building and scaling a leading pan-European fintech. Coesfeld, who oversees Riverty, noted that the rapid approval process reflects the strength of the company's application and its existing compliance framework.

From Payment Processor to Full-Fledged Bank

Founded as a payment service provider within Bertelsmann's services division Arvato, Riverty has quietly become a significant player in the European fintech ecosystem. It processes invoice and installment payments for major online retailers, including fashion house Asos and toy manufacturer Lego. Despite its low public profile, Riverty's performance has been highlighted in Bertelsmann's annual report as a growth driver for Arvato, which saw revenue rise 13% to €4.4 billion last year, with operating profit reaching €720 million.

Riverty CEO Andreas Barth, also 39, explained that the bank license will enable the company to introduce diverse credit products, including installment loans and revolving credit facilities. Barth emphasized that Riverty aims to strengthen European financial competence by offering tailored solutions to merchants rather than competing for end consumers directly. Unlike Klarna, which has invested heavily in building a consumer brand through celebrity endorsements and a standalone banking app, Riverty prefers to operate in the background, white-labeling its services for retailers.

Challenging Klarna's Dominance

Klarna has long dominated the BNPL space with a valuation exceeding $6 billion following its US listing last year. The Swedish company relies on a direct-to-consumer model, using partnerships like rapper Snoop Dogg and an aggressive marketing strategy to attract users to its app. In contrast, Riverty's strategy is merchant-centric. 'We don't want to become an end-consumer bank,' Barth stated. Instead, Riverty enables merchants to offer credit under their own brand, including branded credit cards.

This approach could prove especially timely as European regulators tighten scrutiny on BNPL practices. The European Commission's proposed Consumer Credit Directive mandates stricter affordability checks and clearer information for consumers, which could favor established financial institutions with robust compliance systems like Riverty. By staying behind the scenes, Riverty also avoids the reputational risks associated with aggressive lending campaigns that have plagued some competitors.

Filling the Gap Left by Solaris

Barth sees a particular opportunity in the branded card business, an area where Berlin-based fintech Solaris has scaled back after running into regulatory and financial troubles. Solaris had partnered with organizations such as the ADAC automobile club to issue co-branded credit cards, but has since curtailed those activities amid a restructuring. 'Merchants want to offer their customers a credit card with their own label,' Barth said. 'There is clear demand in the market, and we can step in to fill that void.'

By leveraging its new banking license, Riverty can issue cards directly, eliminating the need for third-party banking partners. This vertical integration reduces costs and allows faster product development. Moreover, Riverty's existing relationships with over 40 million customers across Europe provide a ready-made user base for these new offerings.

Strategic Importance for Bertelsmann

While Bertelsmann is best known for media properties like RTL television and publisher Penguin Random House, its services arm Arvato has become a major profit center. Arvato handles logistics, customer relationship management, and financial services for clients worldwide. Riverty is a cornerstone of this division, contributing significantly to the group's growth. The decision to invest heavily in a banking license signals Bertelsmann's long-term commitment to fintech and its willingness to deploy capital beyond traditional media.

Carsten Coesfeld's involvement adds a family dimension to the strategy. As a member of the Mohn family, which controls the Bertelsmann foundation, his leadership of Riverty underscores the company's plan to create a durable, independent fintech platform. The license also opens possibilities for cross-selling with other Bertelsmann units. For instance, Riverty could integrate payment solutions with RTL's e-commerce ventures or with Penguin Random House's direct sales channels.

Market Context and Future Outlook

The European BNPL market is projected to grow at a compound annual rate of over 15% through 2030, driven by e-commerce expansion and consumer preference for flexible payment options. However, competition is intensifying not only from Klarna but also from incumbents like PayPal, traditional banks launching their own BNPL features, and newer entrants such as Scalapay. Regulatory developments remain a wild card; the European Banking Authority is expected to issue further guidelines on consumer protection in deferred payment products.

Riverty's timing may be favorable. With the Solaris setback creating a gap in the white-label card market, and its own license in hand, the company can target both existing merchants and new partners. Barth indicated that Riverty will continue to focus on its core European markets initially, but the license could eventually enable expansion into other regions. The company is also investing in technology to improve real-time risk assessment and fraud detection, key differentiators in a market where speed and accuracy are essential.

Bertelsmann's willingness to commit substantial capital—a three-digit million sum plus ongoing investments—reflects confidence in Riverty's business model. While the company does not disclose standalone revenue for Riverty, the fintech's contribution to Arvato's 13% growth suggests it is becoming a significant earnings driver. Analysts note that obtaining a banking license reduces Riverty's dependence on partner banks for balance sheet capacity, giving it more control over product terms and margins.

As the fintech landscape evolves from a focus on user acquisition to sustainable profitability, Riverty's business-to-business approach may offer a more resilient path. By enabling merchants to deepen customer loyalty through branded credit products, Riverty aligns its success directly with that of its retail partners. This symbiotic model, combined with regulatory compliance and strong parent support, positions Riverty as a formidable challenger to Klarna in the battle for European payments supremacy.

Source: Manager Magazin News