Initial situation

300 million people around the world have the ambition to launch one of 150 million companies each year. About one-third of these companies actually goes live, which means 50 million new start-ups annually. Until now this trend has mostly spared the captive finance industry, however in the near future disruptions are on the horizon and start-ups will have a direct or indirect influence on existing business models within the captive finance ecosystem.

These start-ups can be divided into three categories, which will be discussed in more detail later: new direct competitors, competitors with adjacent business models and intermediaries.

New direct competitors

After starting to interrupt the traditional automotive industry in 2003 with its strict focus on e-mobility, Tesla set up a financial services unit in Germany in 2015 in order to leverage the potential of financing and leasing contracts. As a new player and supported by NetSol, Tesla offers an end-to-end digitized application process which still represents a future scenario for most of the traditional captives.

The example of Tesla shows that it is not only possible for new players to push into the automotive industry, but also to set up captive units claiming typical start-up advantages, like lean structures and innovative systems to provide a state-of-the-art customer experience and services.

However, new direct competition may also arise from within the industry. Original Equipment Manufacturers (OEMs) and ‘captives’ around the world are investing in setting up digital units and innovation centers. This path may put forth new “digital direct captives” analogue to the direct banking model – a path that classical banks have already taken decades ago: the German Commerzbank, for example, founded the digital direct bank Comdirect already in 1994.

Competitors with adjacent business models

New players are also emerging from neighboring industries and slowly creeping into the continuously expanding scope of traditional captives. With crowdfunding and peer-2-peer-lending, they offer customers the possibility to obtain loans at lower rates, or under facilitated criteria., Lending Club and SoFi are only few examples within the market. Due to their platform characteristics, these providers not only influence the financing business but also offer their customers the opportunity to invest money at attractive interest rates in transparent risk classes. A market in which players like Daimler FS, Volkswagen FS and BMW Bank are also trying to position themselves through new products, like call-money or fixed-term deposits.

Likewise, this is happening with insurance products which were traditionally sold in bundles with leasing and financing contracts. Today, innovative players like Friendsurance and Coverfox offer attractive products promising price savings of up to 40% over traditional offers – captives are now facing the challenge if they can emphasize and market the convenience of bundled products to compensate for the significantly lower price of the products of start-ups in the long term.

Looking back, we find that captives in the recent past have tried to push explicitly in the mobility services sector. New mobility offers like Car2Go or Volkswagen FS Rent-a-Car are only some examples with this wide range of initiatives.

However, this market is also becoming more and more competitive: the great potential of mobility and Internet of Things technologies offers an attractive playing field for innovative players, who are able to quickly build scalable and customer-centric business models. Examples include the evolutionary taxi and delivery specialist Uber, the innovative parking experience of EvoPark or MobileNow, as well as Moovel‘s comprehensive mobility planner (Daimler and Deutsche Bahn invested).


The competitive pressure in the captive market caused by new players, whether direct competitors or competitors with adjacent business models, is reinforced by intermediaries/ platforms (e.g. comparison portals). Those intermediaries leverage increasingly smart search engines to create a (mock) transparency for end users, accessible comfortably from their living rooms.

Similarly to adjacent business models, the intermediary market also covers a broad range of services, stretching from players with a wide product portfolio (such as the German “Check24”) to specialized portals in almost every captive business segment. Carvana and offer the possibility to buy cars directly online including the conclusion of a leasing or financing contract with any player on the market.

In addition, portals like or Nutmeg offer the possibility of a transparent investment in call- and fixed-term money. Last but not least, multi-modal travel platforms offer the possibility to find the best way from door-to-door and thus bring transparency to the mobility market.


Reconsidering the changing competitive situation of the captive finance market clearly shows that the established players should not rest on their recent double-digit growth figures. Just remember the case of Blockbuster and Netflix: While in 2004 Blockbuster was still worth nearly $6 billion and Netflix was only a local video provider, the tide has turned within only six years when the big player had to file for bankruptcy in 2010.

Netflix, on the other hand, has steadily increased its value and today, due to its innovative business model, has a market value of $ 40.5 billion. Captives should keep this image in mind when thinking about the future and invest heavily into their innovative power.

It doesn’t matter whether this is done through internal measures like the setup of digital units and innovation centers or externally driven measures, such as integrations, cooperations and acquisitions, in order to still be a relevant part of the ecosystem around mobility, banking, leasing & finance in 6 years from now.