Kapilendo AG, a Berlin-based fintech company offering digital investment banking services for small and medium-sized enterprises (SMEs), will use the Stellar network for its upcoming Security Token services. After extensive diligence and testing, Kapilendo has identified Stellar as the most suitable platform for its new product.

The incorporation of distributed ledger technology will allow Kapilendo to strengthen its business by making the transfer of ownership and value more efficient and secure than previously possible. This is particularly relevant in a legacy-based financial system where transfer of ownership is costly and inefficient and where smaller companies have restricted access to the capital market due to their low investment volumes, which make them unattractive for traditional investment banks.

Stellar is built to address the inefficiencies of the financial services industry. While facilitating cross-border payments is commonly cited as the main application of the Stellar network, issuing digital assets, and facilitating their exchange, is another use case in which the Stellar network confers considerable advantage. The efficiencies Stellar provides will be instrumental in furthering Kapilendo’s mission to help SMEs gain access to equity financing.

Stellar’s smart contract functions are restricted to use cases in the financial industry. This limitation has the benefit of making it less complex and less error-prone than other blockchains. The Kapilendo team especially appreciated the ease of separating on-chain operations (e.g. ownership transfer) from off-chain operations (e.g. KYC & AML), a feature that is particularly important for regulators and Kapilendo customer groups.

“Stellar was an obvious choice — it combines simplicity, speed, cost efficiency and met all our requirements. We are glad to join the Stellar ecosystem along with several other European companies, contributing to the adoption of blockchain-based products and providing SMEs with easy and efficient access to equity financing through electronic securities”, says Didier Goepfert, Head of Product at Kapilendo.

“We’re thrilled for Kapilendo to become the latest German fintech to join the Stellar ecosystem,” said Boris Reznikov, Director of Partnerships at Stellar.org. “Kapilendo’s investment platform takes advantage of what the Stellar network does best — facilitating the efficient transfer and exchange of value — and we look forward to the upcoming launch of their platform.”