FACT SHEET

FinTechin Germany

ISSUE 2022/2023“FinTech,“ the now ubiquitous term used to describe thedigital union of financial services and technology, hastransformed the global financial services landscape. Germany’s FinTech market is one of the most dynamic markets in the world. FinTechs use of future key technologies
makes them important drivers of digital innovation in
the established economy.
FinTech adoption rates are growing around the world. According to EY, 64 percent of global consumers use FinTechs – withthe rate as high as 87 percent in China and India. Germany iscurrently on the global average, but FinTech acceptance andadoption rates have increased within Germany and Europe
in response to the global coronavirus pandemic. It has also
helped accelerate the digitalization process, with more people
turning to digital banking and payments.
Digital Infrastructure
The appropriate digital infrastructure is essential for FinTechs active in developing digital markets. Internet penetration levels in Germany are hovering around the 90 percent
mark according to the Statista Digital Market Outlook 2022.
The country also has a high share of online and mobile payment users. Growing FinTech adoption rates in Germany
are also tied into broadband availability and mobile device
uptake levels as well as an internationally strong GDP level.
Maturing Market
According to EY, Germany’s FinTech marketplace is showing
increased maturity – best evidenced by rising average deal
sizes and funding volumes as well as increasing interest levels
from international investors. In 2021, more than EUR 3.76 billion investment was made in the FinTech sector – making it
the single biggest recipient of VC investment in the country.
FinTechs in Germany now provide digital services along theentire financial value chain of companies of the B2B and B2Csectors.

FinTech in Numbers

FinTechs>1,000companies active in Germany

FinTech Adoption Rate64%

take-up rate in Germany

Start-up Investment Level

EUR 3.76 billion

start-up investment in FinTech in Germany in 2021

Visit our website for more FinTech
market information:
www.gtai.com/fintech

Sources: Barkow Consulting, EY 2022

Market Opportunities
Germany’s maturing FinTech market provides excellentopportunities for international actors in a number ofmarket segments including payments, investment, retailbanking, and insurance.
Current hot topics include embedded finance, sustainable andgreen finance as well the potential launch of the digital euro.
FinTechs are major drivers of digitalization, making increased
use of artificial intelligence and blockchain solutions.
BankingGermany’s banking sector secured the most FinTech investment in 2021, raising EUR 1.27 billion in investment capital in
22 rounds according to EY. Incumbent banks are increasingly
turning to cooperations and partnerships with FinTechs. A
number of FinTechs are also deploying “cooperation throughacquisition” strategies.
Digital Payments
The global digital payments market is growing. Germany
is home to the second-biggest digital payments market inEurope. Digital commerce represents the single biggest segment with EUR 4.91 billion of total 2022 transaction value
and is forecast to rise to EUR 7.23 billion in 2026. FinTech plays
a decisive role in the delivery of digital payment services –whether in the realm of digital commerce or mobile POSpayments.
E-CommerceThe Statista Digital Market Outlook 2022 reports that Germany has the highest number of digital commerce users inEurope. Revenue in the e-commerce market is projected toreach EUR 126.2 billion in 2022, making the country the fifthbiggest digital commerce market internationally. Domestic
e-commerce market volume is forecast to rise to EUR 168.6
billion in 2025, corresponding to CAGR of ten percent for theperiod 2022 to 2025.
InsurTech
Germany’s InsurTech market continues to grow at pacethanks to increased investment activity in the sector. The
domestic InsurTech landscape is evenly spread across thecountry, with major hubs in Cologne and Munich. The “NewPlayers Network” lists 195 InsurTechs – including digital insurers, contract managers, claims adjusters, and comparison
platforms – currently active in the country. InsurTechs areintensifying their footprint in the incumbent value chain;with rising investment indicative of increased interest among
both domestic and international investors. Digitalization andsustainability represent key opportunities and challenges forthe insurance industry. According to a recent BearingPoint
study, 71 percent of Germans believe that insurers should
promote sustainable behavior with their products. This trend
is reflected in the neighboring German-speaking countries.

Regulatory Framework
Who regulates banking, financial services andinsurance providers in Germany?
The Federal Financial Supervisory Authority (BaFin) is
one of Europe’s largest financial supervisory authorities. BaFin ensures the stability of the largest financial
market in continental Europe as an integrated financial
supervisor for the banking, securities and insurance
sectors. BaFin offers transparent, reliable operations
and communication in English to support internationalcompanies.
Are FinTechs subject to special regulation?
Germany has a regulatory level playing field. Some FinTechs – subject to their business model and structure –may be subject to BaFin supervision. Others need only
comply with the requirements of the Industrial Code.
European Union passporting allows companies to accessthe entire EU market of 320 million consumers.
What FinTech business models are subject toauthorization?
The different business models laid out by BaFin areindicative in nature and do not constitute a final legal
assessment by the authority. Authoritative evaluations
are made on a case-by-case basis.
→ www.bafin.de/en� 300 bn

� 4,300

Digital payment
market volumein Germany 2025

Average digital paymenttransaction value by user
in Germany 2025

� 30 k� 255,000

Average neobanking
transaction value per user
in Germany 2025

Average alternative lendingtransaction volume by user
in Germany 2025

Source: Statista Digital Market Outlook 2022

FinTech Cooperation
Cross-segment partnerships can allow FinTechs to access agreater consumer base, reduce their client acquisition spending and move more quickly to market. This trend has been
most noticeable in the case of B2B FinTechs whose technology
and infrastructure services enable FinTechs in different segments. Germany’s B2B segment also provides singular opportunities for FinTech service providers to tap into the country’s
thriving market of around 3.6 million registered SMEs. They
represent more than 99 percent of all enterprises, of whichmore than 350,000 are exporters to global markets.
Accelerators, Incubators and Company Builders
Germany is home to numerous accelerators, incubators andcompany builders who provide funding and support servicesto help high-potential start-up enterprises scale their business in Germany and beyond. The German Accelerator, backed
by the Federal Ministry for Economic Affairs and ClimateAction (BMWK), supports German-based start-ups enter USand southeast Asian markets.

Germany has a number of advisory policy bodies, platforms and initiatives that are working
together to ease market entry and support market
growth activities across industry sectors.
Association of German Banks
The Association of German Banks actively promotes partnership between banks and FinTech companies. As well as providing extraordinary membership to a number of FinTechs, theassociation has established a Digital Banking Project Committee (made up of Chief Digital Officers from the banking sectorand leading figures from the German FinTech scene) thatprovides a platform to banks, FinTechs, academics, start-ups,
policy makers, and administrators.
BitkomBitkom is Germany’s digital industry association. The association’s “Digital Banking and Financial Services” steering groupis working to create a digital single financial market in Europe.
The association networks FinTechs, established banks andincumbent insurance providers, IT service providers, and legal
experts to promote innovation-friendly market framework
conditions.
Digital Finance Forum
Established in 2017, the Digital Finance Forum acts as a platform for exchange between the Federal Ministry of Financeand experts from the digital finance market. Selected experts
contribute their perspectives and experiences from the German financial world. Members meet in expert groups focusing
on payments, investment, retail banking, and insurance.

Digital Hub Initiative
A series of regional digital hubs have been established inGermany as part of an initiative of the Federal Ministryfor Economic Affairs and Climate Action. Start-ups,science, SMEs, industry, and local administrations join
together to become centers of digital transformation.
The cities of Berlin and Frankfurt are home to one
FinTech hub respectively and the cities of Cologne andMunich both have an InsurTech hub. These hubs offer
excellent opportunities for start-ups to network withmarket incumbents. Other strong FinTech clusters areestablished in the cities of Hamburg and Stuttgart.
→ www.de-hub.de/en

FinTech Internationalization
Almost three quarters of FinTechs in Germany work using
highly scalable business models (online platforms andsoftware-as-a-service solutions). A comparable numberof FinTechs active in Germany also plan to internationalize
their service provision, with the European Union being thefocal point of these activities. The European Union provides
companies with a harmonized legal system and a Single Euro
Payments Area (SEPA) for simplified bank transfer activities.

Venture Capital Investment in FinTech 2021

Banking

1,270 (22)

Trading

1,097 (27)Insurance

767 (16)

SavingLending
Payment

264 (17)213 (14)

Investment in EUR million
and number of financingrounds

135 (21)

Crowdfunding 16 (1)Source: EY Start-Up Barometer Deutschland, January 2022

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ContactDr. Josefine Dutschmann
Digital & Service Industries
Germany Trade & Invest
josefine.dutschmann@gtai.com· Market and industry reports· Market entry analyses· Business and tax law information· Funding and financing information

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