The Finance Sector
in Germany
ISSUE 2022/2023

Germany is a major international financial center andthe leading location in continental Europe. Five German
cities regularly rank within the top 50 of the Global
Financial Centres Index.
Germany is the largest economy and the largest market in
the EU-27, accounting for 25 percent of EU GDP and 19 percent of total population. All European markets can be served
from Germany. The country is also one of the world's leading export nations. The finance sector is a strong partner andfacilitator for actors in the thriving domestic economy. Internationally active banks and insurance companies support
businesses in international markets and help company growthand expansion.
Financial center Germany
Banks, insurance companies and other financial service providers like stock exchanges represent the three core pillars of
the financial system in Germany. The country’s financial system is both unique and supportive of the domestic economy
thanks to its size and highly decentralized nature. This meansthat the structures of the financial system – with regional
centers and institutions – are important instruments thatalign with the requirements of business, “hidden champions”
and small and medium-sized companies.
Opportunities for international players
The United Kingdom’s “Brexit” departure from the EU has
redrawn the European map for financial services. London
remains an important financial hub, but the loss of EU passporting rights is seeing many international financial service
providers shift their businesses to locations within the EU.
German financial centers – and Frankfurt in particular – arebenefiting from this development; one that will manifest thecountry as the most important financial center in continental
Europe. The Trade and Cooperation Agreement with the UK
covers financial services in the same way as with other free
trade agreements with third countries.

Germany’s Finance Sector
in Numbers
1,500+
banks and saving banks nationwide
operating in German banking market

500+

insurance companies operatingin German insurance market

Number 2
re-insurance locationworldwide after the USA

63%

cumulative growth in Fintech equity
transactions between 2018 and 2020

EUR 3.4 trillion
in assets managed by fund companies inthe EU's largest fund market→ Further information
www.gtai.com/financial-services
Sources: Bundesverband deutscher Banken, BVI, GDV, Germany FinanceMARKET OPPORTUNITIESFinance Sector Market Composition
All of the major financial subsectors are represented inGermany. They are supported by a strong ecosystem ofconsulting, auditor, academic, and regulatory actors thatallow the financial marketplace to thrive.

Europe’s Largest Asset Management Funds Market
Germany’s funds market comprises EUR 3.4 trillion of Europe’s
EUR 12.8 trillion total, making the country Europe’s largest
market with the highest annual growth rate of 9.3 percent.

Banks play a central role as conveyor belts to markets andcompanies and channel investments. A strong banking sector
is also important for Germany’s strongly export-oriented
economy.

Around 700 fund companies are active in Germany, ranging
from independent fund boutiques to group-owned banking
or insurance subsidiaries. The EUR 3.4 trillion assets managed
is almost as high as German GDP. In addition to a large number of retail funds and individual special funds for institutional investors, closed-end or alternative investment funds
for financing individual tangible assets are a key focus ofasset management. More than 25 percent of investors in Germany are private. The funds industry is an indispensableintermediary, bringing together the liquidity of millions ofsavers and investors with the capital needs of companies andgovernments.

Banking Sector Structure
There are more than 1,500 credit institutions active in Germany, of which more than 250 are private banks. The banking
sector has a workforce of more than 500,000 people. The
total assets of the German banking industry amount to morethan EUR 9 trillion. The banking sector in Germany consists ofthree pillars: commercial banks, the public banking sector(Sparkassen and Landesbanken – Germany’s decentralized
network of independent regional commercial and savingsbanks) and cooperative banks (Volks- und Raiffeisenbanken).
This is a special characteristic of the German market, as private banks only cover part of the market. Large sections of
the market are served by the network of savings and cooperative banks. Germany’s universal banking system is anotherunique feature of the German market.
Internationally Leading Insurance Sector
Germany is one of the largest insurance markets in the world
and the second largest reinsurance location worldwide. Twoof the five largest international reinsurance groups are basedin Germany. Many international insurance companies are also
active in the German market. Almost 500,000 people work in
the insurance industry. Together, they provide coverage forbusiness and private risks without which normal life would beinconceivable. With investments of around EUR 1.75 trillion,
insurers are among the largest institutional investors in Germany and thereby predestined partners for the green transformation of the economy.
Highly Differentiated Trading Centers
Various stock exchanges in Germany count amongst the oldest in the world. Today, stock exchanges in Berlin, Dusseldorf,
Frankfurt, Hamburg, Hanover, Munich, and Stuttgart (and theEuropean Energy Exchange for energy and commodities inLeipzig) provide a differentiated and competitive platform
for companies and private investors. In Frankfurt, Deutsche
Börse operates the fully electronic XETRA system, one of theworld's highest turnover cash markets for securities. Of morethan 150 market participants, roughly half are from countries
other than Germany. The turnover of Germany’s stock exchanges is the highest in Europe.

Thriving Private Equity Sector
There are around 400 private equity firms that invest in morethan 1,000 companies per year resident in Germany. Morethan 5,500 companies are managed in the portfolios in total.
In 2020, private equity investment totaled EUR 12.6 billion.
Venture capital was invested in more than 60 percent of thecompanies financed with equity capital.

Fund Assets of investors in the EU
TOP 5 markets in percent

27%

15%

10%

10%
7%

Germany

FranceSource: BVI/ECB June 2021

Netherlands

Italy

Luxembourg

Market Trends: FinTech and Sustainability
Digitalization of the financial services market has received an indirect boost from the global coronavirus
pandemic, with acceptance of digital solutions (e.g.
contactless payment solutions) now enjoying greater
widespread acceptance.
Germany’s FinTech market of more than 630 active FinTechs
is now one of the biggest in the world, and the strongest
sector in the country’s start-up ecosystem (55 percent of
FinTechs are five years or younger). According to the FinTech
Report 2021, single service providers constitute the largest
group (230 companies) with financing activity increasing by
an average of six percent over the last twelve business quarters. FinTech and InsurTech companies have enjoyed substantial VC funding in recent years, securing record VC investment
of EUR 3.7 billion in 2021.
Sustainable Finance
Sustainable financial investments are booming in Germany,with funds recording an annual increase of 69 percent – tomore than EUR 330 billion under management – in 2020.
The EU Commission wants Europe to be the first continent
to become climate neutral by 2050 as part of its “European
Green Deal.” Sustainable finance has an important role toplay in this program. In Germany, sustainable transformation
requires an investment of around EUR 322 billion per year.
Neither the “Sustainable Development Goals” nor the objectives of the “Paris Agreement” could be accomplished without
fundamental change within the national and international
capital allocations framework.

Germany adopted its first sustainable finance strategy in
2021. The German Sustainable Finance Strategy seeks tomobilize urgently needed climate protection and sustainability investment while addressing the increasing climate risks
for the financial system. The portfolio of measures – including funding for sustainable forms of investment, sustainability labeling and new sustainability reporting requirements –will help establish Germany as a leading sustainable financelocation.
Germany's FinTechs and InsurTechs in Numbers

639 active
FinTechs

FinTechs raised
most financing

one of the biggest
FinTech markets worldwide

in Germany's
start-up ecosystem

230 single service
companies

EUR 3.7 bn VC
investment

from largest Fintech groupwith financing activitiy

for FinTechs andInsurTechs in 2021

Venture Capital Investment in FinTech/InsurTech 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 financing
rounds135 (21)

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

Digital Hub Initiative
A series of regional digital hubs have been establishedin Germany as part of an initiative of the Federal Ministry for Economic Affairs and Climate Action. Startups, 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 are
established in the cities of Hamburg and Stuttgart.
www.de-hub.de/enGerman Financial Centers
Germany is one of the world’s strongest financial centers. Boasting Frankfurt as one of the leading international financial centers and strong regional centers – inBerlin, Hamburg, Munich, Stuttgart, and North RhineWestphalia – Germany guarantees international con-nections and diverse financial services. Differing fromother global financial centers that are heavily centralized, a hybrid form of large and smaller financial centers
has established itself in Germany.

Germany’s Decentralized Financial Center Landscape

BERLINHAMBURG. Germany‘s FinTech capital. Leading in foreign trade finance, transport
insurance and coverage of special risks.

. High expertise in neo banking, insurance,. High expertise in wealth management

crypto and asset management, digital
infrastructure. Highest number of foundations in Germany

Kiel
SchleswigHolsteinMecklenburgVorpommern

NORTH RHINE-WESTPHALIA
Hamburg

Schwerin. Leading innovation, transformation andscience ecosystem

Bremen. Large insurance sector. Second largest banking centre

BerlinNiedersachsen

FRANKFURT AM MAIN

. More than 200 financial institutions

Potsdam

Magdeburg

HannoverBrandenburg
Saxony-Anhalt

North RhineWestphalia
Düsseldorf

SaxonyErfurt(of which more than 160 are foreign banks). Workforce of more than 70,000 employees

HessenDresdenThuringia

in sector. Home to a dense network of supervisory,
regulatory and scientific bodies (ECB andEIOPA, among others)

RheinlandPfalz

Wiesbaden

Mainz. Leading global insurance location

Saarland. Leading private equity, venture capital

Saarbrücken

STUTTGART. Diversified financial center with strong
real economy ties

. Largest digital and crypto business of
the European exchange groups

MUNICHFrankfurt

and leasing center
Stuttgart
Bavaria

Baden-Württemberg

MunichGermany Finance – The Financial Center Networkwith the same risks are subject to the same level of supervisionand regulation. The Federal Financial Supervisory Authority(BaFin) offers transparent, reliable operations and communication in English to support international companies entering theGerman market. European Union passporting allows companies regulated in one EU country to access the entire EU market
and its 320 million consumers.

Jörn Le Cerf
Finanzplatz Hamburg
Spokesperson Germany Finance 2022
Germany Finance is an initiative to promote Germany
as a European and international financial center. The
initiative is the joint platform of the leading German
financial centers: Frankfurt, Berlin, Hamburg, North
Rhine-Westphalia, and Stuttgart. It works in close cooperation with the German Federal Ministry of Financeand Germany Trade & Invest (GTAI). Jörn Le Cerf, Germany
Finance Spokesperson, outlines the aims and objectivesof the Germany Finance initiative.
What are the goals of Germany Finance?
The common goal of Germany Finance is to strengthen Germany as a financial center within Europe and internationally.
The platform provides a strong brand identity and acts as apoint of contact for everyone interested in Germany as afinancial center.
How does Germany Finance work?
The initiative addresses economically important issues andtheir potential effects on the financial sector. These include
location factors and sustainability as well as human resources,
digital transformation, and innovation (the latter two having
significant relevance for the FinTech and InsurTech sectors).
We seek to address the challenges of the day and highlightindustry performance in international comparison. Germany
Finance has published a study analyzing the specific features of Germany’s financial system in European comparison– highlighting the role and benefits of the country’s systemand the challenges and opportunities ahead.
Why Germany?
Germany is the largest economy in Europe – measured interms of GDP and population – and is an international export
leader. The domestic financial sector has two defining characteristics: economic clusters spread across the country anda diverse economic ecosystem led by strong and innovative
SMEs. There is a welcoming regulatory level playing field –meaning that companies providing the same financial services

The country also boasts a well-functioning supporting ecosystem of companies in the consulting and services sectors,
excellent digital infrastructure and business development
agencies in every region. Frankfurt has the second-highest
data center density level in Europe with DE-CIX – Germany’s
most important internet exchange node and the world’s largest and most reliable data exchange point.
Germany is also home to a highly skilled and well-educatedworkforce. Thanks to its excellent quality of life, international
professional talent is easy to attract to the country. Join us
and be a part of Europe’s financial hotspot.
Link to study: germany-finance.com/cornerstone

Germany Finance – Our Mission
Germany Finance is a platform of all leading German
financial centers in close cooperation with the German
Federal Ministry of Finance and Germany Trade &Invest. The common goal is to strengthen Germany asa major financial center in European and international
context, to provide the financial services sector with arecognizable face and be the first address for all parties interested in Germany as a financial center.
Discover the diversity of Germany’s financial centers,
the breadth of services offered in the German financial
sector, regional focal points, and current topics of our
joint work.
Contact: info@germany-finance.com

Our Support for Your Business in Germany
Germany Trade & Invest (GTAI) is the foreign trade and inward
investment agency of the Federal Republic of Germany. We
advise and support foreign companies planning to expand
into the German market and assist German companies seeking to enter global markets.

All investment-related services are provided entirely freeof charge and all enquiries are treated with the utmost
confidentiality.

Investor Consulting
Our Investor Consulting division of specialist industry teams
provide international investors in all sectors with comprehensive consultancy services specific to each individual investment project. Services include:

Contact
Dr. 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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June 2022

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