Market Intelligence
Financial Services Germany Information Management

Germany Financial Technology "FinTech"

The market for “FinTech” is expected to continue to grow in Germany, the 4th biggest Fintech market in the world and largest in the EU, as the country offers the necessary digital infrastructure and consumer appetite. Germany’s FinTech demand and market size (reaching a 64% adoption rate, 2023) is estimated to grow steadily due to various socioeconomic factors:  

  • A high 2022 GDP per capita of $48,432  

  • A per-head 2022 consumption expenditure of $21,704 

  • 97% of its population has an account at a financial institution as of 2023. 

  • More than 75% of Germans are digital payment users as of 2023. 

Though Germany has yet to overtake the United Kingdom in terms of aggregate mobile payments, Germany’s forecasted compound annual growth rate (CAGR) of mobile payment adoption currently stands at 43.8% to the UK’s 19.5%, driven by: growing credit card adoption, slated to reach 67.3% in 2028 from 58.0% in 2023; highest user penetration of mobile payment options in the EU (24.3%); and strong demand for digital personal finance services.  

While Germany’s transaction value related to alternative financing is estimated to grow at a yearly average of 7.9%, the lack of government regulation and availability of traditional loans may hinder rapid growth of the alternative investment Fintech sector. In the first half of 2023, InsurTech startups – a subsector of the Fintech space – raised $341 million USD, 33% less than in 2022, compared to an overall 43% drop in EU startup funding since last calendar year. Capturing the continental rebound after market stabilization in the coming years will be critical for Germany’s fintech future.   

Infrastructure

In 2023, Germany reached a smartphone penetration of 90.1% and an overall internet penetration of 93.1%, up significantly from pre-Covid 2019’s 79.8% smartphone penetration and 84.8% internet penetration, providing an excellent base for the growing FinTech sector. 
Important FinTech locations are Berlin, Frankfurt, Munich, Hamburg, as well as the larger cities in North Rhine-Westphalia. The leading sectors are banking (~20% of the industry by market value), payment (16%), capital markets (14%), and insurance (13%), with German and U.K.-based companies accounting for much of the sector’s market share. 

Regulation

Depending on their specific corporate structure, FinTech companies operating in Germany require authorization by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht or BaFin) which is overseen by the Federal Ministry of Finance (BMF). However, assessments by the agency can only be made on a case-by-case basis. As the introduction of the Single Euro Payments Area (SEPA) has harmonized digital payments legislature within the European Union (and to several non-EU countries), the authorization to operate in Germany might also be a potential channel for international FinTech companies to other markets within SEPA. 

For more information, contact the Commercial Service in Frankfurt, office.frankfurt@trade.gov. 

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