A 2016 EY study put Germany’s overall FinTech market size at US$2.5bn, the fourth-largest in the world, with new investments of US$539m. VC-backed funding for German FinTechs rose by 118 percent in 2016, contrary to an overall global downward trend, according to Business Insider. As for last year, the statistical observer Statista reckons that transactional value in 2017 across German FinTech companies was US$115bn; a Dorfleitner/Hornuf study FinTech Market in Germany estimates that the market volume in finance and asset management alone will grow from €2.2bn in 2015 to €58bn by 2020.
Sebastian Schäfer, CEO of TechQuartier in Frankfurt, sees Germany as the future center of the industry in Europe, filling the hole left by Brexit. “There are opportunities here in insurance, crypto-finance, RegTech, infrastructure and particularly SME lending,” he says. “Crucially, FinTech companies from Germany and other countries do not see London as first choice anymore.”
With FinTech seemingly looking for a new base, Germany’s tech hubs, so strong on innovation, are actively courting startups. “A recent survey counts about 700 companies in this sector in Germany, half of them founded during the last three years,” says Josefine Dutschmann, senior manager at Germany Trade & Invest’s Investor Consulting. “A series of regional digital hubs has been established in Germany as an initiative of the Federal Ministry for Economic Affairs and Energy, where startups, science, SMEs, industry and administration join together and become centers of digital transformation. These also become centers for collaboration, which is interesting, as banks and insurance companies are starting to be a lot more open to FinTech collaborations and partnerships.”