The Current State of German Fintech

As the European fintech industry matures Germany is increasingly becoming one of the dominant regions in the field. Recently, the national financial regulator, BaFin, laid out regulatory requirements for fintechs wanting to operate in the country, while VC-backed funding for German fintechs were among the few that reversed the downward global trend in 2016 to reach $421 million, up 118% from $193 million in the previous year.

Germany is also rapidly catching up with the UK which has historically been the leading European fintech hub (based on funding). In both Q2 and Q3 of last year, German fintechs attracted more VC funding than firms in the UK and this trend seems set to continue.

There are a number of cities in Germany which are building up fintech communities, among them Frankfurt and Berlin. The UK’s decision to exit the EU has left the future of its fintech industry unclear, creating an opportunity for Germany to fill the gap. UK-based firms will likely lose the benefits of passporting while firms based in Germany will continue to profit from that right, and thereby have access to the entire EU consumer market.

Germany will also maintain visa-free access to potential employees from across the wider European Economic Area (EEA), which British will likely lose. These factors could make Germany more attractive than the UK to firms looking to expand to Europe, and may also convince fintechs that are currently UK-based to relocate.

Photo credit: http://www.colourbox.com. Material used in the preparation of this article has been drawn from BusinessInsider.

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