Fintech in Germany set for strong 2016 

Nery Alaev writes about financial technology in Germany.

The financial technology (‘fintech’) industry in Germany is set to rival its strong equivalent in the United Kingdom and other global rivals, according to new data from a major professional services firm.

As well as finding out more about the data, I’ve decided to look at the fintech industry itself.

What is fintech?

Wikipedia’s definition of the sector is:

Frankfurt, a hub for German finance

“Financial technology, also known as FinTech, is an economic industry composed of companies that use technology to make financial services more efficient. 

Financial technology companies are generally start-ups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software.”

In short, fintech organisations utilise technology to access financial services, such as banking and insurance, in a way that is fine-tuned to technology and the increasingly digitised environment.

A good example of a fintech organisation is TransferWise. The UK-based company, established by two Estonian partners, has grown strongly since its establishment in 2011 thanks to increasing demand for less-expensive, hassle-free international money transfers.

German strength

Returning to Germany, it’s becoming clear that the small sector is set for growth.

For example, Hubertus Vaeth of Frankfurt Main Finance mentions in Bloomberg’s report about the data that investment is set to ‘quadruple’ in the next five years to €2bn. Employee numbers are expected to double to 26,000 also.

The Frankfurt region is especially set for more growth, as it has start-up numbers nearly double that of the rest of Germany (22% vs 13%).

My previous article about LSE and Deutsche Boerse’s merger already points towards a change in the competitive environment between Germany and the United Kingdom. What will happen to the fintech industry is sure to be interesting.

Nery Alaev

Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.