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Global Expansion, Market Environment Germany

A Comparison of FinTech Markets in Germany and China

In recent years, the banking industry across Europe and in Germany particularly has changed fundamentally. Reasons for this, apart from digitalization, are structural change and new regulations put in place by the German government. Increasing numbers of financial transactions are now carried out with a click of a mouse: Those who want a loan or want to invest money often don’t go to a classic retail bank anymore but rather do the transaction online. FinTechs in Germany have discovered this trend for themselves and offer their customers exactly what they are looking for. On the other hand, China has emerged as an innovative superpower growing new business models to unbelievable scale.

FinTechs in Germany


FinTechs are emerging web-based companies that are challenging existing financial institutions through their customer-centric approach and the use of new digital technologies. According to a study by Barkow Consulting, more than 400 FinTechs are expected in Germany. Most of them are located in Berlin, Munich, Hamburg and Frankfurt.

For most citizens, however, FinTechs remain a mystery even after several years of market and media presence. 76 percent of Germans have never heard the term FinTech; only six percent have a clear idea of what it means.

On the other hand, German consumers are eager to learn more about the services of FinTechs according to a survey completed by Statisa: online payment services are particularly popular among Germans and mobile payment is by far the number one trending topic.

Online Payment Services and Insurance Brokers well known

Dealing with financial services and insurance is usually both necessary and useful. Germans have recognized that, in addition to traditional providers such as banks and insurance companies, there are also digital providers in the market.

Two-thirds of Germans are familiar with the offer of digital insurance managers and also use online payment services. Internet and smartphone banks as well as providers for managing stock portfolios are also known by the majority.

On the contrary, industry experts are critical of aspects such as data protection and the competition with traditional banks and insurance companies: 45 percent consider these to be the biggest obstacles to a positive development of the FinTech sector in Germany.

In the Scandinavian countries, the topic of FinTech is already part of everyday practice and more and more national and international providers are entering the local market with their mobile payment solutions. Experts consider the smartphone transformed into a mobile wallet to be an equally appealing idea. Two thirds of them see it as the biggest trend in the German financial industry in the future.

Berlin – The German FinTech Capital


Frankfurt has always been regarded as Germany’s number one financial powerhouse. It is home to the European Central Bank and the German Federal Bank. No other city is home to more banks than the city on the Main river. In total, there are more than 300, including almost 200 foreign banking institutions.

Therefore, Frankfurt as a major location is largely set with traditional banks. However, the situation is different in the FinTech sector. Here the Main metropolis Berlin is clearly lagging behind.

According to a study by the state-owned Investitionsbank Berlin (IBB), around 70 FinTech companies such as the best German credit card provider N26 are based in the German capital, twice as many as in Frankfurt. During the last years, Berlin has been trying to further expand its strong position.

The Brexit-Votum is supposed to help with this, whereby other cities like Berlin as a European hub instead of London are increasingly in the focus of FinTech companies. The main reason for this is the EU payment directives, which are essential for many of these companies for their own business.

An Overview of the German FinTech Market


The FinTech market consists of the banking, insurance, lending, payment and trading & investing sectors. Banking comprises mobile account management without a bank counter, where customer needs for individual, fast and uncomplicated financial management are met.

In the insurance sector, the focus is on fair, simple and customer-oriented insurance models. Lending refers to the online comparison of flexible instalment loans and the granting of personal loans outside a financial institution. Payment deals with new payment models that promise low transaction costs and simple processing.

Behind trading and investing lies a mobile administration of stock portfolios and the optimization of personal investment strategies through exchange with experts.

In the FinTech sector, it can be seen that there are several providers for almost every service – even in Germany. The most attractive segments for banks include providers of virtual currencies, e-commerce companies, fundraisers and transaction providers. This can also be seen in the global investments, where the areas “Financing & Credit”, “Payment Processes” and “Mobile Payment Systems” are at the forefront.

The reason for the growth of the FinTech scene is the focus of its applications: FinTechs offer changing user experiences. Google, Amazon, Apple and start-ups are often seen as role models for digital applications.

According to a study by Ernst & Young, this is also the reason why users accept FinTech solutions: ease of use and “convenience” are the focus of almost half of the respondents. In their eyes, FinTechs serve this desire much better than traditional banks.

FinTech Unicorns in Germany

As a result of innovations and their often disruptive technologies, FinTechs have become an important influencing factor for the banking business as a whole in the course of digitalisation. Against this background, investments in corresponding financial technology companies have also gradually increased in recent years.

The valuation of these companies can now easily exceed the one billion US dollar mark in individual cases. Such a company is known as a so-called “unicorn”.

The name goes back to Aileen Lee, the founder of Cowboy Ventures, a fund that invests during the initial financing phase of a young company. In late 2013, Lee published an article in the tech blog Tech Crunch in which she wrote about the fascination of start-ups that had reached a valuation of one billion US dollars – either through an IPO or the successful exit of a founder. The title of the article was “Welcome to the Unicorn Club”.

The Chinese FinTech Market


When it comes to digital financial solutions or financial technology, China is increasingly dependent on international competition. According to the global ranking FinTech 100 of the management consultancy KPMG, five of the ten most successful FinTechs worldwide are from China. These include the online lender Qudian and Ant Financial, the financial subsidiary of the Chinese online trading group Alibaba.

Recently, the Wall Street Journal reported that Ant Financial, which also includes the mobile payment service Alipay, is preparing a further financing round of nine billion dollars. The enormous valuation of Ant Financial and other Chinese FinTechs is an expression of the meanwhile high importance or outstanding market position of these companies.

Ecosystems and platforms in China

In general, the landscape for financial technology companies in China is characterized by the fact that, unlike in many European countries, a number of companies have already managed to build up ecosystems and link various services to them. These often go beyond traditional offers in the finance and insurance sector and cover other user needs.

Within the framework of an app, for example, the user has access to chat functions as well as digital asset management or payment options.

A well-known example is WeChat from the Chinese tech-giant Tencent. Originally launched as a pure chat service, comparable to WhatsApp, around one billion Chinese now practically control their life via the WeChat application.

For example, they can chat with friends and make appointments to go to the movies, order and pay for tickets directly via the app, arrange a doctor’s appointment, shop online or even pay their electricity bill. Everything is done directly via the smartphone, so there is no media disruption.

Full Disclosure of Personal Data

The FinTech development is causing huge platforms to emerge, which, due to their high distribution, successively attract further innovative start-ups.

As a result, the platform continues to grow and focuses on the concrete needs of the target group. Alipay, for example, has introduced a kind of credit rating. On the basis of the things a user buys and the disclosure of his data he gets a certain rating. This gives the user access to further services.

For example, a deposit is no longer required when renting a car. A rental bicycle can also be used without any problems using a QR code, even though the user has never had a business relationship with the rental company. The user simply has to scan the code on the desired bicycle and the lock will pop open. As the user discloses all his data and his actions influence the general credit rating, the company trusts that the user will return the bicycle in an orderly manner.

Credit Lending in Minutes

Whether payment, transfers, loans or insurance – hardly any other country already handles as much digital processing of financial services and insurance as in China. Around 500 million Chinese now pay primarily by smartphone.

Thanks to the start-up company Dumiao, for example, loans can be granted within a few minutes. Customers often apply for a loan from Dumiao directly in the store to be able to buy the desired product. The request is made via app or an online portal. After a few minutes, the applicant receives a credit or the information that his application has been rejected.

Conclusion – Comparison of FinTech Markets in Germany and China


The reasons for the FinTech boom in China are diverse. On the one hand, the Chinese have a high affinity for online activities. On the other hand, established financial institutions, unlike in Germany for example, do not enjoy a particularly high level of trust, as most of them are state-owned. Moreover, security and data protection concerns are much less pronounced in China than in Germany.

In addition, China’s banks have often refused to lend to smaller, private companies in the past. As a result, these banks sought alternative financing options and their demand ensured that the first start-ups with corresponding offers came onto the market.

Experts also expect a positive development of the Chinese FinTech market in the future. The management consultancy PricewaterhouseCoopers, for example, expects an increase in the number of solutions offered by the FinTech companies over the next five years, particularly in the three areas of consumer banking, investment and asset management, and transfers and payments.

According to Statista, the total transaction volume in the Chinese FinTech market will also increase from around 1.4 billion euros this year to around 3.2 billion euros in 2022 – this corresponds to annual growth of almost 23 percent.


Lisa Meier
Lisa Meier

Lisa Meier has more than ten years’ experience in providing strategic advice and legal guidance on international trade, administrative and legal matters to foreign companies, associations, and governments doing business in Germany. She advises companies in a broad range of industries on successfully navigating the German economic environment.

Lisa brings a wealth of knowledge to Universal Hires’ marketing and client success team. In her free time, Lisa spends time exploring the unique city-life of Berlin and all the diversity that the East of Germany have to offer.

About Universal Hires

Universal Hires is Germany’s leading staffing provider. With expertise in recruitment and employer of record services, the company levarges its market entry support.

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