As the European fintech industry matures, Germany is increasingly establishing its credentials in the space — national financial regulator BaFin has clearly laid out regulatory requirements for fintechs wanting to operate in the country, while VC-backed funding for German fintechs bucked the downward global trend in 2016 to reach $421 million, up 118% from $193 million in 2015. Germany is also starting to catch up with the UK, which has historically been the leading European fintech hub when it comes to funding — in both Q2 and Q3 of last year, German fintechs attracted more VC funding than firms in the UK. We expect Germany will continue to build on this strong base to establish itself as a European fintech leader over the next few years.
There are a number of cities in Germany seeing significant progress in building up fintech communities. This suggests a model more closely aligned with the US, which has at least two fintech hubs in San Francisco and New York, and is in contrast to the UK, where the fintech industry has been concentrated in one city, London.
Berlin. Germany's capital city is home to 87 fintechs, according to data from EY. Although not historically a financial center, Berlin does have a reputation as a technology hub, which is helping to make it attractive to fintechs. That's because tech skills and expertise are arguably harder to come by than experience in the financial services industry. Further boosting Berlin's fintech appeal are a number of corporate-sponsored accelerators that have recently set up in town. It also has a relatively international populous, and English is commonly used as the language of business — an attractive attribute for firms planning further global expansion. An advantage it has over London in particular is the lower cost of [...]