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Looking to start a fintech business in the Federal Republic of Germany? And you have every reason to. Boasting a highly developed fintech sector, Germany has long been a magnet for investors seeking to expand their portfolios. So, let’s have a closer look at the country’s fintech sector & see why it holds such an appeal for international businessmen.

Germany: Major Fintech Players & Hubs

The city of Berlin, Germany's capital & the largest financial hub, is also the country’s number one fintech center. The three other fintech hubs include the Rhine-Neckar-Triangle, Hamburg & Munich. The following companies & banks are considered Germany’s major fintech players :

  • Raisin - operates an EU-wide securities scheme;
  • N26 - an application-based bank;
  • Spotcap - extends loans to small & medium businesses;
  • Auxmoney - runs a P2P money-lending platform;
  • Smava - operates a platform for comparing loan propositions;
  • Scalable & Liqid  - manages portfolios for retail clients;
  • Exporo - runs a platform specializing in crowdfunding through P2P lending.
  • Kreditech - provides database-driven credits.

Germany: DLT & Cryptocurrencies

BaFin, the country’s main financial regulator, previously issued a warning regarding the launching of an ICO in the Federal Republic of Germany. Among other things, it cited potential risks connected to:

  • fraudulent schemes;
  • non-existent regulatory framework & unawareness of customers;
  • instability.

Whether it has produced any notable impact on an investment climate in the sector isn’t yet clear. As regards the non-existent regulatory framework, BaFin was a pioneer in this regard, coming up with its own definition of bitcoins. However, this definition may require companies to obtain a fintech license in Germany for implementing specific business schemes.

According to BaFin’s most recent statement, it’s considering applying the said definition to other tokens as well. Its token notice provides a detailed description of how various legislative norms can be applied to services involving sale & purchase of tokens.

Germany: Alternative Lending Platforms

The one big challenge Germany’s alternative lending platforms are facing is the existing regulations. Pursuant to the country’s banking legislation, extending loans is the exclusive prerogative of banks. Hence, providing P2P lending services in Germany requires entering into partnerships with licensed banks which will then provide the required amounts of money through their online platforms. AIF managers can extend loans to specific closed-ended AIFs; however, they can do so only on the borrower’s behalf. It should also be kept in mind that some market participants are operating B2B, B2C & C2C schemes.

Germany: Digital Payments, Money Transfers & Currency Exchange

Until recently, Germany was a country where cash payments dominated over non-cash ones. However, after card payment fees have been capped, that trend has begun to change. And given Google Pay & Apple Pay’s inactiveness, smaller companies have an easier time entering Germany’s fintech market. It should be noted that PayPal is still Germany’s largest provider of digital payments. In their turn, public & private savings banks are investing heavily in the development of solutions like GiroPay & Paydirekt.

Issued in 2018, the PSD 2 is projected to incentivize & stimulate the market of fintech services in the Federal Republic of Germany. According to it, additional fees for certain non-cash payments made through SEPA are now banned. Also, payment service providers  are now allowed to access their customers' bank details by using a special software.

At the moment, a number of providers are making use of apps & services enhancing their clients’ experience. It is believed that providing unrestricted access to payment-related data is going to create new opportunities for innovative business schemes.

However, new providers are facing tightened regulatory requirements. Payment for providing services related to accessing account information is now regulated by the PS Act & various authorization requirements.


If you need more information on regulatory requirements in Germany’s fintech sector or require legal advice on launching an ICO in the Federal republic of Germany, IQ Decision UK is at your service. Our legal experts will be happy to lend you a hand with any other legal challenges you might be facing in that regard.