Germany FinTech Report 2020 – By MEDICI

For the past many years, Germany has been topping the FinTech leaderboard in continental Europe. Germany has the most thriving FinTech sector, be it by the number of startup enterprises or by the quantum of private investment coming into the sector. Against this backdrop, MEDICI has recently launched a new comprehensive study titled ‘Germany FinTech Report 2020.’ In this article, we look at some snippets from the report and share what you can expect to find in it.

Germany's FinTech Funding Trend

There are over 800 FinTechs in the country today, and during the analysis period of this report from Jan. 2019 to Aug. 2020, over $2.2 billion was invested into the sector. According to MEDICI’s analysis of the market over the last five years, there has been a steady growth in FinTech funding in Germany between 2015 and Aug. 2020, barring a minor blip in 2017 (Figure 1). The average deal value has steadily risen from $3 million in 2015 to $24 million at the end of 2019, showing increasing maturity and investor faith in the market. 

A detailed analysis is available in our new Germany FinTech Report 2020. Access the full report here.

According to MEDICI’s Germany FinTech Report 2020, out of the $2.2 billion in fundraises from January 2019 to August 2020, global neobanking innovator N26 led the charts with three rounds totaling $570 million, thereby entering the Unicorn Club. Though the Neobank sector had only seven funding rounds, the numbers from N26 pushed them to the top of the charts in total funding amount. The InsurTech sector saw the most number of deals (20) as well as the second-highest ranking in the total amount of funding. wefox Group’s twin Series B fundraise totaling $235 million was an important contributor to this number.

A detailed analysis is available in our new Germany FinTech Report 2020. Access the full report here.

City-Wise Distribution of FinTech: Berlin and Munich Lead the Pack

Berlin can be described as the FinTech capital of Germany, with 197 startups currently functioning in the sector. Munich, Frankfurt, and Hamburg are also emerging as centers for innovation in financial technology.

The Germany FinTech Report 2020 provides a detailed analysis of the geographic and FinTech segment-level composition of the German FinTech landscape. You can find the report here.

Are Banks and Insurance Companies Investing in FinTechs?

The answer is: yes. CVC investment activity has been vibrant in Germany during the analysis period (January 2019 to August 2020), with incumbent banks and insurance companies making 30 deals in various FinTech firms. Deutsche Bank led the charts investing in companies such as Deposit Solutions, Zeitgold, and Finanzguru. A high percentage (13/30) were in Seed and Series A rounds, which demonstrates the interest and faith in identifying and nurturing early-stage startups. With regard to segments, InsurTech had the most interest, followed by Neobanking and Lending.

FinTech Consolidation

Of the 36 M&A deals during the analysis period, one-third were in Payments, which shows a high level of consolidation in a business facing eroding margins. This is likely to continue as PSD2-led disintermediation and price discovery unfolds. The first 8 months of 2020 have already seen 16 M&A deals this year, already touching last year’s numbers. COVID-19 has accelerated this by making it difficult for many businesses to survive and giving them no option but to merge with or be acquired by a larger player.

German FinTech firms have always focused on innovation, and their rising funding numbers are proof of global interest in this sector. MEDICI’s research shows that despite funding concentration with top FinTechs (which is the case globally), every prominent sector has received a good share of the funds. Banking-as-a-Service platforms such as Solarisbank and Fidor have enabled domestic startups to easily offer financial services, and some of them have also gone on to set up their own neobanks using these platforms. Traditional players with global businesses such as Deutsche Bank and enterprise solutions provider SAP are also collaborating with FinTech firms, thereby offering them better distribution and growth opportunities.

About the Report

In September 2020, MEDICI published the Germany FinTech Report 2020, a comprehensive study based on MEDICI’s proprietary FinTech data of thousands of startups, deep market intelligence derived from years of tracking the FinTech industry, and secondary research which was refined through brain-storming sessions and in-depth interviews with segment experts to extract valuable market signals from the noise, identify market trends, and develop point-of-views in the report.

What More to Expect From the Germany FinTech Report 2020 by MEDICI

This 40-page report from MEDICI offers an in-depth look at:

  • Germany FinTech Funding – Total funding, along with segment-wise funding breakdown 
  • City-wise breakdown of the number of FinTech players 
  • Overview of regulator – BaFin
  • Bank and insurance investments & partnerships with German FinTech companies, which covers segment-level investments in detail
  • FinTech consolidation – M&A analysis
  • Segment level deep-dive analysis covering:
    • WealthTech
    • Lending
    • InsurTech
    • Payments
    • B2B FinTech
    • Other sectors
      • RegTech
      • Neobanks/digital banks
      • Blockchain/cryptocurrency
      • Financial aggregators/BaaS

Grab your copy of the full report here.