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Berlin is a hub for the technology needed for moving money and more.

Berlin: The FinTech Capital

In the first of a series diving into the Berlin FinTech scene, we look at the factors behind Berlin’s success.

Did you know that there are around 32,000 FinTech companies in the world? Together, they make about $12.5 trillion in revenue globally. No wonder investors like FinTech – up to approximately 20% of venture capital goes into FinTech startups. 

The number of transactions made through young FinTech companies rather than traditional banks is rising steadily, meaning the acceptance of such new financial technology in business and in the public is growing. 

High time to take a closer look at the Berlin FinTech scene. In this series we will highlight the significance and development of the FinTech sector in Berlin, show why Berlin is so attractive for FinTech companies, and provide insights into the current FinTech ecosystem. 

Over ten percent of startups founded in Germany are FinTechs. It’s the second largest sector after ICT. The development of Berlin into an international finance tech hub is not least the result of the attractiveness of the German capital itself. Established banks are opening their innovation departments in Berlin, and international payment companies are also increasingly taking advantage of the international talent pool that the city on the Spree offers. 

Around one third of all FinTech startups in Germany are located in Berlin. According to the FinTech Startup Monitor 2022, there are over 700 FinTech companies in Germany, over 300 of them in the German capital. They operate in various areas of the financial industry, including payments, lending, investment consultancy, and risk management. Six out of the seven German FinTech unicorns are in Berlin. Around half the FinTech startups in Berlin are less than five years old. For an overview, see the startup-map

Berlin has an internationally recognized FinTech scene that attracts investors and their capital as well as talent from all over the world. The scene is well-connected and well-organized thanks to initiatives such as the public-private Berlin Partner, which supports startups with localization, finding talent, funding opportunities, and partnering by connecting startups with SMEs, corporations, and science.

FinTech: Embedded in the Startup Scene

The vibrant startup scene in Berlin hosts several important incubators, accelerators and venture builders, such as Finleap. There are also high-level recurring events, such as FIBE, a new upcoming festival for FInTech in BErlin. Then there are the Digital Finance Conference and the Payment Exchange, or PEX. FinTech also occupies an increasingly prominent role in business and startup events, such as Transfer Week Berlin-Brandenburg in November 2023, or Startup Night and Bitkom’s hub.Berlin, which is morphing into Transform in 2024. 

The Federal Ministry for Economic Affairs and Climate Action runs the Digital Hub Initiative across Germany, with FinTech concentrated in Berlin. The Hub promotes the sector and provides networking opportunities through the Berlin Finance Initiative and de:hub

English is the lingua franca among the international startups, and costs are still noticeably lower than in London or Paris. The ecosystem attracts countless skilled workers to Berlin and somewhere between a quarter to half of the employees in Berlin startups have a non-German background. This is a benefit for those companies considering internationalization, since multicultural teams work more effectively in global markets. 

The advantages of this ecosystem for the German capital are clear. The FinTech sector is developing rapidly and is becoming an increasingly strong economic force creating jobs, well over 9,000 local jobs in Berlin. High investments are bringing fresh capital for strong growth of the companies, with the biggest proportion of the venture capital in Berlin being invested in FinTech, and 85% of FinTech investments in Germany happening in Berlin. No wonder FinTechs have proportionately more employees than other startups.

But what is FinTech? 

The term FinTech encompasses technology dealing with financial topics, such as:

  • payments or remittance 
  • e-commerce
  • asset management
  • investment
  • credits and loans
  • factoring
  • banking
  • accounting
  • controlling
  • compliance and ESG (environmental, social, and corporate governance) and ‘regtech’
  • tax
  • insurance 
  • aspects of real estate (PropTech), with crowdfunding becoming a thing in this sector

Another important aspect are APIs, i.e. the interfaces which make it possible for two or more software systems to exchange data so that a company has all their data in sync across all the tools they use. Some startups offer full service solutions, while others are single service providers, specializing in one particular issue – which usually necessitates integration with other tools in the form of APIs.

Looking at this list of topics, it becomes clear that FinTech is not an adjunct to doing business in a digitally transformed world, but occupies the very core of business itself: making money.

Where tech transforms finance: Berlin, the FinTech capital
Where tech transforms finance – © Berlin Partner

FinTech in Europe

It is clear that within Germany, Berlin is the FinTech center. In a European context, too, Berlin is a prime hub for FinTech. For instance, the Global FinTech Index 2020 named Berlin as no. 1 FinTech ecosystem in the EU. 

Ernst & Young identifies London, Berlin, and Paris as key ESG FinTech hubs, with Berlin being the strongest location in the EU in terms of number of companies. 

McKinsey points out that the German public is not the most digitized when it comes to money, with only half the population using online banking compared to over 90% in the Netherlands, and sees this as a headwind the FinTech sector is facing in Germany. In the realm of B2C, transaction habits and popular payment methods diverge widely from nation to nation (see for instance ppro country reports – ppro has an office in Berlin, by the way). From an investor’s point of view, smaller countries, such as Sweden, have comparatively strong statistics for the FinTech sector and overall startup scene, for instance number of founders per million of population, yet these markets are also considerably smaller. 

Berlin has a well-educated workforce with a strong focus on technology, and Germany has a large number of graduates in technical fields with the highest proportion of STEM graduates in the EU. According to Eurostat, STEM subjects accounted for 25.8 percent of all graduates at the EU level in 2018, compared to 36.9 percent in Germany. In fact, you can even get a German “distance learning” FinTech degree

Following the example set by France, the regulatory environment in Germany is becoming more conducive to FinTech. The German government has taken a number of measures to promote the development of the sector. 

To quote startupgenome, “Berlin’s FinTech scene attracts top international talent thanks to its high level of English language adoption and startup-friendly laws.”

Talent, Security and Stability

The Federal Financial Supervisory Authority (BaFin) has been the watchdog regulator of all German financial markets since 2002, with the aim of increasing customer protection and trust in the financial system. In response to the rise of FinTechs, BaFin launched the FinTech Innovation Hub in 2022, designed to promote dialogue between BaFin and innovative FinTech service providers and supply information and answers to questions on financial regulation. Furthermore, the German reserve bank, the Deutsche Bundesbank appointed a FinTech officer, all signs that the regulators are actively seeking dialogue with startups in the sector. 

BaFin has also established a focus supervisor for complex organizations, a central data intelligence unit, and a ‘digital supervisor cockpit’ as the backbone of IT-driven supervision of the financial sector. In addition, BaFin granted permission for crypto custody business in 2021, establishing Germany as a ‘crypto-friendly’ country. 

For a FinTech startup in Germany, the general licensing rules apply, there is no specific FinTech license and the regulation of such companies depends on their business model. It is a technology-neutral ‘same business, same risk, same rules’ approach, so usually the banking, securities, or payment services Acts apply. 

The monitoring of the sector to keep it stable and safe, government subsidies and programs to promote investment, and the talent pool in Berlin due to the attractiveness of the city all contribute to making Berlin a top location for FinTechs.

Success Stories Made in Berlin

All of the factors we refer to above provide the breeding ground for the hundreds of Berlin FinTech companies, including the unicorns Trade Republic, N26, Mambu, Wefox, Raisin DS, and Solarisbank. 

Considering for instance Berlin as a pool of international talent – N26 is a FinTech neobank that operates in over 20 countries. The €8B company has approximately 1500 employees who come from over 50 different countries. Raisin DS is a FinTech that offers a comparison portal for savings products. The company has employees from over 25 countries. Solarisbank offers a platform for financial services and has employees from over 30 countries. 

Trade Republic is digitizing investment and asset management. The online banking broker was founded in 2015 and was backed early on by Creandum, Founders Fund (Peter Thiel), and Project A Ventures. Now the neobroker has over 700 employees and 2M+ customers, with €6B worth of assets under management. After raising €250M in 2022, the company has a valuation of €5B. 

MAMBU was founded in 2011 and is a banking SaaS provider with €32M in revenue in 2020. The company employs over 900 people and has a valuation of €4.9B. Mambu’s SaaS platform provides tools for traditional banks, FinTech startups, financial institutions, non-profits, and other businesses to build their banking, lending, and financial products. N26 is among Mambu’s many customers. 

The B2B2C platform Wefox was founded in 2015 and sells third party insurance products indirectly via human agents, using digital analytics that supply Wefox with better loss ratios compared to market averages and ‘straight-through-processing’, meaning that the agents handle the products digitally. Wefox generated €320M in revenue in 2021 with 2M+ clients in Europe and 700+ employees. The valuation lies at €4.5B. 

For information on settling your FinTech in Berlin, see the business location center for financial services.

Watch out for our next article on FinTech from Berlin, in which we’ll take a closer look at the transformative nature of financial technologies.

Text: Olaf Bryan Wielk, ideenmanufaktur
Header image: ©

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