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Key Facts
The Financial Industry in Numbers
Banks Hiring Again
Around one third of financial institutions surveyed plan to hire new staff in the near future – particularly in the areas of risk management, compliance and IT. This is the first time since 2015 that more staff are being sought in the banking sector.
Growing Market Volume
At the end of 2023, the financial assets of private households in Germany amounted to around EUR 7.7 trillion – an increase of around 6.6% compared to the end of the previous year.
Digital Transformation
Around 84 percent of the population now conduct most of their banking transactions online and 79 percent have already taken out insurance policies online.
Stable Demand for Insurance Cover
The long-term nature of many insurance contracts means that premium income is largely stable. In 2023, premium income in the insurance industry grew by 1.4 percent.
Opportunities
European Central Bank interest rate increases have improved the income situation for German banks. Despite economic challenges, the mood in the banking sector is more optimistic than in the economy as a whole – 92 percent of the financial institutions surveyed by the EY Banking Barometer 2024 rate their current operational business development positively. Many banks have adapted their business models and tapped into new sources of income such as innovative financial products and sustainability.
Sustainable Finance
The sustainable finance sector is experiencing a growth spurt worldwide – but especially in Germany. The volume of newly issued green bonds in Germany in 2022 amounted to EUR 84 billion euros – placing the country first within the OECD. Germany also has the largest share of green IPOs worldwide in the last ten years after the USA and China. Some EUR 727 billion is invested in sustainable funds in Germany. The overall share of sustainable investments in Germany has more than tripled since 2018. With its Sustainable Finance Strategy, Germany is in the process of mobilizing urgently needed climate protection and sustainability investments while addressing the increasing climate risks for the financial system.
FinTech
Germany has a dynamic fintech scene that is enriching financial sector solutions in all of the country's financial centers. Germany is a major FinTech hotspot in Europe. The willingness to cooperate between traditional financial service providers and FinTechs is high. German FinTechs cover a wide range of solutions – whether it be payment, savings, cryptotrading, insurance, B2B or B2C. With USD 1.1 billion in venture capital investments in the FinTech sector in 2023, Germany is the frontrunner in the EU alongside France.
Blockchain
Blockchain remains a key technology for the financial sector. Germany is a leading location for blockchain technology in Europe. Some 25 percent of the more than 500 blockchain companies in Germany are active in the crypto and finance sector. By 2025, the market for digital assets in Germany is expected to reach USD 1.9 billion – equivalent to 13 percent of the European market. Germany is promoting the acceptance and use of blockchain technologies with advanced regulations such as the law on electronic securities and licenses for crypto custody transactions. The country also has a strong infrastructure including the second largest number of Bitcoin nodes in the world.
Business Environment
Financial Services After Brexit
The United Kingdom’s Brexit departure from the EU has redrawn the European map for financial services. London remains an important financial hub, but the loss of EU-passporting rights is seeing many international financial service providers shift their businesses to locations within the EU.
The Trade and Cooperation Agreement with the UK covers financial services in the same way as with other free trade agreements with third countries. German financial centers – and Frankfurt in particular – are benefiting from these developments. The EU's decision to locate the new Anti-Money Laundering and Terrorist Financing Authority (AMLA) in Frankfurt is also a significant boost for the city’s international importance as a financial center. (GfK cfs) Frankfurt is among the world’s top 10 financial centers – alongside New York, London and Hong Kong – according to the Global Financial Centers Index 2024. As well as Frankfurt, Germany also boasts important financial centers – including Hamburg, Berlin and Munich – that are characterized by diversity, innovation and sustainability. The country’s decentralized regional financial centers and institutions meet the requirements of companies, “hidden champions” and small and medium-sized enterprises alike.
The Future Finance Act passed in 2023 promises to modernize the financial sector in Germany and mobilize more private capital by simplifying IPOs for companies and employee capital participation. Financial market supervision will also be modernized. This will include easier communication with the Federal Financial Supervisory Authority (BaFin) in English.
Germany Finance
A number of German financial centers have formed the GERMANY FINANCE initiative. Germany’s highly decentralized financial sector means that the country boasts not one but multiple strong financial hubs. GERMANY FINANCE includes initiatives from Frankfurt, Hamburg, North Rhine-Westphalia, Munich, and Stuttgart all seeking to enhance and promote Germany’s financial sector. They have created a joint platform for exchange that serves as a central contact point for those interested in Germany as financial business location.
Digital Hub Initiative
A series of regional digital hubs have been established in Germany as part of an initiative of the Federal Ministry for Economic Affairs and Climate Action. Startups, science, SMEs, industry, and local administrations join together to become centers of digital transformation. The cities of Berlin and Frankfurt are home to one FinTech hub respectively and the cities of Cologne and Much both have an InsurTech hub. These hubs offer excellent opportunities for startups to network with market incumbents. Other string FinTech clusters are established in the cities of Hamburg and Stuttgart.
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