Fintechs in Germany: Are Digital Banking Financial Services the Future?

Are digital finance technology and blockchain the future of banking?

Since the first fintechs came into existence in the year 2008, the banking world is being stirred up by the rather young start-ups. Will the young companies turn the industry around? Photo: Pixabay
Since the first fintechs came into existence in the year 2008, the banking world is being stirred up by the rather young start-ups. Will the young companies turn the industry around? Photo: Pixabay

[contains unpaid advertising] The digitization of all areas of life does not stop at the financial sector. Since the first fintechs came into existence in the year 2008, the banking world is being stirred up by the rather young start-ups. Fintech is the abbreviation for financial technology and stands for a movement of companies, which wants to offer through ever more abstract and opaque business acting big money houses by everyday solutions to the price. Will the young companies turn the industry around?

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Fintechs are defined as companies focused on solving digital finance issues. According to Thomas Dabb of the Deutsche Bank, these are technology-driven players "who are pushing digitally and with great dynamism into the market for easily standardized financial products and services in order to win customers and market shares." These young and often both Private and corporate customers popular Tech companies According to Dabb solve the more complicate problems in the financial sector such as digital payment services, information services, online bank accounts, as well as investment and financing. The automation of processes such as online lending and investment advice is also taken over by Fintechs. The automated solutions in the field of financial planning and private investment are called "Robo-Advisors", ie automatic investment advice.

Fintechs are sure that the future of banking is digital! Photo: Pixabay
Fintechs are sure that the future of banking is digital! Photo: Pixabay

Financial technology start-ups and banks are slowly approaching

Banks and fintechs are finding each other bit by bit. For a long time there had been some inertia on the part of the financial institutions. The banks are only beginning to devote themselves to high-tech start-ups and continue to devote time to their own digitization. "In the long term, an all-embracing digitization strategy should (not only) be a high priority for traditional banks," writes Thomas Dabb in his scientific paper and sees both the need for action and the influence of newcomers within narrow limits.


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Nevertheless, start-ups and banks slowly approach each other. Banks are now looking for "closeness the digital innovators", As emerges from a study by Sopra Steria Consulting and FAZ. About 60 percent of banks are already working today smaller financial start-ups together. However, takeovers are rather rare as fintechs are often highly valued on the market and still generate relatively low sales. "The major banks complement services rather selectively, for example when scanning credit transfers via smartphone. In addition, these institutes are developing more themselves, "explains Stefan Lamprecht of Sopra Steria. Such rather simple technology tasks are often solved in-house. According to the study, 27 percent of all banks in Germany have now set up their own fintech start-up. A good example of this is the "Digital Factory" of Deutsche Bank.

Bank Towers in Frankfurt am Main: The industry is slowly approaching the fintechs. Photo: Pixabay
Bank Towers in Frankfurt am Main: The industry is slowly approaching the fintechs. Photo: Pixabay

Growth market: That's how fintechs shape the future

The fintech industry is a growth segment despite relatively low sales. According to a forecast by the portal Statista, the transaction volume in Germany will increase from the current 103 million euro 2017 by 9 percent to 146 million euro 2021 annually. However, these volumes are comparatively low: In China, more than 900 million euros are already being transferred via fintechs annually. However, today hardly anyone believes in a future takeover of financial start-ups and a disruption of the banking market.


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The future of fintechs lies more in cooperation with the banks, since both the long-established companies and the newcomers benefit from cooperation. "Many fintechs underestimate how expensive it is to even win customers," says econometrics professor Stefan Mittnik told Zeit Online. Accordingly, the start-ups would do well to rely on customers and experience of the banks. Conversely, financial institutions could benefit from the technological know-how of fintechs. It is secondary, whether the companies worked together or the bank takes over the start-up. How exactly the relationship between fintechs and banks will develop in the near future is probably not decided by the companies, but by their customers. After all, they choose whether to conduct their business in a conventional or digital manner in the future.

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About Sascha Tobias Tegtmeyer 95 Article
As a journalist, passionate diver and ambitious stand up paddler, I've become more and more specialized in water sports topics. For several years as an online editor, content and SEO manager for the year Top Special Verlag in Hamburg, I edited the leading diving portal TAUCHEN.de editorially and am at home in the water sports industry. My passion is the sea and all the activities that can be practiced on, in, on and under water. To give this child a name, I created www.just-wanderlust.com - for all people who love the sea - love to travel and water sports like diving, surfing, stand up paddling.