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Number of fintechs in Germany increases

08 Dec 2016

Number of fintechs in Germany increasesEY study on current fintech trends

A recent EY study finds global fintech funding volumes increasing slightly in the first three quarters of 2016. The increase is mainly based on significant growth in Asia and other emerging regions since the developed markets have seen decreased volumes for the first time in five years on a yearly basis (comparing full year numbers to 9M’2016).

In 2016, investors have channelled 60 per cent of total global fintech funding into Asia’s fintechs which caused Asia to overtake North America as the leading destination for fintech funding.

However, North America still remains the leader in terms of the number of fintech deals, accounting for roughly 50 per cent of global deals.

In Europe, Germany and the UK remain in their positions as the region’s fintech powerhouses. However, 2016 may be the first time Germany’s fintechs obtain more funding than the UK’s.

Germany sees a growing maturity of fintech base

Indicator for this growing maturity is that the funding structure is changing from traditional venture capital investors towards corporate venture capital investors. A key region for this expansion has been Frankfurt and the Rhine-Main area with its strong concentration of fintechs with a focus on B2B business models, especially from the finance sector, which led to a 45 per cent increase in the number of regional fintechs as compared to 2015.

Key driver of the transformation in the financial services sector is regulation and its requirements.

Fintechs and regtechs are expected to grow significantly since fintechs offer solutions to financial services organisations by helping them comply with regulatory requirements whereas regtechs cover the scope of user authentication as well as security applications.

The position of the Rhine-Main area as a fintech hub in Germany was further strengthened by several fintech initiatives in 2016, such as the newly instituted DB1 Ventures, the corporate venture capital arm of Deutsche Börse Group or Venture Match, a new service for financing rounds launched by Deutsche Börse Venture Network in September.

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