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„Rhein-Main-Neckar ist
Deutschlands dynamischste
FinTech-Region“
2
Inhalt
1. Vorbemerkungen
2. Überblick und Analyse zur Entwicklung der deutschen FinTechs
Anmerkungen
2
1
2
3
3
Financial System in Perspective (American households, 2013, %)
By familiy
income $‘000 0
Unbanked AFS* (used in the last 12 months)
<15
15-30
30-50
50-75
75+
10 20 30 40
*Alternative Financial Services include cheque cashing outlets, money
transmitters, car-title lenders, prawnshops and return-to-own stores
All households
Source: The Economist 09/2015, FDIC
8 25
4
Mindset: banks and fintechs
have different starting points
Risk aversion Entrepreneurship
Silo-based management
Bureaucracy
Corporate Culture
Processes IT structures
Approach to market
Structures
Quality Discretion
Comprehensive
range of service Regulation
Expectations of customers and public
Source: Bankenverband – Fintechs – Developments and Outlook, Sept. 2015
5
FinTech Business Models
5
Degree of disruptiveness
Supporters
Players which
support existing
market participants
or products through
their own services
to create, e.g.,
higher quality or
efficiency.
Typical solutions
include financial
software and
processing
solutions.
1 Aggregators
Players who use
existing services or
information for
aggregation
purposes to create,
e.g., market
transparency or to
route business to
core providers.
Typical change in
the front-end of
services.
2 Disruptors
Players which the
full value chain of a
service or parts
thereof and, in
doing, who have a
“disruptive” impact
on the existing
market.
Such services are
typically product
innovations.
3 Innovators
Players which
invent services or
products outside the
existing value
chains and
generate
innovation.
E.g. Blockchain,
Cryptocurrencies
4
De
pth
of va
lue
ch
ain
dis
rup
tio
n
6
Snapshot of Germany´s FinTech segments
FinTechs within this segment enable the exchange of
products, services by provision of an agreed value. This
includes Payments infrastructure, Virtual Currencies, Online
and Mobile Payments and E-Money/-Wallets.
Payments
Banking &
Lending
Financial Data
Analytics
InvestTech
The Banking & Lending segments includes FinTechs offering
core bank services like lending services & products, short
term financing and factoring, alternative financing in terms
of crowdfinancing for both B2B and B2C as well as P2P,
account management (opening, maintaining, switching
accounts).
Business models of the financial data & analytics market
provide significant opportunities for companies to use data
analysis to e.g. improve the consumer experience,
monitoring of business activities or manage credit risk and
as well as data enrichment services to combine various sets
of data from several sources.
InvestTech covers the scope of trading with traditional
trading activities, portfolio management including
investment analytics for decision-making for both
businesses and private traders. The segment also comprises
business models addressing Trading operations &
investment accounts on the B2B side.
# FinTech foundations per year
2
89
10
4
2
0
5
10
2012 2011 2010 2015 2014 2013
8
11
8
11
8
5
0
5
10
15
2011 2010 2015 2014 2013 2012
112
1
0
2
2015 2014 2013 2012 2011 2010
5
7
34
3
1
0
2
4
6
8
2015 2014 2013 2012 2011 2010
German FinTech landscape: opportunity for Rhein-Main-
Neckar
Expected trend
Source: EY analysis 2016
7
Snapshot of Germany´s FinTech segments (cont’d)
FinTechs within this segment provide a new or
altered financial infrastructure to enable products
and processes. In addition, FinTechs offer
solutions to optimize process management or
financial software supporting processes and
functions.
Enabling
Processes &
Technology
eMarketplaces,
Aggregators &
Intermediaries
RegTech
InsurTech
While eMarketplaces offer the possibility to
directly purchase a financial service or product,
Aggregators & Intermediaries levy a fee for a
service rather than providing the service
themselves. Platform markets are online
marketplaces that generally provide third-party
products (B2B / B2C).
In this business segment are FinTechs offering
solutions to financial services organizations to
help to comply with regulatory requirements and
manage risks. RegTechs also cover the scope of
user authentication e.g. fingerprint or voice
recognition technology and software as well as
security applications.
InsurTechs impact the incumbent insurance
business through innovations in (digital) products
and operations. Examples are data-driven and
usage-based insurance or digital claims
processing software.
334
2
4
2
0
2
4
2011 2010 2015 2014 2013 2012
89
6
12
5
2
0
5
10
15
2015 2014 2013 2012 2011 2010
43
4
11
0
2
4
2011 2015 2014 2013 2012 2010
111
0
2014 2015 2013 2012 2011 2010
German FinTech landscape: opportunity for Rhein-Main-
Neckar
# FinTech foundations per year Expected trend
Source: EY analysis 2016
8
Most investments still take place in traditional banks
Source: Bankenverband – Fintechs – Developments and Outlook, Sept. 2015
Comparison of Investment by fintechs and banks
975
Global investment by fintechs1 in selected
business activities Estimated total
investment in
Germany (based on
German share of
global GDP)
Total IT budget of top
3 retail banks in
Germany
Investment
by fintechs Retail banks‘
IT budget2
ca. 160
ca. 1.000
2Minus costs associated with regulation
2012, in USD million; sources: CORETransform, World Bank,
KPMG/Association of German Banks / Association of German Public
Banks 1Includes only publicly accessible data about the analysed firms
Payment
transactions Asset
Management
Lending
Operations Personal Finance
Management
81
308
391
1.755
TOTAL
9
Overview international FinTech hubs
9
Silicon Valley New York
London
Singapore
Hong Kong
Frankfurt Luxembourg Zürich
Stockholm
Tel Aviv
Number 1 location for start-ups globally,
with a highly-developed landscape of
FinTechs across all segments and
levels of maturity with excellent access
to capital
Number 1 global financial
center with the highest
number of employees
(followed by London) working
in the FinTech industry
Europe´s number 1
hub with strong
growth through an
excellent environ-
ment as one of the
two major global
financial centers
Innovative FinTech hub of
the Nordics with strong
FinTech niche capabilities
such as gambling
Highly active
and innovative
technology location
with almost 300
venture capital firms;
strong penetration in
seed-stage funding
Key gateway to the Chinese mainland
which represents significant
opportunities for financial services
Largest hub in Asia with strong
government support in promoting
an innovative FinTech eco-system
through direct investment, tax
incentives and measures
to attract entrepreneurs
Berlin
The Baltics have a lively
FinTech scene. Skype,
Napster and BitTorrent
have roots to the Baltics
Baltics
10
“Potential”
“Large but complex”
A comparative snapshot of the major global FinTech regions
New York
“Proximity to expertise &
customers”
Market size
€7.5b
Investment
€1.9b
FinTech staff
c.57,000
Characteristics
► Proximity to established
financial markets.
► Network of first generation
entrepreneurs.
► Strong presence of
incubators, accelerators.
“Increasingly progressive regulatory regime”
California
Characteristics
► Expertise from a relatively mature FinTech
community.
► Established interconnections within FinTech
ecosystem.
► Concentration of large venture capital funds.
Market size
€6.3b Investment
€4.8b
FinTech
staff
c.74,000
“All rounder”
United Kingdom Characteristics
► Proximity to global financial hub offering talent
and expertise.
► Progressive government and regulatory regime.
► Effective network of hubs.
Australia
“Up and Comer”
Characteristics
► Emerging FinTech ecosystem with high levels of collaboration and
government interest.
► Recent €0.9b commitment to innovation agenda.
Market
size
€ 8.9b
Market size
€0.8b
Investment
€267m
FinTech staff
c.10,000
Investment
€707m
FinTech
staff
c.61,000
Germany Characteristics
► Significant investment in Credit and
Lending (c. €402m); growing focus on
B2B.
► Complex start-up environment; efforts
underway to integrate Berlin, Frankfurt
and Munich.
Market
size
€ 2.4b
Investment
€524m
FinTech
staff
c.13,000
Hong Kong
Characteristics
► Relatively nascent, emerging market.
► Emerging community of FinTechs focused on
Capital Markets.
Market size
€0.9b LTM Investment
€62m
FinTech
staff
c.8,000
“Increasingly progressive regulatory regime”
Singapore
Characteristics
► Gateway into Asian market.
► Ease of doing business, and English
language proficiency.
► Dedicated team in the Monetary Authority
focused on public and private partnerships.
Market size
€0.9b Investment
€50m
FinTech
staff
c.7,000
11
Germany is ranked as follower with strong future potential in the group of the top 8 global regions
In order to catch up with the leading FinTech hubs, Germany will have to provide a well-tuned ecosystem to attract
talent as well as capital and improve the regulatory environment
Talent
► California is leading as
provider of top talent,
especially for tech skills.
Capital
► With Silicon Valley, California
has long been an attractive
spot for investors seeking
innovative new start-ups.
► Also the failure culture has
been ideal to foster start-up
activity.
Policy
► Compared to Germany’s
BaFin, the FCA in the UK is
extremely open towards
FinTechs and actively
supports the development of
ne business models.
Demand
► Being one of the world’s
largest financial capitals and
a metropolis, New York offers
huge market potential.
Region
2015 Rank by Ecosystem Attribute
Total
Points
Talent Capital Policy Demand
- Talent availability
- Talent pipeline
- Seed
- Growth
- Listed
- Regulatory
regimes
- Government
programs
- Taxation policy
- Consumers
- Corporates
- Financial
institutions
UK 2 3 1 3 9
California 1 1 6 2 10
New York 3 2 7 1 13
Singapore 4 7 2 6 19
Germany 6 4 5 5 20
Australia 5 5 3 7 20
Hong Kong 7 6 4 4 21
Source: EY analysis – HM Treasury Benchmarking Study 2016
German FinTech landscape: opportunity for Rhein-Main-
Neckar
► UK leads the ranking of the top global FinTech regions with good scores in all Ecosystem attributes
► There is a significant gap between the three leading Anglo-Saxon FinTech regions and the remainder of the group
► Germany is scored at 5th rank in par with Australia, which correlates with the maturity of the German FinTech Ecosystem
12
German FinTech investments are growing disproportional
compared to global investments
Global Fundraising in bn € German Fundraising in mn €
Source: EY Analysis & CB Insights
• Global investment volume have been increasing
steadily since 2010
• 2015 has seen another tremendous increase in
FinTech investments with total investment of 25bn
US$
• Asia shows globally the strongest investment growth
in 2015
On a European level, Germany is catching up with the UK market in terms of absolute FinTech investment but will have
to further develop its investor landscape to provide more growth capital
• Significant growth of FinTech investments in Germany in the
last 2 years (from 80mn € in 2013 576mn € in 2015).
Including the 360T transaction, the investment volume would
add up to over 1.2bn € in 2015.
• Germany is on a good track to close the gap to FinTech
investments in the UK market (UK investments 2015 =
707mn €)
• Availability of capital is seen as good for seed capital but
more investors providing Growth Capital are required
• Investment (especially seed funding) is expected to continue
to grow in 2016
0
5
10
15
20
25
2010 2011 2012 2013 2014 2015
Others
Asia
Europe
USA
576
225
80
0
100
200
300
400
500
600
+181%
+156%
2015 2014 2013
* Does not include 360T transaction of 750mn US$
Source: EY Analysis & CB Insights
13
The German market has grown significantly
to 250 FinTechs in 2015
59
50
32
46
14
12 4
33
Banking & Lending
eMarketplaces, Aggregators &
IntermediariesEnabling Processes and
TechnologyPayments
RegTech
Financial Data Analytics
InsurTech
InvestTech
Germany is a fast growing and dynamic market with increasing activity in InvestTech in recent years – regional
clustering will help to strengthen market proposition
Key findings
► German FinTech activities and the development of a FinTech
ecosystem have started later compared to other global
regions.
► The German FinTech market has been growing by more than
70% since 2013 and consists currently of 250 companies.
► The German FinTech market is fragmented but has developed
three main hubs: Berlin, Rhein-Main-Neckar region and
Munich, each standing for a distinct characteristic.
• Banking & Lending has been and still is the most dominant segment.
• The eMarketplaces, Aggregators & Intermediaries segment including
FinTechs such as Finanzcheck.de have been continuously growing and is
still one of the most popular segments for new FinTech start-ups.
• The Payments segment has been receiving increased attention since
2012 with Mobile Payments as well as Virtual Currencies pushing
segment growth.
• Since 2010, the B2B segment has gained attention but is still behind
B2C development.
Germany’s FinTech Universe: Cluster Breakdown (2016)
56
34
70
250
90
0
50
100
150
200
250
Germany Munich Berlin Rhein-Main-
Neckar
region
Other
German
Germany’s FinTech Universe by City (2016)
Source: EY Analysis 2016
36%
22%
14%
28%
24%
20%
13%
18%
6%
5%
13%
2%
Source: EY Analysis 2016
14
Rhein-Main-Neckar region is No. 2 FinTech hub and shows over
average growth in 2015
10
14
12
3
6 2 8
Banking & Lending
eMarketplaces, Aggregators &
IntermediariesEnabling Processes and
TechnologyPayments
RegTech
Financial Data Analytics
Frankfurt’s FinTech Universe: Cluster Breakdown (n = 56)
5646
0
20
40
60
+22%
End of
2015
2015
10
End of
2014
New FinTechs in Rhein-Main-Neckar region*
193
171 22
0
50
100
150
200
End of
2015
+13%
2015 End of
2014
New FinTechs in rest of Germany*
Key findings
► Rhein-Main-Neckar region comprises the second-largest
FinTech hub in Germany, serving as a base for 56 companies
(22%) of the identified universe
► The Banking & Lending market has grown over the past
years and is now the dominant segment together with
platform markets and processes and technology
► With 22% the region has experience a higher growth rate
than the rest of Germany in 2015
► Rhein-Main-Neckar region FinTech universe is more mature
than that of Germany’s other rival cities
* Calculation based on FinTechs with identified year of foundation only
Successful Frankfurt FinTechs
22%
11%
4%
18%
15%
5%
25%
Source: EY Analysis 2016
15
Rhein-Main-Neckar has an existing strong base to develop as a
leading European FinTech hub
Frankfurt has great potential to become the leading German FinTech hub which requires coordination of FinTech
activities and a clear proposition considering existing regional strengths
Leverage existing strengths for FinTech activities
1. Close distance to headquarters of FS providers
2. Access to FS and regulation-related know-how and
capabilities
3. Excellent regional infrastructure (universities, traffic, internet
junction)
4. Large pool of academic excellence in FS and IT
German FinTech landscape: opportunity for Rhein-Main-Neckar
Consider development opportunities for the region
1. Strengthen the local FinTech ecosystem to be perceived as lively
start-up location and not as “home of bankers and consultants”
2. Develop and communicate a regional FinTech proposition
3. Support the settlement of an investor landscape in the Rhein-
Main-Neckar Region (Business Angels, VCs and PEs)
?
16
Rhein-Main-Neckar as Germany’s international FinTech
gateway and B2B focused FinTech hub
Rhein-Main-Neckar region has to differentiate itself through a focus on certain segments fit to location attributes (i.e.
banking expertise) and develop a reputation for
International FinTech gateway in Germany
Built up strong collaboration and network with other international
FinTech hubs (e.g. Tel-Aviv, Singapore, South Korea), based on University
projects, joint conferences and events and support them in Germany.
Focus on B2B business models, such as infrastructure innovations and
data analytical improvements which combine Technology and Financial
Services expertise.
Close collaboration of traditional financial services institutions with
FinTech corporations, based on integrated business models, support of
show case projects and direct support and mentoring of Start-ups to
contribute to improve the customer journey.
1
Focus on B2B business models 2
Use of proximity to financial services 3
Data Analytics: As technological systems advance and the world
transitions to an “Internet of Things” (IoT), the collection, analysis
and interpretation of data will increasingly become a more important
differentiator for all companies.
Personal Finance Management:
PFM has the potential to replace
online banking in its current form
and to set new standards in
terms of customer relationships.
Infrastructure: Solutions in the space of financial infrastructure are
assumed to have a huge growth potential, as basis for required
efficiency and flexibility in the technological solutions in the Financial
Services industry. Blockchain will be one major disruption in the
Payments segment.
17
We identified six short term fields of action to execute Rhein-
Main-Neckar’s FinTech journey
FinTech Center
Frankfurt
Innovation Labs
/ hackathons
Local / regional
development
schemes
Market positioning Show-case projects Marketing and
networking events
• Decide on a building
• Offer subsidized office space
• Coordinate settling of stakeholders in the
Center to ease access to e.g., to
accelerators, incubators,
investors, regulators
• Organize local hackathons with focus on
the target proposition
• Tie winners of the events to Frankfurt as
future location (see xware42 case study )
• Set up local / regional development
schemes to attract FinTechs in the early
stage
• Define market proposition with Rhein-
Main-Neckar FS community (FS players,
associations, multipliers, public
institutions)
• Use defined target proposition in all
activities to penetrate
message
• Create show-cases with coordinated
support of regional financial service
players (e.g. members of the Financial
Service Community) to jointly test or
implement FinTech solutions
• Penetrate message across channels to
FinTechs, stakeholders and multipliers at
regional, national and global level
• Use Frankfurt-based events to attract
German and international FinTechs and
show activity
German FinTech landscape: opportunity for Rhein-Main-
Neckar
