London is proud of its FinTech success and with Germany creating its own FinTech champions, we are set for a golden era for payments solutions in Europe.
The UK loves to talk up the success of its FinTech industry but it is not the only country seeing a surge of investment in financial services disruptors, with Germany witnessing significant growth in the sector.
In the first half of 2015 Berlin FinTech start-ups collected more venture capital (€1.4bn) then start-ups in London (€1.1bn), according to accountants EY.
Its development is being fuelled by Berlin’s entrepreneurial culture as well as Germany’s strong economy. The test now is whether it and other German cities including Munich, Frankfurt and Hamburg can sustain the recent high level of investor interest.
The FinTech market in America still towers over the European scene of course, and the UK and Germany still trail Israel’s FinTech industry.
Yet despite not being the country’s financial centre, Berlin is attracting VCs and innovators from the US who see the city as a realistic alternative to London. In the area of payment solutions, for example, Germany is fast closing the gap on the UK.
One German FinTech business challenging on the world stage and helping German start-ups is Wirecard AG, based in Aschheim near Munich. Launched in 1999 and listed on the Frankfurt Securities Exchange, it is a global leading specialist for payment processing and financial technology that competes with WorldPay.
Furthermore, the company has a bank licence and acts as a payment gateway for FinTech start-ups that need to transact online, offline and on mobile devices. It has more than 20,000 customers and in the first half of 2015 its consolidated revenues increased by 26.5% up to € 340.1 million.
This is evidence of the effective culture of collaboration which is needed to create any FinTech ecosystem. New York and London have thrived on cooperation and the same is happening in Germany. Partnerships with established businesses such as Wirecard generate value for all parties.
These payment partnerships are essential for start-ups that need to accept money across different sales channels if they are to grow as quickly as they want to.
They need easy access to the right software technology and banking solutions as well as help with risk management, issuing cards and mobile payments and introducing value-added services such as loyalty schemes.
One of the leading German disrupters helped by Wirecard is Berlin-based Number26 which claims to offer Europe’s most modern current account on mobile and online. In July it launched an English-language version of its mobile banking app which had been running in Germany and Austria since January.
With Berlin and London demonstrating such high levels of FinTech innovation and investment there are calls for start-ups from both cities to perhaps find ways to work more closely together.
There could be a cooperation to enter each other’s market and the sharing of best practice. Innovators could also share knowledge. London is known as a metropolis for banks while Berlin offers a more relaxed corporate culture which appeals to entrepreneurs.
One of London’s key advantages has always been the proximity of its financial institutions, and in Germany’s financial centre Frankfurt there is also considerable investment in FinTech. In fact there is no shortage of innovators keen to challenge the traditional financial services model.
In November the next FinTech hub, the FinTech Forum formed in 2013, takes place at Frankfurt Airport. Investors and financial institutions from Germany, as well as Austria, Switzerland and Central Europe, will rub shoulders with financial services disruptors to ensure they continue to compete with the innovators of London, New York and Tel Aviv.