What is the best Fintech hub in Germany?

What is the best Fintech hub in Germany?

Has Berlin won over Frankfurt in FinTech, and is it going to catch up with London?

In the recent discussion between Ramona Pop, Senator of the economy, and Tarek Al-Wazir, minister of economy in Hessen, both argued whether Berlin has become the central hub of FinTech, as opposite to Frankfurt. Although many people would assume that Frankfurt is the leading city in financial services in the country due to its domination in the banking sector, it is actually Berlin that is on top of the list with the number of FinTech companies established in Germany.

According to the report by Ernst & Young, Berlin has the leading position in Germany with the largest FinTech hub, serving as a base of 27% of the FinTech companies. 

On top of that, in May 2018, Berlin announced the opening of Fintech Hub H:32. With representatives from business and politics in attendance, today it is Europe’s largest hub for FinTech companies. The German capital chose FinLeap Berlin to build a hub focusing on Fintech in order to create an ecosystem for the finance sector.

Berlin has experienced the highest economic growth compared to the rest of Germany in the last 4 years, partially thanks to the start-up scene in the FinTech industry,

There are many FinTech companies in Berlin that managed to grow and develop from a start-up into a fully established company. A few examples are Orderbird, a point of sales system, with more than 8.000 customers. Vexcash, a short-term credit provider. Smava, the largest online insurance provider in Germany. And of course, everyone knows N26 - the first online bank of Europe with a full European bank license. 

But if Berlin has firmly established itself as a FinTech hub in Germany, does it mean that London has to start worrying for its position as the international FinTech leader?

At this stage, it is obvious that London is leading the numbers of the VC money invested into FinTech. Since 2012, London fintech companies attracted more VC money than Paris, Frankfurt, Berlin and Amsterdam combined. However, this might change after Brexit. Many in the sector worry that the new regulations might hinder the way their business is operating with Europe. Theresa May announced that UK wants to keep a free trade zone with Europe but only for products and goods, excluding services, which means FinTech companies might need new license that costs time and money. And this is not the only concern. British financial technology companies are worried that Brexit is causing a shortage of software engineers and pushing up salaries in the sector, prompting some of them to open offices elsewhere in the EU. Here Berlin has taken the leading position as one of the cities that attracts young professionals due to the its lifestyle and relatively low cost of living compared to London. Attracting new talent to London after Brexit is indeed a top worry: according to Forbes, 30 percent of the industry's workers are from overseas and most are from the European Union. 

A reason why some FinTech companies are considering moving from London to Berlin is the insecure situation of the Brexit. According to the Co-Founder of Brickvest Thomas Schneider, who moved his back office to Berlin, with Brexit, there is a risk of losing access to the European market. 

Swissbank was also one of the companies that took part of their business from London to Berlin. Hans Guenther Dah, CEO of Swissbank, says that Germany offers stability as the country is seen as strong and stable. For employees, Berlin offers a big economic advantage due to low living cost compared to London. 

Berlin attracts a big amount of companies and top talents from across the world (read our piece about it here). This gives Berlin another boost in the financial as well as real estate sector, as more and more companies are moving their headquarters to the German capital. 

The reason we picked up on this trend is because Fintech founders and CEOs are reaching out to us for our expertise in the Berlin real estate market. If you are looking to relocate to Berlin and need to purchase an apartment, office, factory loft or a penthouse in Berlin, I am happy to give you a free consultation over the phone, skype or during a face to face meeting.

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Jonathan Vandamme

j.vandamme@jonathanvandamme.com

www.jonathanvandamme.com

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