Fintech Market Overview

This article does not constitute legal advice.

Banking in Germany

Fintech Software

According to German laws, a license requirement is usually applied if one plans to provide, in Germany, commercially, or on a scale that requires commercially, organized business assuming one of the services listed in the comprehensive catalogs of regulated activities referred to above. Therefore, careful analysis is required to determine if a fintech business model falls within the scope of one or several of these regulated services.1

What competent authority might grant the relevant license depends on the type of a license. Constructing a hierarchy of the competent authorities, the ECB is at the top with its competence for granting licenses for institution that plan to carry out banking business that supposes lending and deposit-taking business and for most systemic investment companies. Below the ECB, BaFin is the competent authority for firms that intend to provide banking business except for lending and deposit-taking, including investment services (other than most systemic investment companies) and other financial services, payment services, collective asset or funds management and insurance business. The lowest level in the hierarchy includes authorities that have been given the competence under the German federal state laws to grant licsenses pursuant to the GewO.1

All these categories of licenses may be relevant for fintech business models. This can be proved by the fact that “fintech banks” were created in Germany as institutions holding a banking license granted by ECB.1

The type of license determines the requirements to obtain a license under the German financial supervisory laws and following ongoing legal requirements. For example, the requirements to obtain a license pursuant to Section 15(1) of the WpIG for providing investment brokerage or investment advice are less strict than obtaining a license pursuant to Section 32(1) of the KWG for guarantee or for safe custody business. At that point, there is a significant difference for regulatory purposes if a company intends to hold funds or assets for its clients because in this occasion the regulatory requirements are more tight and more comprehensive.1

Payment services in Germany

Fintech in Germany

Fintech in other countries

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  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/germany
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