In our “Unlocking the German Fintech Market Potential” series, we will explore the business potential of the German FinTech and digital finance ecosystem for foreign start-ups and banks. The series will outline the German FinTech market’s dos and don’ts, starting with an observation of the B2B and B2C cultures. Learning about customer expectations is encouraged before venturing into the market with new financing solutions.

Why Expand into Germany?

Germany has been one of the driving forces of the European Union and is seemingly becoming a hotspot for European entrepreneurship. The country’s economic stability, willingness to embrace post-pandemic digital technologies, financial growth projections, and the steady influx of foreign talent are solid arguments for expanding to Germany. However, sprawling, bureaucratic requirements may deter potential newcomers.

According to Destatis, 22.3m of the 83,2m population in Germany has a migrant background. In other words, one in four people carries a different cultural DNA. Considering the German coalition’s qualified foreign labor goals and the lowered visa barriers for tech workers, it might be accurate to expect an inflow of foreign entrepreneurs and corporates to address the needs of the growing immigrant crowds and locals. After all, Germany is seen as one of the top countries for entrepreneurship globally.

An influx of foreign entrepreneurs and companies is therefore likely, especially as the German market enjoys a high international reputation1. In addition, Germany’s importance for the European financial industry has increased significantly after Brexit and the country plays an important role for FinTechs and the achievement of their ambitious growth targets.

As per the 2022 edition of “Start-up Heatmap Europe,” Berlin has been voted as the number one start-up destination for the second year in a row, and more than every third founder in Europe could imagine starting their company in the German capital.

As most start-ups have just one shot at making a good impression, entrepreneurs must understand the local dynamics and expectations before starting a business or expanding into the German market. Are you one of these foreign players founding a FinTech start-up or a financial institution in Germany? Or are you a first-time German entrepreneur trying to decode the expectations of the German consumers or partner banks? Then your wait is over; let’s quickly scan the cultural DNA of German consumers and the German working culture to ease the business integration process.

German Customer and Working Culture and its Impact on Financial Services

Trust, Trust, and More Trust

If we say that trust is essential in the German culture, it would be an understatement. Building a trust-based relationship takes time and effort, but once you create a local customer base, you might count on these customers to stay with you through thick and thin. Of course, most FinTech start-ups rely on the good old “word of mouth” when building trust. Still, we usually advise starting by collecting local stamps of approvals through local certifications, TÜV, Stiftung Warentest approvals, and other applicable references, which will establish more substantial confidence in your brand.

Cash as a Data Protection Mechanism

Finally, cash payments are losing their momentum after the pandemic. Regardless, paying in cash still comes as second nature to some (72% in 2022, according to Statista) German customers. In addition to historical reasons and the lack of alternatives some merchants offer, this habit comes from the instinct to protect financial data. Data privacy is no joke in Germany, and the lack of a proper data protection mechanism (or the lack of explanation thereof) could be a deal breaker for some customers. That’s why newcomers, particularly FinTechs and banks expanding into Germany, should explain the data processing and storage terms and whether the data is being shared with foreign sister companies (the answer is no).

German Borrowing Behavior

I had a credit card with a decent overdraft limit when I was just a freshman at university. Most US-born colleagues spend their 30s and 40s paying back student debts to brand-name schools, whereas some expats you see on social media with great financial advice finance their designer clothes using POS finance or consumer loans. In Germany, the approach is quite different. Credit cards are rather niche products due to the local culture, and consumers are not used to resorting to consumer credits as quickly as other Europeans.

Even the German word for “debt (Schuld)” is the same as the word “guilt,” which should give an idea about the way debt is perceived. Hence the low adoption of the first generation of (p2p and consumer) lending products in Germany.

The same applies to mortgage products, as homeownership in Germany is lower than in most other developed countries.

The increasing interest rates are additionally likely to slow down the real estate boom of the past years.TL; DR: define strict personas before enabling consumer lending services or features.


German consumers may be risk-averse, but the investment patterns have definitely started being more adventurous in the post-pandemic era. Traditionally, low-risk and saving products have been Germany’s most popular investment-related products. However, the post-pandemic digital wealth management trends, low-interest rates (although now changing), and the inflation protection instinct seems to have triggered WealthTech curiosity. For example, as of April 2020, the German neobroker Trade Republic had 150,000 users, consisting of more than one-third of first-time investors. Now, the mobile broker has more than 1m users.

Another example underlines the interest in alternative investment methods: According to Gemini’s “2022 – Global State of Crypto” report, 17% of Germans own cryptocurrencies, and 53% of Germans are “crypto-curious”. At first glance, this may not sound particularly impressive, but smartphone payments have an acceptance rate2 of only 18%.

Conscious Consumers

German customers are very sensible and perform a lot of research and comparison before a purchase (or subscribe) decision. All newcomer FinServ players are advised to pay extra attention to their FAQs, customer service, and customer-facing documentation. Also, explaining your services and USPs in a simplified manner on comparison portals could give your company a nudge.

Practicality Above Bling-Bling

German consumers are modest and practical, so status-driven products and services are only on the radar for smaller crowds like non-Germans or HNWI. Quality is important, but before investing in over-the-top features or services (that customers won’t be willing to pay for), it is advised to check whether there is any interest. Also, longevity and economic advantages can give products and services a competitive edge.

Innovation Comes Second

or financial institutions and corporates, regulatory compliance is way more important than innovation. As corporates and banks pay the utmost importance to keeping their licenses, authorizations, and reputation intact, they would want the newcomer provider or partner (you) to pass the compliance test with flying colors.

As for consumers, in addition to compliance, ease of usability is a big plus. According to the Association of German Banks’ survey dated February 2022, 78% of consumers prefer banking app usability over different functions and services. The message is clear: do one thing, but do it correctly (and compliant!).

Meticulous Work Culture

Both B2B, B2C, and B2G customer segments are a part of diligent work culture. That means newcomers must give their counterparties time to deal with the procedures and digest the offer and the changes to the status quo. Also, some processes might be slower than usual. (e.g., a house sale takes months or company formation takes weeks as opposed to hours, like in some countries). Therefore, your sales team might want to leave the haggling methodology at home, focusing on building long-term relationships, trust, and diligent processes.

You might ask yourself why your team should lose time with integration and localization instead of entering the market immediately. However, remember that integration is a crucial element of German culture. As there is an instinct to conserve the local market and competition, you are golden once you are used and beloved as a local brand. And as the German market success and regulatory approval is a genuine stamp of approval, once you are accepted in Germany, there won’t be anything between your brand and the European market dominance.

1 Germany is ranked #2 in entrepreneurship globally, according to US News & World Report, BAV Group, VMLY&R, and The Wharton School of the University of Pennsylvania (2021); as the 6th most startup-friendly country according to (2021).

2 Reference: Bankenverband (Association of German Banks), Mobile Banking und Mobiles Bezahlen 2022

You are a FinTech, or a bank expanding into Germany and would like to learn more about market success factors? Then, stay tuned for our common FinTech market mistakes piece next month.

About the Author

S. Elif Kocaoglu-Ulbrich is the Founder and Principal of Contextual Solutions, a Berlin-based 360-degree FinTech strategy consultancy. Following her +14 career at international law firms, Denizbank, FinLeap, Cringle, and Lendico.

She founded Contextual Solutions, where she helps startups and banks with a team of international experts with business model and monetization, product, and regulatory strategy, product and platform development, market launch, and expansion. Elif is a published author (Fintech Circle) and blogger (Fintech Istanbul, Blockchain Turkey, Fintechna, LHoFT).