Abstract

Fintech is the place where innovation takes place in the financial sector. Yet, Fintech is not a separately defined field of statistics. It is important to monitor fintech, as much of the innovation in the financial sector takes place in fintech companies. Fintech activities are of increasing importance for financial stability, supervision, payment and monetary policy. The Bundesbank Fintech Monitor (from here on Fintech Monitor) is a uniquely structured and experimental data collection to get a statistical hold on the German fintech market. The Fintech Monitor is induced by the six-step roadmap laid out in the IFC report (2020) “Towards monitoring financial innovation in central bank statistics”. This experimental dataset is informed by the specific needs of policy analysis regarding data on market structure and indicators for fintech activities in Germany. Bundesbank Statistics, supported by other Bundesbank departments, has collected what is internally available, enhancing it with selected commercial information. This feasibility study, based on the Fintech Monitor, features the Bundesbank’s approach to identifying fintechs and collecting data without specific statistical reporting requirements.

Essentially, the Fintech Monitor is a multi-purpose collection of master data. The data collection started with three separate fintech lists, one external list from a German fintech market study by Professor Dorfleitner and two internal lists. These lists were consolidated and cleaned, to arrive at one common list, which was enriched with statistical data sources available in-house (e.g. RIAD) and the company register by the German statistical office. The dataset was extended with manual research, and data gaps were filled using private data sources and publicly available data. Overall, by combining statistical, supervisory and commercial data, the Fintech Monitor came to be a unique and informative dataset. In the course of the data gathering exercise, multiple challenges had to be surmounted, with the lack of an operable definition of fintech being the most important one. Our solution is an operational and pragmatic approach, based on the FSB definition of fintech, interpreted in such a way as to encompass the novel activities in which central banks are interested given the diverse monitoring tasks.

The Fintech Monitor categorizes the German fintech market into six main segments, where each main segment is further divided into sub-segments. Those segments and sub-segments were attributed to companies and their activities on a case-by-case basis. The six segments are No liability crypto-assets (NLCAs), Financing and services auxiliary to financing, Asset management services, investment and trading, Payment services and related technical and support services, Neobanks and services auxiliary to banks, and Other fintech services.

Preliminary results, as of January 31st 2023, show a promising first estimation of the structure of the German fintech sector. Altogether, we count 1,153 active fintech companies from which 895 are located in Germany. The estimated turnover generated by the companies’ observed fintech activities adds up to 6 billion Euro, with around 24,000 employees involved. Most fintechs in the dataset are considered micro or small, which is not unusual for a sector that consists largely of start-ups.