Name
Global FinTech Guide
Country _ Name
Germany
SectionTitle
Loan services/factoring/loan broking/finetrading
Body
FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find “peer-to-peer” (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.

Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time. 

As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.

Introduction

Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services

In Germany, FinTech loan services are increasingly recognized as valuable alternatives to traditional bank financing, especially for small and medium-sized enterprises (SMEs) and individuals who may face stricter lending criteria at conventional institutions. The demand for flexible, swift, and accessible financing solutions has grown, fueled by ongoing economic challenges and tighter bank credit policies. Factoring and finetrading services provided by FinTechs also support businesses in managing liquidity and working capital more efficiently. This trend of turning to FinTech-driven lending and ancillary services continues to gain momentum, with expectations for steady growth in the coming years.

Traditional banks are also starting to collaborate more with FinTech lenders to broaden their offerings, acknowledging FinTechs as important partners rather than just competitors.


Legal affairs

Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above

Loan, loan broking, factoring and finetrading services are governed by in the German Banking Act (Kreditwesengesetz – KWG). Additionally, anti-money laundering and data protection regulations are to be complied with.

A license under KWG is required when providing loan business or factoring business. The financier is deemed to conduct loan business (granting of money loans and acceptance credits) if they grant money loans commercially or on a scale which requires commercially organised business operations. Factoring on the other hand is the ongoing purchase of receivables on the basis of standard agreements, with or without recourse.

License costs depend on the specific business model and result from fixed and time spent costs. Fixed costs typically range from EUR 3,262.00 to EUR 10,114.00 and additional time spent costs depend on the complexity of respective business model.

Among other things, particularly sufficient initial capital consisting of Common Equity Tier 1 capital (CET1) available in Germany is required to obtain a license. The amount of required CET1 is subject to a case-by-case assessment. For institutions offering both lending and deposit business, the required initial capital is EUR 5m.

When offering loan, loan broking, factoring and finetrading services which conduct banking or financial services in the form of deposit business, portfolio management or contract broking, the service providers are to comply with requirements for the initial capital as well as with the funds requirements at all times. According to Art. 92 Regulation (EU) No. 575/2013 (Capital Requirements Regulation – CRR), these are a CET1 capital ratio of 4.5%, a Tier 1 capital ratio of 6%, a total capital ratio of 8% and a leverage ratio of 3 %. When calculating the capital ratios, the fixed overheads of the respective asset manager have an important impact.

Additional comments regarding the legal situation for loan-giving-, factoring-, brokerage, finetrading-, and ancillary services or what FinTech’s must be aware of in this business area

One (1) of the key markets in Germany is the so called buy now pay later (BNPL) vis-à-vis both consumers as well as SMEs. For the longest time, BNPL products were offered in the online shopping business. Today, BNPL products can be found in almost every business sector – e.g. house improvement or car repair costs, just to name two (2) prominent examples.


Economic conditions

Market size for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services and biggest companies in this business area

The combined German FinTech segment encompassing loan-giving, factoring, brokerage, finetrading, and related ancillary services now includes approximately 65 active FinTech companies and represents a market volume of around €9 billion, consistent with your earlier estimate. This sector has shown steady growth in recent years and is expected to continue expanding in the near term. The alternative lending sub-sector alone is projected to reach USD 6.4 billion (€5.9 billion) in 2024, increasing to approximately USD 9.0 billion (€8.3 billion) by 2028 at a CAGR of ~8.8% Major players include Solarisbank (digital SME lending via partnerships like American Express), Upvest (Investment-as-a-Service), Billie and Auxmoney in SME and P2P lending, and Commerzbank’s stake in Billie for factoring services.

Additional comments regarding the economic situation for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services or what FinTech’s must be aware of in this business area

Demand for alternative financing solutions remains strong, particularly among SMEs facing high liquidity needs and constrained access to traditional loans—exacerbated by high interest rates and inflation . FinTechs offering flexible loan and invoice-financing products can fill critical gaps, but they must partner effectively or integrate with established banks to reach scale—evidenced by Solarisbank’s collaboration with American Express. Also, as corporates (like Commerzbank) and investors (via CVC) increasingly back lending and BaaS ventures, competition is intensifying. Successful fintechs will need strong regulatory compliance, partnership ecosystems, and operational efficiency to thrive.



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