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FinTechs belonging to this category provide identification services, which are required for most banking services.
Introduction
Attitude of the country towards identification services
Digital identification services are gaining interest in Germany, with 63% of people having used some form of digital or remote ID verification. Traditional methods like in-person ID at post offices and video identification remain the most popular, while fully automated solutions are less common. Despite the electronic ID function on German ID cards, only a small share (8%) use it.
Security concerns are a major barrier—many worry about identity theft, cyberattacks, and privacy issues. Trust is highest in German-based providers, while non-EU companies are less trusted. Adoption is steady but cautious, with broader acceptance expected to improve through better public education and the upcoming European Digital Identity Wallet under eIDAS 2.0 regulations.
Legal affairs
Obligations and requirements to provide identification services
Regarding the identification of the customer as the main 'Know Your Customer' – element (KYC-element) the German money-laundering act (Geldwäschegesetz – GwG) and the circular 3/2017 (GW) for video identification procedures by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) must be complied with.
According to the GwG, it is possible for obliged parties, to which credit and financial institutions belong, to delegate the fulfilment of the KYC-requirements to third parties. The third parties don't need any license to conduct their identification service.
Regarding the collection, storage, modification, or transfer of the data retrieved during the identification process the European General Data Protection Regulation and its German accompanying regulation must be complied with.
Additional comments regarding the legal situation for identification services or what FinTech’s must be aware of in this business area
On a European level, there are plans to harmonise the AML/KYC regulation. This could lead to changes regarding the KYC-requirements and the delegation to third parties. Further details have not yet been conclusively clarified.
Economic conditions
Market size for identification services and biggest companies in this business area
As of 2025, the FinTech KYC and identity verification market in Germany is experiencing strong growth, driven by rising regulatory demands and the increasing digitization of financial services. The market generated around USD 712 million in 2023 and is expected to grow to approximately USD 2.37 billion by 2030, reflecting a CAGR of about 18.8%. Broader digital identity solutions, including onboarding and compliance tools, reached USD 2.61 billion in 2024 and are forecast to nearly double by 2030.
Germany holds a significant share of the European KYC market, with particularly strong demand from banks, FinTechs, and neobanks. The main growth drivers include the need for automated, compliant, and secure onboarding, expansion of digital banking, and new European digital ID regulations.