Name
Global FinTech Guide
Country Name
Germany
SectionTitle
Online banking services
Body
FinTechs belonging to this area offer traditional banking services in a modern way, usually through online services or mobile applications as well as ancillary services – e.g. enabling customers to manage their giro- or custody-accounts online and in real time or offering e-wallet services. Keywords in this context are also API-Banking or Banking as a Service (BaaS)/ Bank as a Platform (BaaP).

API-Banking:  

API stands for application programming interface and is offered to access data banks and to extract and insert information. API-Banking consequently means the access to data banks of banks to offer new and innovative banking applications.

Through these services FinTechs offer services with new functions – e.g. enabling customers to manage their accounts online and in real time.

BaaS – Bank as a Service/BaaP – Bank as a Platform:
 
The API-based Bank as a Service platform has a full banking licence, but merely serves as the back end for standalone independent FinTechs, which "use" the licence and the back end of the bank to offer new financial services, launch additional financial products or expand into additional markets.

Introduction

Attitude of the country towards online-banking services

Online banking is deemed established on the German market. With the major banks shutting down their counter branches, most people use online banking services. The latest development in the online banking market is the devices used, shifting from stationary computers to using mobile apps on their smartphones.


Legal affairs

Obligations and requirements to provide online-banking services described above

Online banking services as part of the usual banking business and financial services are activities governed by the German Banking Act (KreditwesengesetzKWG). For banking business and financial services, a license is generally required.

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 banking services, 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% and a total capital ratio of 8%. When calculating the capital ratios, the fixed overheads of the respective asset manager have an important impact.

Additional comments regarding the legal situation for online-banking services or what FinTech’s must be aware of in this business area

In order to provide online banking services both in a cost-efficient way and at the same time meeting all legal requirements, a fronting bank cooperation is recommended.

Economic conditions

Market size for online-banking services and biggest companies in this business area

There are no recent statistics on the size of the online banking services market. Most of the online banking services (API-Banking, BaaS, BaaP) are performed in the inter-banking sector and may not be recognisable for end-customers. Biggest players in this regard are Raisin DS, Mambu and Solarisbank, all of which are considered unicorns valued at EUR 2.5, 2 and 1.4 billion.

Additional comments regarding the economic situation for online-banking services or what FinTech’s must be aware of in this business area

N/A

Authors

Disclaimer

© 2022, SCHALAST LAW I TAX. All rights reserved by SCHALAST LAW I TAX as author and the owner of the copyright in this chapter. SCHALAST LAW I TAX has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this guide.

The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

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