Top FinTech trends 2021: the DACH region

FinTech’s keep moving fast and breaking things. It’s a major shakedown for the incumbents who often lack what the newcomers are known for: ingenuity and openness to innovation. But what are the patterns here? What trends are emerging? Let’s take a closer look at the DACH region.

Machine and human factors

On the one hand, the focus these days is on unbound access to capital, which lets FinTech’s grow, and develop new product segments. There is also a clear focus on supporting new technologies. DeFin (Decentralized Finance), Blockchain, AI (Artificial Intelligence), and ML (Machine Learning) play a major role in the current and future business models. On the other hand, the need for human resources should not be underestimated. Start-ups need to fill their vacancies with the right talent to be able to take on the big players.

In addition, this is where the accelerated digitization caused by the Corona crisis comes in. What I’ve found impressive is people’s willingness to take out complex mortgages via online channels, said Matteo Bernardoni of UBS.

fintech trends 2021 DACH

Platforms vs. ecosystems

Due to the continued low-interest-rate policy of the European Central Bank, it has become increasingly difficult to generate sales outside of credit card transactions. The pandemic has made this situation even worse. Established banks, as well as up-and-coming FinTech’s from the banking sector, are both faced with this problem.

For this reason, two new business models have emerged: the platform and the ecosystem. The first one is based on the expectations of customers who want to swiftly compare offers – and conclude them.

The ecosystem goes one step further. FinTech’s operate in a specific financial segment, such as insurance or factoring. This makes it harder to offer customers a wide range of products. And that’s where ecosystems are needed. The basic idea is to have a central platform that covers all the services a company might want. This is in particular demand from SMEs that have to carry out a multitude of operational activities on their own.

I believe that only a few banks in Europe will be able to create an independent ecosystem. It is more likely that they will join forces and offer services for the customer together from which all partners in the ecosystem will benefit, said Urs Bolt from ti&m.

More money, fewer beneficiaries

According to PWC, around 3 billion euros flowed into funding FinTech’s in the DACH region in 2020, including exits. What was different last year – compared to previous years – is the distribution of the funds. The proportion of seed investments in the early-stage FinTech companies has changed in favour of late-stage deals. This is mostly because there are already some FinTech’s with the unicorn status in the DACH region, such as Mambu or N26, and these are given priority by investors.

Where the numbers in funding remained stable, the market shares of FinTech companies have changed due to the pandemic, especially in Germany. In 2019, FinTech’s had a 21% share of the total start-up market. Compared to 2020, the numbers have dropped to 12%. This is because less early-stage financing is carried out. In addition, the proportion of start-ups from other sectors such as HealthCare has risen sharply, which, again, can be attributed to the pandemic.

This trend can be observed somewhat differently in Switzerland. Matthias Kribbel of TradePlus24 says that the financing of institutional financing partners, with business models that are not one hundred percent secure, has declined.

FinTech trends in 2021

Factoring on the rise | FinTech trends 2021

Factoring is a service that enables invoices to be sold to a factoring service provider. In this way, the factoring customer can get the payment based on an invoice issued to the contractor before the payment deadline has expired to secure liquidity for the company. This enables business operations to be maintained in difficult times to start new investments or customer projects, which otherwise would not have been possible or would only have been possible with an expensive loan.

In 2020, the number of used international factoring services decreased, which has to do with a sharp decrease in export factoring and the corona aid packages from EU governments. Due to this commitment, the need for the form of financing and the need for loans was less in demand in the short term. This is likely to change when these have to be repaid.

The newly developed market niche for FinTech’s that do factoring is geared towards SMEs and the self-employed, which until now have tended to be underrepresented in this market. This means FinTech’s have understood how to open up an untapped market niche for themselves. There are some examples where invoicing only takes a few seconds. Online applications and contract signing have become standard for young factoring FinTech’s.

What can banks and FinTech companies have in store after the crisis?

Driven by the already listed FinTech industry trends, FinTech’s, as well as the banking market, will change in many ways. The platform and marketplace strategy already mentioned can lead to a strong wave of consolidation. On the one hand, this can further strengthen the partnership approach between banks and FinTech companies or, on the other hand, increase competitive behavior. It will be relevant for FinTech’s to acquire a broader range of products in the next few years to address a broader target group of customers. This will help them to break free from the individual SME segment and offer comprehensive services.

This is an abridged and edited version of what was said during a webinar on the same topic hosted by Comarch. The webinar’s speakers were: Felix Magdeburg (Comarch) Matteo Bernardoni (UBS), Urs Bolt (ti&m), and Matthias Kribbel (TradePlus24).

How does Comarch react to these market changes?

At Comarch, the principle of a marketplace has been followed for several years. A few years ago, people refrained from developing monolithic systems. At Comarch, all products can be combined individually, which means enormous flexibility for the customer. Furthermore, strategic partnerships with FinTech’s and the development of technical resources are in the foreground to help FinTech’s to react to market changes. It is easy to adapt products to the requirements of small companies and corporations without having to forego functionality and services. Technological adjustments and the possibility of cloud or on-premise implementation are important to Comarch to guarantee flexibility and growth.

If you would like to get more information about us and our products, or exchange ideas about FinTech trends in the banking and insurance markets, please contact me directly or visit us at:

Felix Magdeburg autor

Felix Magdeburg

Business Development Manager at Comarch



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