GERMANY Law and Practice Contributed by: Stephan D. Meyer, Lars Fidan, Elisa Otto and Christian Meisser, LEXR
LEXR Gormannstraße 14 10119 Berlin Germany Tel: +41 44 544 13 30 Email: contact@lexr.com Web: www.lexr.com
1. Fintech Market 1.1 Evolution of the Fintech Market
AI adds a further dimension. No longer a differentiator but a baseline component of fintech infrastructure, it now raises its own regulatory questions. Aligning AI governance with the EU AI Act’s high-risk classifica - tion framework remains a practical challenge, espe - cially for credit decisions, insurance underwriting and AML screening, where clear supervisory guidance from BaFin is still developing.
Germany’s fintech market has entered a phase of regulatory maturity. The past 12 months have been defined by the full application of MiCA and DORA, marking the most material shift in Germany’s finan - cial regulatory architecture since the introduction of MiFID and PSD2. Germany moved faster than other EU member states, opting for a strict 12-month MiCA transition period and becoming the jurisdiction with the highest number of CASP authorisations in the EU by the end of 2025. An especially noteworthy consequence of this shift is the changing competitive dynamic between incum - bents and new entrants. Traditional financial institu - tions are leveraging existing licences to expand into crypto-asset services through streamlined notifica - tion procedures under MiCA, effectively reaching the market faster than crypto-native firms navigating full CASP authorisation. This dynamic is reshaping the competitive landscape in ways that pure fintech play - ers need to anticipate. These structural shifts also set the agenda for the coming months. The operational reality of DORA com - pliance will become visible for the first time through audit cycles covering thousands of German financial entities. In parallel, the PSD3/PSR package will begin to reshape payment services regulation, and tokenisa - tion of financial instruments is moving from pilot stage into institutional production.
2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models
Germany’s fintech market is characterised by a broad range of verticals that have matured at different speeds. Digital banking and neobanking, neobroker - ages and payment services represent the most estab - lished segments, with several players now reaching profitability after years of growth-focused strategies. Crypto-asset services, insurtech and regtech are ear - lier in their development cycle but attracting increas - ing regulatory and investor attention. What distinguishes the German market from many of its European peers is the depth of the legacy banking sector. Germany’s dense network of savings banks, co-operative banks and large commercial institu - tions means that fintechs rarely operate in a vacuum. Instead, many business models have evolved around collaboration rather than pure disruption. Banking- as-a-Service arrangements, where a licensed bank provides the regulated infrastructure while a fintech handles the customer-facing product, remain a widely used model, though recent regulatory scrutiny has
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