Digital Disinterest

  • Why it matters

    Why it matters

    Advisers interpret Germans’ lack of interest as a wake-up call for online financial service providers to come up with better products.

  • Facts


    • According to one study, four-fifths of Germans have a smartphone but only one in five use it for banking transactions.
    • Experts put this down to concerns about digital security and a tendency to cling to old habits.
    • Robo-advisors in Germany manage assets in the hundreds of millions of euros, compared to $0.5 trillion in the United States.
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Ausstellung “The Future of Today” in Peking
Wary of online security in financial matters, many Germans are content to sit on the sidelines. Source: DPA

When it comes to some things, Germans are undisputed whizzes – their prowess for quality engineering and public transportation, for instance, is legendary. But in the world of online banking, the country is a stand-out laggard. A survey of more than 15,000 people in 17 countries by Legg Mason, a global asset manager, shows only a slight majority of Germans use the internet to sort out their personal finances, say, by accessing their bank account, a broker, or fund manager. The worldwide figure is somewhat higher, at around 60 percent.

Germans also seem fairly oblivious to financial apps: Only one in five residents bother with them, compared to about one-third globally. These findings are echoed in a study of 1,400 German adults by EY, a management consultancy. While around 80 percent of Germans own a smartphone, only 20 percent use it to conduct banking transactions.

What is going on? Advisers interpret Germans’ lack of interest as a wake-up call for online financial service providers to come up with better products.

“User behavior (of Germans) is ambivalent: We communicate online, we shop online – but when it comes to money, we lose confidence in digital technology,” said Joachim Spill, a partner at EY. Experts have identified many reasons for this, most of which relate to German concerns about digital security, a tendency to cling to old habits and – perhaps most tellingly – a general lack of interest in financial matters.

That makes for sobering reading for droves of financial technology providers, or fintechs, that target the German market with online business models. They automate processes, offer reasonably-priced investment products (such as funds that track security indexes), and charge cut-rate fees to lure pint-sized investors, often with assets of €10,000 ($11,800) or less. Sensing potential, the country’s established financial service providers have already invested millions in digital services.

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