German FinTechs

Getting More Bang for the Euro

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A better place to put your money?
  • Why it matters

    Why it matters

    Interest rates are at historic lows in Europe, a problem for Germany, the land of savers. Some start-ups may have found a solution.

  • Facts

    Facts

    • German start-ups are offering banking customers ways to move their savings to European countries that still offer higher interest rates.
    • Germany has among the lowest interest rates for savings accounts in all of Europe.
    • The European Central Bank is still expected to keep its benchmark interest rate at a record low of near 0 percent for a number of years.
  • Audio

    Audio

  • Pdf

A “Fintech” innovation made in Germany? That is quite unusual.

Germany lags far behind Britain and the U.S. in the battle to set up creative new finance-technology firms – a growing brand of company that is challenging the status-quo in the global banking world.

But when it comes to savings, however, Germany is streets ahead. Saving is something that Germans have always been particularly good at – the typical German household saves more money than most of their global peers.

A start-up Internet platform called “Weltsparen” is taking aim at this typically German phenomenon, and is preparing to expand its product to other thrifty European countries. The company’s co-founder Tamaz Georgadze sees himself as something of a pioneer.

“We were the first,” he said.

The idea is simple: Since German banks offer very low rates of interest for savings accounts and other deposits these days, Weltsparen mediates the contact to banks in other European countries that are offering something more.

The market potential looks huge, at least in theory: According to figures from Germany’s central bank, the Bundesbank, Germans currently hold more than €2 trillion in current accounts, fixed-term deposits and savings accounts, or as cash.

This savings glut is scarcely rewarded by Germany’s own banks. Because most of them already have plenty of deposits on their books – and if anything are struggling to find people who will borrow the money – they don’t have an interest in drumming up additional customer savings through high rates of interest.

According to a comparison by FMH-Finanzberatung, a consulting firm in Frankfurt, German banks currently pay an average of only 0.39 percent annual interest on savings accounts. For a deposit with a fixed term of five years, the annual rate is only 0.74 percent.

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