The Disruptive Potential of FinTechs in the German Consumer Finance Sector -- A Blue Ocean Scenario?

TL;DR

This paper assesses whether FinTechs can create a blue ocean in Germany's conservative banking sector using strategic analysis, surveys, and case studies, finding limited market potential outside payment solutions.

Contribution

It applies the Blue Ocean strategy to analyze FinTech disruption potential in Germany's banking sector through empirical and qualitative methods.

Findings

FinTechs have limited market share in Germany outside payment solutions.

German consumers show low affinity towards FinTech services.

The banking sector remains a 'Red Ocean' with limited disruption from FinTechs.

Abstract

Using the Blue Ocean strategy as an underlying strategic element, this dissertation analyses whether this statement holds true for the rather more conservative banking sector in Germany and the overall risk-averse mindset of the German population by using both quantitative and qualitative elements to assess the current market share of FinTech companies in the Federal Republic, as well as grasp a potential outlook on the future development. A literature review of the strategic framework, the banking sector in Germany and the FinTech sector is carried out accordingly. Subsequently, a formal verification as to whether the banking sector is a "Red Ocean" and if the FinTech industry is a "Blue Ocean" is carried out using case studies from both sectors. A quantitative analysis of banking customers in Germany and their use of FinTech companies is conducted by way of an online survey, with selected participants being interviewed thereafter to gain additional insights. Data evaluation is made using pivotal analysis and cross tabulation of survey results and interview findings, along with extrapolating indicators to reflect the full size of the German banking sector and transactional volumes per segment are provided and examined for signs of elevated FinTech use in the market. Despite several limitations from where ideas for future research are derived, the outcomes provide an overview of existing trends for the use of FinTechs in Germany. The main finding is that with the notable exception of payment solutions, Germans do not have a high affinity towards FinTechs, rendering them a byproduct of the financial service industry, with limited market share and low potential.