2016 will be “the first significant year for the German fintech scene,” according to a recent title of an article on the Gründerszene website. While established financial service providers continue the battle to adapt their businesses to keep up with digital developments, new fintechs are entering the market. “2016 will be the year of the German fintech scene. On the one hand, fintechs will be reaching an ever-growing target market. On the other hand, the wheat will be separated from the chaff this year,” asserts Gregor Puchalla, Managing Director of fintech incubator FinTechCube and of etventure subsidiary FintechStars. FinTechCube was founded in December 2015 and it helps both financial service providers and fintechs to address their customers’ pain points. The company was included in the Berliner Morgenpost newspaper’s list of the most important trends in the startup scene for 2016.

In the article on Gründerszene, an online magazine for the German startup scene, industry expert André Bajorat says: “In retrospect, 2015 will be identified as the wake-up call for the traditional finance sector.” In the course of digitization, what is true for most sectors also applies to the financial industry i.e. the most established players do not usually completely take over the market afresh. The sector is made up of businesses from outside the world of banking. These include large companies such as Google and Apple as well as smaller startups.

Established financial service providers are therefore forced to adapt to the persistent trend of digitization and offer their customers new solutions. Yet even for fintechs, a good idea does not automatically equate to a sure-fire success. Strict regulatory conditions and a lack of financial know-how make it difficult to enter the market quickly.

By introducing FinTechCube to the market in December 2015, etventure subsidiaries FintechStars and FINANCE BASE launched this sector’s first full-service provider. The sector showed keen interest in this newly founded company. The following was written in the Berliner Morgenpost newspaper: “While the birthing pains in Deutsche Bank’s innovation lab have already been going on for many weeks, the arrival of FinTechCube in Berlin has provided new businesses in the finance sector with an incubator. It was founded by startup factory etventure and Munich-based software provider Finance Base AG. Berlin is continuing to compete with London.”

The fintech incubator wants to help both sides of the industry to address their customers’ pain points. It also seeks to act as a bridge between startups and banks. “Established service providers and fintechs have much to learn from each other,” says Gregor Puchalla, Managing Director of FinTechCube. “The necessary innovative capability is often the main thing that traditional financial institutions are lacking. The rigid, largely hierarchical company culture makes it difficult to develop new ideas. When it comes to the legal framework conditions of the financial market, particularly the regulatory requirements, it tends to be the fintechs that have some catching up to do.”

It is likely, however, that competition between the two sides will intensify because German customers are also showing openness towards fintechs, as shown by a recent study undertaken by market research institute YouGov and foreign cash transfer service Transferwise. The study showed that 72 percent of respondents are considering using fintechs for their transactions instead of banks. One in five even thought they would be managing all of their finances with the help of fintechs by 2020 (Handelsblatt).