CFS Index: Financial institutions expand, service providers lag behind

The CFS Index shows an overall stable development in the fourth quarter of 2025, behind which growing differences between financial institutions and financial service providers are emerging.

The CFS Index, which quarterly reflects the condition of the German financial sector, declined slightly by 1.4 points in the fourth quarter of 2025 to a level of 107.1 points. However, this apparent stability results from the fact that the significant losses of financial service providers are mathematically offset by the stable gains of financial institutions. While the assessments of the surveyed professionals and executives in financial institutions point to new record highs in revenue and profit growth, a clear trend toward results below the neutral benchmark of 100.0 is solidifying among service providers. It is also disappointing that Germany’s importance as an international financial center is weakening in the eyes of the panelists.

“Of particular concern for the financial centre is the fact that the expectations of the surveyed service providers have deteriorated significantly again across all areas”, comments Prof. Dr. Rainer Klump, Director of the Center for Financial Studies, on the results.

The assessment of the future international importance of Germany as a financial center dropped sharply by 9.0 points after the fourth quarter of 2025, reaching an average of 91.7 points based on responses from financial institutions and service providers. In particular, in the perception of financial service companies, the location is increasingly losing international importance, resulting in a value of only 85.6 points. The hoped-for turnaround in the industry’s assessments has not materialized.

“The expectation that the international importance of Germany as a financial center will decline should not leave us indifferent. I do not share this view and believe we have been drawn into the general skepticism surrounding the overall economic development. I am more confident, not least because policymakers have recognized the strategic importance of the financial center at the federal, state, and municipal levels. Combined with a pragmatic implementation of EU regulations, as seen with CRD VI, this is yielding results. I therefore expect further positive surprises,” explains Oliver Behrens, President of Frankfurt Main Finance.

Uneven development across sectors in revenue and profit growth

Revenue growth among financial institutions continued to strengthen in the fourth quarter of 2025, rising by 6.3 points to 127.8—the highest level this indicator has reached since the global financial crisis in 2007. An opposite trend is evident among service providers. Here, the downward movement intensified: revenue growth fell by another 10.8 points to 96.2, dropping below the neutral threshold of 100.0. Expectations among financial institutions (+3.1 points) and service providers (−11.3 points) suggest that this current trend will continue into the future.

A very similar pattern can be seen in profit growth. Financial institutions report stable growth of 5.8 points, with this sub-index also reaching its highest level since the 2007 financial crisis at 126.7 points. Among service providers, profit growth declines by 5.8 points to the neutral level of 100.0, with the negative trend becoming even more pronounced in expectations.

Investment growth, however, remains stable across the overall industry.

The growth in investment volume in product and process innovations among financial institutions also increases by 5.4 points to 114.4, marking another peak value in recent years. Service providers, by contrast, invest 1.0 point less compared to the previous quarter, and despite the significantly reduced growth in revenues and profits, remain at a relatively high level of 104.8 points. On average, investment growth across the entire industry reaches 109.6 points.

The sub-indices reflecting employee growth mirror the developments in revenues and profits. While financial institutions are hiring staff, with the corresponding sub-index rising by 5.1 points to 110.0, employee growth among service providers declines by 5.2 points, falling to 97.1 points. Expectations here also suggest no significant changes in the near future.

General methodology of index calculation

The CFS Index is based on a quarterly management survey of Germany as a financial center. The index aggregates qualitative information on key business indicators—“revenues or business volume,” “profit situation,” “number of employees,” and “investments”—for both the just-ended quarter (“performance”) and the current quarter (“forecast”). By design, the index ranges from a minimum of 50 to a maximum of 150, with a value of 100 indicating a neutral sentiment. The survey is a panel-based study of companies and institutions in the financial industry. Panel participants are divided into the sectors “financial institutions” and “service providers” at the financial center, with the latter group defined quite broadly.

Brief profile of the CFS

The Center for Financial Studies (CFS) conducts independent and internationally oriented research across all major areas of financial markets, financial institutions, and monetary economics: from financial stability and banking regulation, to securities trading and valuation in financial markets, household portfolio decisions, as well as the law and economics of financial organizations, and monetary policy and the economics of financial markets. Drawing on relevant insights from its research areas, the CFS contributes to policy debates and analyses. For its research projects and policy advisory work, it relies on a network of academics and professionals from the financial industry and central banks both within and outside Europe.

CFS Survey

The survey shows widespread use of AI in the financial sector and clear expectations of changes in employment and work structures.

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Source: CFS press release dated March 25, 2026

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