Background:
Hardly any market segment in banking is undergoing such a profound transformation process as retail banking, excluding private wealth management. Technological changes such as AI and the increasing virtualization of customer relationships are putting established providers such as savings banks, cooperative banks, and commercial banks under pressure. Fintechs such as Revolut, Trade Republic, N26, and others are primarily targeting younger customers. At the same time, digital providers from major international banks such as CHASE and BBVA are entering the German market. What does this mean for the future of retail banking in Germany?
Survey results:
An overwhelming majority of respondents (96%) believe that competition in the German retail banking sector will continue to intensify.
Against this backdrop, around 63% of the finance sector specialists and executives surveyed expect profitability among local providers to decline. “Neo-banks are struggling to achieve sustainable profitability. I see a greater threat to the traditional market leaders – the savings banks and co-operative banks – from the entry of foreign providers such as CHASE. They have staying power and can certainly afford to offer competitive terms to persuade customers to switch,” says Professor Volker Brühl, Managing Director of the Centre for Financial Studies.
Survey participants identify brokerage and payment services as the product segments most affected. “There are a particularly large number of fintechs active in these areas. This is because the regulatory hurdles in these segments are not as high as in the lending and deposit business,” explains Brühl.
Another interesting question is which banking groups the panellists believe are most in need of action. Here, a nuanced picture emerges for savings banks, co-operative banks and commercial banks. According to the respondents, there is a general need for action across all banking groups. However, a particularly high need for adaptation is seen among savings banks and co-operative banks.
“High levels of competition are good for customers and the best ‘fitness programme’ for market players. The pressure to offer customers modern solutions and to adopt customer-friendly, innovative technology more quickly and comprehensively is increasing. For the institutions, this represents less of a threat than an opportunity. This is demonstrated by the rise in employment at banks in Germany, which we have seen in 2025 according to the latest figures from the ECB,” says Hubertus Väth, Managing Director of Frankfurt Main Finance.
