Stand:updated on 29.07.2021 Market entry
Content
Anyone wishing to provide certain banking and financial services in Germany requires authorisation by BaFin. With regard to the question of which authorisation is required, the determining factors are the planned business model and the legal and actual design of the planned products and services. In principle, a distinction is made between banking business, investment services, financial services, payment services and e-money business. The question of whether a business model requires authorisation and, if so, the type and scope of the authorisation are determined on a case-by-case basis. BaFin provides the information regarding market entry on this website to serve as initial, non-binding guidelines.
For specialised information designed for start-ups in the field of innovative, digital banking and financial services or payment services (fintechs) whose business models may be categorised under all the above-mentioned areas of authorisation, please see BaFin’s website articles for fintechs.
Banking business
The business model of banks typically comprises all or a large number of the forms of banking business specified in the German Banking Act (Kreditwesengesetz – KWG), but in particular the acceptance of customer deposits and the granting of loans and other financial intermediary activities. A banking licence is generally required in order to conduct one or more forms of banking business. Depending on the type and scope of the business model, distinctions are made between a full banking licence and a limited banking licence. A full banking licence allows an institution to conduct all major forms of banking business. Banks with a full banking licence usually operate as universal banks. By contrast, a limited licence enables an institution to conduct only certain forms of banking business, or only one specific form of banking business. Banks that provide only certain forms or only one specific form of banking business are also referred to as specialised banks. Depending on the type and scope of the authorisation sought, either the European Central Bank (ECB) based on a proposal of BaFin as the national competent authority (NCA) or solely BaFin decides on the application for authorisation.
Investment services
If an undertaking intends to exclusively provide investment services, such an undertaking is deemed a investment firm and, as such, requires authorisation. If authorisation is requested only for the provision of investment services, such authorisation is granted solely by BaFin.
Financial services
An undertaking intending to provide financial services such as leasing, factoring, services relating to investment products or certain services with various financial instruments is deemed a financial services institution and, as such, requires authorisation. This authorisation is granted solely by BaFin.
Crypto custody business
In Germany, the custody, management and protection of crypto assets or private cryptographic keys used to keep, store or transfer cryptoassets – referred to as crypto custody business – is likewise a financial service subject to the authorisation requirement.
Payment services and e-money business
Certain services relating to payment transactions and the issuance of electronic money (e-money) require authorisation or registration as a payment institution or e-money institution. This authorisation is also granted by BaFin.
Hybrid business models
In addition to individual authorisations for conducting or providing solely banking business, financial services or payment services/e-money business, it is possible to obtain authorisation for hybrid business models. Where a company intends to engage in business operations in several areas that require authorisation, such as financial services and payment services, a number of basic principles and special aspects must be observed. These play a role both when institutions are first being established and when institutions already authorised are expanding their business model. Based on the particular circumstances, however, it may not always be necessary to obtain additional, separate authorisation under the relevant supervisory legislation.
