Finance in Germany

Finance and Banking in Germany

Germany has a long banking tradition, from the merchant bankers of the 16th century to 19th-century industrial financiers. Not known for flashy marketing or risky products, Germany's banks tend to be divided into savings banks, regional banks, cooperative banks, and multinational private banks. The sector is proud of its sensible approach, and consumer-focused services, but which banks and financial institutions should new German residents choose? 

This article will be your guide to banking and finance infrastructure in Germany, providing an overview of different types of bank accounts, which you can easily open even online, being an international in the country.

Banking System in Germany

Germany's banking system includes four major types of institutions, and there are some important distinctions between them

Firstly, there are private commercial banks. These banks control almost half of all German assets and finance most of Germany's international trade. And within that sector, Deutsche Bank reigns supreme, being the 11th biggest bank worldwide.

However, private banks don't dominate the retail banking sector. The three largest private banks control 15% of the retail sector, but they are rivaled by public sector and cooperative banks - not to mention so-called "free" banks.

The public banks are divided into Sparkassen (local savings banks, don’t confuse with the name of big German bank Sparkasse!) and Landesbanken (regional banks). Seven Landesbanks operate in German regions, while smaller Sparkassen tend to operate in particular cities or urban areas.

Also known as Raiffeisenbanken, cooperative institutions are the final major group, and there are around 1,000 across Germany.

Both coops and public banks tend to cater for local communities and aren't usually focused on international visitors. But they are seen as more reliable and less risky, and some are moving toward more outward-looking strategies.

How many banks are there in Germany?

According to national statistics, there are 1,900 banks in Germany, including 1,000 cooperative banks, 403 Sparkassen, and far smaller numbers of private banks and Landesbanken. That works out as 1 bank branch for every 2,500 Germans - a very high number of branches by international standards.

However, while bank numbers are high, they have been declining in recent years. The rise of mobile banking and the internet have accelerated branch closures, albeit from a much higher level.

Types of bank accounts in Germany

Banks in Germany offer a range of different accounts for expatriates, and there are numerous types of bank to choose from as well. We can't cover them all here, but it helps to provide a short introduction.

Most arrivals will want to create what is known as a Girokonto. This is essentially a checking account and can be provided by various forms of bank. There are big international banks which offer Girokonto, or current account, for foreign residents.

Applicants must be sure to check the Kontoführungsgebühren (account fees) when making a decision, as they can bump up the cost of banking quite a lot in some cases.

Can I have two bank accounts in Germany?

Germans aren't restricted to a single bank account. While it's advisable to set up a Girokonto to handle income and savings, this account often functions alongside a Sperrkonto (blocked account). That way, students can receive their monthly payments and add them to work income or payments from abroad.

Some people may want one account which offers advantages for international money transfers, as well as a current account account which guarantees good ATM access anywhere in Germany. You won't always find an account with the features you need, and there's nothing wrong with shopping around. There's no limit to how many bank accounts you can use, so find a mix that works for you.

How to open a German bank account

Opening a bank account in Germany isn't usually a difficult task

In fact, knowing the value of solid savings and a good credit rating, Germans have gone out of their way to make the process streamlined and efficient.

Before you can open a bank account in Germany, you'll need to satisfy certain requirements. In most traditional banks, individuals who come from outside the European Union must provide documentation which proves they are registered as German residents, and that they have a valid work permit.

What do I need to open a Bank Account in Germany?

These requirements mean that a little work will be involved when you start an account. However, the various stages aren't hard, and you should have most of the documents required. To set you on your way, here's a breakdown of things needed to open a bank account in Germany:

  • Your passport
  • A valid German visa
  • Any documents showing that you are enrolled on a university course or employed in Germany
  • Your Meldebescheinigung (documents confirming your German address). This can be obtained by making an appointment at your local Bürgeramt - which functions like a town or city hall.
  • Some banks may also request documentation showing a regular income, such as your last three pay slips.

Once you have these documents, you can head to a local bank branch and start filling out forms.

However, nowadays the best place to open a bank account is definitely online!

For example, the mobile bank N26 simply requires your name, birth date, and German address. After that, you need to supply the "supporting ID" listed above, and then your account can be created instantly. The whole process is designed to take 8-10 minutes.

The same applies with Monese, another popular mobile banking app. Again, users just download the app, submit a few personal details, and then add their ID information. Within a few minutes, you can be up and running, depositing euros as with any normal account.

Note for non-EU nationals

Non-EU nationals should note that they will need to be resident in Germany before using these mobile apps. EU residents can create accounts from abroad before moving to Germany, but for Chinese, Indian, or US visitors, it will be necessary to make arrangements after arrival.

Mobile banking isn't the only option, of course. Many arrivals like to visit a nearby bank branch to meet the staff and discuss their accounts. These accounts often deliver more complex features like credit cards, overdrafts, and may suit self-employed workers and families.

There's nothing to stop people using both mobile banks and conventional banks. In fact, that's a very common option for expatriates as they navigate Germany's financial system.

Bank transfer

Transferring money from abroad and between German banks could be a headache for expatriates, but it doesn't have to be

German banks know that easy transfers are a major selling point and way to serve their customers, so they tend to make the process relatively hassle-free.

How do I transfer money to a German bank account?

Making a domestic transfer (Überweisung) between German bank accounts isn't complex at all. To do so, use your bank's online banking portal or visit a local branch. You will need the account details of the receiving account. So, if you are paying your monthly rent, be sure to request these details from your landlord.

Even better, you can set up a standing order (Dauerauftrag) which transfers a set amount of money at regular intervals. For variable transfers such as phone bills, you can also set up direct debits called Einzugsermächtigung.

PayPal

Services like PayPal are widely used in Germany as well, and can be the easiest way to shift money between accounts or manage self-employment income.

How long do bank transfers take in Germany?

Most bank transfers in Germany won't be instantaneous. If you need to make a payment by a certain date, be sure to leave a couple of days leeway. Transfers will typically take 2-4 working days, from the moment you hand in the form to bank cashiers, to the money lying in the receiving account.

What is the fastest way to transfer money?

If you are in a hurry, try online payment portals. Because they remove a layer of paperwork, they can be much quicker than traditional transfers. One option is to use the online banking portal provided by your bank. Many direct banks and even saving institutions offer this facility. Mobile banks such as N26 and Monese make transfers even faster. 

What is the cheapest way to transfer money internationally?

If you are transferring money from an EU-based bank with an IBAN code, transfers will be free and easy. For non-EU nationals, fees and delays could be involved, but specialist transfer services exist to make the process simpler.

TransferWise is probably the cheapest and most popular method. This mobile-based service can be connected to online banking services like PayPal, and will convert foreign currencies into Euros, before depositing them into your German account. When you sign up, you'll need to provide some basic personal details, including your full German bank details. Beyond that, all that's involved is a swipe of the smartphone screen.

Our International Money Transfer page presents you more providers to transfer money internationally.

Best Banks in Germany

Germany's banking landscape is changing fast, and here are some of the current leading operators for international residents to consider:

  • N26: Based in Berlin, N26 has quickly become one of the country's biggest Direct Banks. Offering checking accounts with Mastercard Debit cards, N26's accounts can be set up in seconds online, and work in all Eurozone countries.
  • Monese: British company Monese offers services for people who move between countries and addresses regularly. There's no need for a fixed address. Customers can just use their phone to create an account wherever they are, and access ATMs all over Germany.
  • DKB Girokonto: A leading Direct Bank, DKB Cash is popular due to its zero fee accounts and slick online services.
  • Postbank Giro Plus: Postbank is Germany's biggest retail bank, and its Giro accounts feature extremely low fees. They come with Visa cards too, widening customer purchasing options

Which bank is the best bank for students in Germany?

These banks are all high-quality companies, but not all cater for students. If you need a solid financial partner during a degree or postgraduate study, you'll want cheap rates, easy money transfers internationally, and foreign language support.

N26 for international students

N26 is probably best situated to provide those services you need as an international student. You can manage everything online via a simple app, and the company has excellent support for international customers.

Expatrio Blocked Account

Expatrio helps you to open your German Blocked Account in a fast & secure way, while you are still abroad in your home country.

Open Blocked Account