Finance Research Letters xxx (xxxx) xxx–xxx

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Finance Research Letters

journal homepage: www.elsevier.com/locate/frl

Banking goes digital: The adoption of FinTech services by German

households
Moritz Jüngera, Mark Mietznerb,
⁎

a
Zeppelin University, Am Seemoser Horn 20, D-88045 Friedrichshafen, Germany
b
Chair for Banking and Finance, Zeppelin University, Am Seemoser Horn 20, D-88045 Friedrichshafen, Germany

ARTICLE INFO ABSTRACT

Keywords: Germany is falling behind its peers in adopting new digital technologies and financial services
Non-bank financial institutions offered by non-bank high-tech startups (e.g., FinTech). Using survey data, we analyze which
FinTech (financial technology) FinTech services households are likely to adopt. Our results indicate that a household's level of
Digital banking trust and comfort with new technologies, financial literacy, and overall transparency impact its
Financial services
propensity to switch to a FinTech. Specifically, households with low levels of trust, good financial
Switching behavior
Technology acceptance model
education, and preference for transparency are characterized by a higher probability of adopting
FinTech. In contrast, household price perceptions do not appear to significantly impact switching
JEL classification: probability.
G2
G23
E21
D8

1. Introduction

With advances in technology and the digitalization of business processes in the financial services industry, physical and virtual
environments are rapidly converging. The digital transformation of the financial sector has led to more digitized business models and
processes, but has also created new products and services. For example, the past decade has seen the rise of digital advisory and
trading systems, artificial intelligence and machine learning, peer-to-peer (P2P) lending, crowdfunding, mobile payment systems, and
even new monetary capabilities, with various forms of digital money (such as Bitcoin and other crypto assets). Today, digital channels
are no longer just another or cheaper way to interact with customers. Rather, they represent a significant and continuously increasing
share of retail client business worldwide. We use the term “FinTech” to refer to the services of various high-tech startups that feature
innovative business and digital platform models.
However, Germany currently lags behind its global peers, as well as many developing countries, on the FinTech wave, although it
already has all the elements needed for a hugely successful FinTech industry. A striking example is the mobile payments market,
where only 14% of Germans are currently using mobile payments, and two-thirds of the population claim they are not considering
adopting FinTech services in this area in the future (Schiereck, 2018). In contrast, countries including Sweden, Denmark, and the U.K.
have largely replaced physical cash payments with card and mobile payments, and have even contemplated a digital cash alternative
(e.g., e-Krona in Sweden) (Sveriges Riksbank, 2017). These significant differences in the adoption of digital financial services require
a more detailed analysis of the reasons underlying the varying rates of acceptance across countries, and the formulation of measures

⁎
Corresponding author.
E-mail address: mark.mietzner@zu.de (M. Mietzner).

https://doi.org/10.1016/j.frl.2019.08.008
Received 22 March 2019; Received in revised form 17 July 2019; Accepted 12 August 2019
1544-6123/ © 2019 Elsevier Inc. All rights reserved.

Please cite this article as: Moritz Jünger and Mark Mietzner, Finance Research Letters, https://doi.org/10.1016/j.frl.2019.08.008
M. Jünger and M. Mietzner Finance Research Letters xxx (xxxx) xxx–xxx

to improve user acceptance in Germany.

According to Davis's (1989) technology acceptance model (TAM), a user's intention to adopt a new technology is determined by its
perceived usefulness and ease of use. Recent research uses the TAM to predict FinTech adoption, such as mobile payments in Taiwan
(Wu and Wang, 2005), crypto payments in the Netherlands (Jonker, 2019), e-tickets in Finland (Mallat et al., 2009), and e-commerce
(Smith et al., 2014) among other services. However, several studies, such as Mangin et al. (2014), Li (2013), Aldás-Manzano et al.
(2009), Amin (2009), Lee (2009), Featherman und Pavlou (2003), and Wang et al. (2003), argue that consumer comfort alone cannot
fully explain the rising popularity of new technologies and services in the financial industry. They show, that especially consumers’
personality, cognitive and behavioral dimensions have an impact on the adoption of FinTech products. Specifically, they propose
extending the TAM using measures of perceived risk and perceived credibility or trust to capture consumers’ security and privacy
concerns about digital banking activities. Thus, the rise of FinTech seems to be more complex, and consumer willingness to adopt this
suite of services exceeds the simple dimension of being cheaper or more appealing.
Lack of trust and dissatisfaction are generally the main reasons why private customers opt to switch financial institutions, or to
consider FinTech as their main service provider (Maier, 2016; Manrai and Manrai, 2007). If FinTech can generate higher levels of
customer satisfaction through better service and offerings (e.g., lower rates and fees, faster, more flexible, and transparent processes,
etc.), they could leverage consumers’ dissatisfaction with traditional players to increase their market share (Maier, 2016).
However, thus far, few studies have analyzed consumers’ bank switching behavior (Manrai and Manrai, 2007). We expect this to
change as a better understanding of innovation adoption in the financial sector by private customers becomes increasingly important,
for, e.g., the assessment of the financial stability implications of FinTech (FSB, 2017), and a host of other implications. The un-
bundling of bank functions by different types of firms using digital techniques, and the adoption of fully digital banking services by
private customers, is a poorly understood and understudied topic. Therefore, our study contributes to the nascent FinTech literature,
as well as to the limited research on what causes customers to adopt fully digital banking services and motivates them to switch to
FinTechs.
We conducted an online survey of 643 German households between October and November 2017, and obtained a total of 324
usable filled-out questionnaires. Our results show that three primary dimensions (trust, transparency, and financial expertise) sig-
nificantly influence the decisions of households to stay with or switch from traditional retail banking service providers to FinTechs.
Specifically, households with low levels of trust, high levels of financial education, and preferences for transparency are characterized
by a higher switching probability. In contrast, households’ price perceptions do not appear to impact switching probability.
Our findings contribute to the literature on financial literacy and customer dis-/satisfaction about the quality of retail banking
services as determinants of retail banking customers’ propensity to switch from banks to FinTechs. The low interest rate environment
and the increasing standardization of financial products have made it somewhat difficult for banks to differentiate themselves from
their peers (Manrai and Manrai, 2007; Lundahl et al., 2009). Therefore, trust and transparency in financial services processes can be a
good basis for banks to differentiate themselves from FinTechs.

2. Data and methodology

Our data is derived from an online survey of 643 German households performed between 23 October 2017 and 11 November
2017. After eliminating incomplete questionnaires and missing values for some variables, as well as cases where respondents
completed the questionnaire in less than five minutes, the definitive sample comprised 323 households.1
In addition to information about individual investment and savings behavior, the economic and financial situation of households,
and sociodemographic variables, we asked respondents about their self-assessed levels of risk tolerance and financial knowledge. The
questionnaire and a description of all the variables involved in the analysis are in Appendix A.
We were interested mainly in the decision factors that determine the propensity of German households to switch from banks to
FinTechs. Consequently, our dependent variable, which directly indicates the potential of a private household to change, is “use of
FinTechs.” This dummy variable equals 1 if private customers are willing to terminate an existing relationship with a traditional bank
and establish a new one with a FinTech. Our set of decision factors and control variables are borrowed from the German Panel on
Household Finances (PHF) (see Deutsche Bundesbank, 2016), a household-level survey conducted by the Deutsche Bundesbank, and
the OECD (2011) study on measurements of financial literacy.2
Because of a high level of correlation between several survey items, we apply a Principal Component Analysis (PCA) to reduce the
number of dimensions without much information loss. The PCA identifies three single factors, social milieu, financial expertise, and
saving attitude, with eigenvalues above 1 that explain 60.44% of the variance in the nine items (Table 2). Factor loadings range from
0.48 (ownership of investment products) to 0.73 (education level).
As Table 2 shows, we extract the first principal component, “social milieu,” from the survey responses pertaining to socio-
economic characteristics, such as education, employment status, and income. This factor alone accounts for approximately 32% of the
total variance in the items. We proxy for “financial expertise” with the second principal component, consisting of a set of indicators of
financial knowledge. This set of variables is composed of questions about the knowledge of and investment in different financial

1
To improve the overall questionnaire design, we conducted a pretest of the survey that showed respondents needed an average response time of
ten to twelve minutes. Therefore, we do not believe a response in less than five minutes could be accurate.
2
The questionnaire used in the PHF survey and an in-depth description of the sampling design are available at: https://www.bundesbank.de/
Navigation/EN/Bundesbank/Research/Panel_on_household_finances/panel_on_houshold_finances.html.

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M. Jünger and M. Mietzner Finance Research Letters xxx (xxxx) xxx–xxx

Table 1
Descriptive statistics.
Obs. Mean Std. Dev. Min Max

Conceivable use of FinTech 324 0.31 0.46 0.00 1.00

Age 324 31.11 11.23 19.00 70.00
Gender 324 1.44 0.50 1.00 2.00
Marital status 324 0.26 0.44 0.00 1.00
Highest level of education 324 4.12 2.25 1.00 8.00
Employment 324 0.69 0.47 0.00 1.00
Household net income 324 2.55 1.55 1.00 7.00
No. of children in household 324 0.20 0.54 0.00 3.00
Self-assessment: trust 324 4.56 2.19 0.00 10.00
Self-assessment: price 324 5.71 1.96 0.00 10.00
Self-assessment:transparency 324 8.46 1.59 3.00 10.00
Self-assessment:risk 324 4.72 2.18 0.00 10.00
Self-assessment:patience 324 5.52 2.42 0.00 10.00
Self-assessment: financial knowledge 324 2.94 1.23 1.00 5.00
Savings behavior 324 3.72 1.01 1.00 5.00
Saving rate 324 2.54 1.53 1.00 7.00
Knowledge financial products 324 0.51 0.12 0.09 0.82
Ownership investment products 324 0.23 0.17 0.00 1.00
Financial literacy 324 0.81 0.26 0.00 1.00

products, and questions on financial topics such as compound interest effect, inflation, and diversification. We again borrowed these
questions mainly from the Deutsche Bundesbank (2016) PHF and OECD (2011) baseline surveys on the measurement of private
wealth and financial literacy. To ensure a single measure of “savings attitude,” we compute a third principal component that accounts
for 12% of the variance between the two items savings rate and behavior.

3. Results

3.1. Household characteristics

Table 1 shows the descriptive statistics for our sample. Respondents are between 19 and 70 years old, with an average of 31 years.
The dataset is divided into 183 men and 141 women. A fairly high degree of respondents (37.3%) describe themselves as students or
trainees, which corresponds with the high ratio of 22.8% of respondents with a university degree as their highest educational
qualification, a net income of less than 2000 euros, and generally high levels of trust.
Moreover, the descriptive analysis reveals remarkable differences in the assessment of the price and transparency criteria.
Although individuals tend to be price-sensitive, the criterion transparency appears to be much more important to them. Furthermore,
note that individuals in our sample consider themselves to have an average level of financial literacy. Interestingly, respondents
answered more than two out of three financial literacy questions on interest rate compounding, the effect of inflation, and di-
versification of securities on basic principles of finance correctly, although, on average, they own less than one-quarter of the
investment products surveyed.
The first major result of this study to assess German households’ willingness to adopt services provided by FinTechs is that most
private households cannot yet imagine using FinTech services exclusively. However, a total of 31% stated that they could. This
finding supports our hypothesis that the internet banking business, and the onset of other online financial intermediaries, will
increasingly affect traditional business areas, ultimately resulting in lower customer loyalty and higher customer migration.

Table 2
Principal component analysis.
Factor 1 social Milieu Factor 2 financial expertise Factor 3 saving attitude

Savings behavior 0.025 −0.012 0.716

Saving rate −0.015 −0.002 0.694
Highest level of education 0.725 −0.008 −0.136
Employment 0.542 −0.128 0.083
Household net income 0.656 0.076 0.140
Self-assessment: finance knowledge 0.002 0.516 0.115
Financial literacy 0.001 0.666 −0.237
Knowledge financial products −0.195 0.522 0.159
Ownership investment products 0.181 0.481 0.075

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Table 3
Regression results.
Model (1) (2) (3)
Odds ratio SE Odds ratio SE Odds ratio SE

Age 0.97** (0.02) 0.97** (0.02) 0.96** (0.02)

Gender 0.95 (0.26) 0.74 (0.26) 0.90 (0.27)
Marital status 1.37 (0.36) 1.50 (0.39) 1.51 (0.42)
Factor social milieu 0.98 (0.23) – – 0.91 (0.24)
Factor financial expertise 2.09*** (0.21) – – 2.11*** (0.22)
Factor saving attitude 0.82 (0.22) – – 0.80 (0.23)
Self-assessment: trust – – 1.13** (0.06) 1.13* (0.06)
Self-assessment: price – – 0.97 (0.06) 0.95 (0.07)
Self-assessment: transparency – – 1.39*** (0.09) 1.42*** (0.10)
Self-assessment: risk – – 1.14** (0.06) 1.09 (0.07)
Self-assessment: patience – – 1.02 (0.05) 1.02 (0.05)
No. of children in household – – 1.01 (0.28) 1.10 (0.29)
Constant 1.23 (0.60) 0.03*** (1.14) 0.03*** (1.22)
Observations 324 324 324
Log-likelihood 377.81 372.58 359.62
Cox & Snell Rsquare 0.063 0.078 0.114
Nagelkerke Rsquare 0.089 0.110 0.161

The calculated odds ratios provide information on the probability of switching from a bank to a FinTech. Standard errors are in brackets in the next
columns. Variable descriptions are in Appendix A. ***, **, and * indicate significance at the 1%, 5%, and 10% levels.

3.2. Important consumer decision factors for choosing financial services institutions

We use a logit regression to analyze the data because we are interested in identifying which variables influence the propensity to
make a change. For this purpose, we calculate three different binary logistic regression models. The first model includes only the
three factors and our control variables; the second model includes the influence of the respondent's self-assessment, price, trans-
parency, risk, and patience. The third model is a combination of both. This structure allows us to determine whether the influence of a
variable changes when further explanatory variables are included in the analysis.
Table 3 illustrates the results. First, we find a lower probability of switching to FinTechs for older respondents. This confirms the
common perception that younger people have a greater affinity for digital innovations. Choudrie and Vyas (2014) and
Choudrie et al. (2018) find similar results for the adoption of mobile banking services by older adults in the UK. They report that the
likelihood for using mobile technology by older generations is rather low but increases with continuous access to mobile devices,
internet connection, the support of their family and friends, and privacy.
Second, an interesting finding relates to the self-assessment variable, “transparency”: consumers who emphasize the importance
of transparency in a bank's services are more likely to switch to FinTechs. Transparency reduces information asymmetries and enables
customers to more accurately assess services and prices. This is important, because consumers are increasingly concerned about the
reliability of financial advice, especially when it comes to financial provisions. Mietzner and Molterer (2018), for example, address
the problem of the reliability of financial advice in Germany. They note that incentive structures can bias financial advisors toward
promoting and selling products that do not necessarily match retail customers’ needs. Transparency, therefore, could be the critical
differentiator that influences customers’ switching behavior.
Transparency can also be a trust building measure, if, for example, a company discloses security and privacy assurances. In terms
of security, Lu et al. (2011) revealed that around three quarters of all customers have security concerns about using mobile payment
services and Gupta and Xu (2010) highlighted that security concerns significantly influence users’ intention to adopt a risky tech-
nology in India. Also, Calisier and Gumussoy (2008) find that young customers do not trust the security of internet banking websites
in Turkey.
Due to the high level of uncertainty and the perceived risk in digital environments, trust and trust-building measures are im-
portant factors for customers in their decision to use an innovation. Lee (2009) documents that the adoption of trading platforms in
Taiwan is especially influenced by perceived risks instead of perceived benefits, like lower costs. Similarly, Gao and Waechter (2017),
Gao et al. (2015), and Lu et al. (2011) document that trust and ease of use, two factors that are strongly related to perceived risk and
benefits, are central for mobile purchases and the decision to adopt digital payment services in Australia and China. Chen and
Barnes (2007) also highlights that cultural conditions are responsible for a lower level of trust of Taiwanese customers in e-business
environments.
In terms of financial advice, Kramer (2016) finds that individuals who generally trust other people have a higher propensity to
seek expert assistance. These clients have also become accustomed to established forms of personal interaction with their bank
advisors. Since they will not usually find this form of interaction with FinTechs, there is a greater likelihood they will stay at their
house banks. Consistent with this, we find that individuals who are characterized by higher levels of trust in other people have a
lower propensity to switch to a FinTech. Specifically, customers who are more skeptical than trustful have a 70% or higher predicted
probability of switching to a FinTech; in contrast, customers who are more trusting have a 60% or less probability of switching.
One reason for this result could be the general skepticism of retail customers toward traditional financial institutions. Skeptical

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retail clients are more likely to question service provider offerings. In contrast, more confident individuals do not generally consider
switching to a FinTech, because they trust in the services of their house bank. Trust and perceived trustworthiness are therefore of
great importance for the acceptance of FinTech services by consumers and can either be knowledge-based or can be developed
through frequent interaction, i.e. previous customer experiences.
We also find that households with greater financial expertise are also more likely to switch to FinTechs (Table 3). The positive
effect of financial expertise on the likelihood of a household changing service provider is intuitive for two reasons: First, households
with a greater affinity for finance have a higher level of financial education, and can likely understand financial products better.
Second, private clients with a high degree of financial expertise have more experience with various financial products. They tend to
have a more comprehensive overview of the financial product offerings, and can more easily identify which offer superior perfor-
mance. In contrast, households with less financial experience may have difficulty differentiating between the various offers. This view
is empirically supported by Henry et al. (2018) and Shahzad et al. (2018) who show that perceived trustworthiness, awareness and
literacy are positively related with bitcoins adoption in Canada and China. For this reason, the innovative solutions and products
provided by FinTechs receive particularly high attention from households with strong financial expertise. Accordingly, we find that
private households with a high level of financial knowledge are more likely to switch to a FinTech.
However, contrary to our expectations, and to Manrai and Manrai (2007), who find that higher bank charges make it more likely
customers will change banks, the coefficient for self-assessment, “price,” is not significant in our models. We find that households
with high price elasticity have a 60% average predicted probability of changing service providers, while it is just under 60% for
households that consider themselves inelastic. This very small difference underlines the finding that price sensitivity appears to have
no significant influence on the likelihood of a private household switching from a bank to a FinTech.
Our results demonstrate that the price of a financial service is not generally a criterion for the decision between traditional credit
institutions and FinTechs. While FinTechs are often characterized by their favorable offers, it is noteworthy that this characteristic is
not applicable to all, and certainly not exclusively to modern financial service providers. In summary, because price does not appear
to influence the probability of a change, banks should resist a damaging price competition, and instead differentiate themselves
through better client service offerings.

4. Conclusion and outlook

This study provides empirical evidence about the factors that may cause consumers to switch at least part of their financial
services from traditional financial institutions to financial technology startups (FinTechs). We discover that 31% of our survey
respondents could imagine moving away from a traditional provider to a FinTech, indicating that these new providers are able to take
significant market share from incumbents. One of the driving factors behind the shift of market share toward FinTechs is due to better
customer satisfaction through better service offerings. Therefore, business model innovation, investment in digital offerings, and
higher service quality will be key for traditional financial institutions in order to differentiate themselves from FinTechs. Overall
customer satisfaction with incumbents appears to be rather low. Specifically, by reducing information asymmetries through greater
transparency, customers can more accurately assess services and prices, which, in turn, will negatively influence their intention to
switch.
Although there are significant differences between users and non-users of FinTech services across countries, our empirical data
highlight that perceived trust and reliability, transparency and financial literacy appear to be the most important attributes of
adopting FinTech products and services. Our results also show that the price of a financial service is not usually a criterion for a
decision between traditional credit institutions and FinTechs, which highlights that the convenience aspect is a more important
differentiator for customers than prices.
Regarding FinTech activities in Germany, Dorfleitner et al. (2017) report that digital banking and payments, P2P lending and
crowd-funding and digital financial advisory services (e.g., robo-advisors that focus on portfolio management and investment stra-
tegies) have blossomed into the largest segments. Especially the fast-growing digital financial advice segment addresses the customers
desire for more transparency, because services like robo-advsisors or price comparison websites, among other, have made certain
types of banking activities and transactions more transparent to customers. However, customers need the relevant resources, financial
literacy, and ability to use financial advice services.
In contrast, financial literacy plays a secondary role in P2P financing, as there are no restrictions on investors and clients typically
invest only small amounts of capital. In addition, research shows that interest rate levels are rather low in P2P lending platforms,
indicating that consumers are less price-sensitive when engaged with FinTech credit providers. However, compared to other seg-
ments, the growth of P2P financing platforms slowed down in Germany and unknown, insecure investors could be responsible for this
development. Regarding digital banking or payment services, we notice that the awareness increases in Germany as these companies
experience generally high valuation levels. On the other hand, a higher awareness will also increase the likelihood of adoption and
use of digital banking and payment services.
Overall, we believe that our results perfectly fit with the stylized facts on the adoption of FinTech products in Germany. Therefore,
this study will be useful for practitioners, policymakers and households to better understand innovation adoption in the financial
sector by private customers. However, given the diversity of business models across FinTechs, the more general implication for the
industry and policymakers is to strive for the goal to decrease customer's perceived risk and to increase their trust in digital financial
services. To capture consumers’ concerns about digital services and products policymakers should ensure adequate consumer pro-
tection and enhance comparableness and transparency as well as customers’ understanding of FinTech products and services.

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Acknowledgments

We would like to thank Shankar Ghimire, Dirk Schiereck and Narjess Boubakri as well as the participants of the Academy of
Economics and Finance 56th Annual Meeting for helpful comments and excellent suggestions. All remaining errors are our own.

Appendix A. Variable descriptions

Variable Definition Coding/construction Source

Endogenous variable
Use of FinTechs Can you imagine switching to a FinTech and receiving Yes = 1 Self-developed
service exclusively from it?
Sociodemographic characteristic
Marital status Are you married/in a registered partnership and living Yes = 1 Deutsche
together with (married) partner, or married/in a registered Bundesbank (2016)
partnership and living separately?
Highest level of Do you have a completed vocational degree or a university No training completed = 1 Deutsche
education degree? If there are multiple degrees, please list only the Currently training or studying = 2 Bundesbank (2016)
highest one Vocational training completed (apprenticeship) = 3
Vocational training completed (vocational school or
commercial college) = 4
Training at a technical or commercial college, school
for master craftsmen or engineers, or university of
cooperative education completed = 5
University of applied sciences degree = 6
University degree obtained/teacher training
completed = 7
Doctorate/postdoctoral qualification obtained = 8
Employment Are you currently employed? Yes = 1 Deutsche
Bundesbank (2016)
Household net in- What is your monthly net household income? <1000€ = 1
come 1000€–1999€ = 2
2000€–2999€ = 3
3000€–3999€ = 4
4000€–4999€ = 5
5000€–5999€ = 6
≥6000€ = 7
Self-assessment
Self-assessment: How do you view yourself: Are you in general a person who I trust others fully = 0 Deutsche
trust trusts others or do you tend to distrust people? I don't trust others at all = 10 Bundesbank (2016)
Self-assessment: How do you view yourself: Do you react sensitively I'm not responding at all to changes = 0 Self-developed
price (elastically) to price changes? I react very strongly to changes = 10
Self-assessment: How important is transparency with regard to product Transparency is unimportant to me = 0 Self-developed
transparency information to you? Transparency is very important to me = 10
Self-assessment: How do you view yourself: Are you in general a risk-taking I'm not at all willing to take risks = 0 Deutsche
risk person or do you try to avoid risks? I'm very willing to take risks = 10 Bundesbank (2016)
Self-assessment: How do you view yourself personally: Are you in general a I am very patient = 0 Deutsche
patience person who is patient or do you tend to be impatient? I am very impatient = 10 Bundesbank (2016)
Self-assessment: Do you agree with this statement? “I am very interested in Disagree at all = 1 Hackethal et al. (2010)
finance kno- financial matters and keep myself informed about potential Fully agree = 5
wledge investment opportunities.”
Financial characteristics
Savings behavior Which of the statements best describes the saving patterns I don't want to save = 1 Adapted from Deutsche
of your household? I am not saving because there is no financial Bundesbank (2016)
leeway = 2
I save something if there is something left to
save = 3
I save every month, I determine the amount de-
pending on the financial situation = 4
I regularly save a certain amount = 5
Saving rate How big is the share you save from your monthly income? <5% = 1 Self-developed
5–10% = 2
10–15% = 3
15–20% = 4
20–25% = 5
25–50% = 6
50–75% = 7
>75% = 8

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Knowledge of fi- Estimated knowledge about financial products based on Knowledge and purchase of all products = 1 OECD (2011) and own
nancial pro- answering two questions: Please can you tell me whether No knowledge and purchase of the products = 0 calculations
ducts you have heard of any of these types of financial products/
In the last two years, which of the following types of
financial products have you chosen (personally or jointly)
whether or not you still hold them. Please do not include
products that were renewed automatically: current account,
credit card, passbook, prepaid payment card, mobile pay-
ment account, shares, consumer credit, unsecured bank
loan, mortgage, insurance, pension fund
Ownership of in- Which investment products were or are in your possession? Ownership of all products = 1 Deutsche
vestment pro- (investments in non-publicly traded companies, RIESTER/ Ownership of no product = 0 Bundesbank (2016)
ducts RÜRUP pension plan, savings accounts, savings and loan
agreements, securities accounts, funds, fixed-interest secu-
rities, other securities in the portfolio)
Financial literacy Estimated financial knowledge based on answering three All questions answered correctly = 1 Deutsche
questions on compound interest effect, inflation, and di- Bundesbank (2016) and
versification: own calculations
1. Let us assume that you have a balance of €100 in your All questions answered wrong = 0
savings account. This balance bears interest at a rate of 2%
per year and you leave it in this account for 5 years. How
high do you think your balance will be after 5 years?
2. Let us assume that your savings account bears interest at
a rate of 1% per year and the rate of inflation is 2% per year.
Do you think that, in one year's time, the balance on your
savings account will buy the same as, more than, or less
than today?
3. Do you agree with the following statement: "Investing in
shares of one company is less risky than investing in a fund
containing shares of similar companies"?

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