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Digital Economy News | September 2021

Germany’s digital economy is booming in a number of sectors as coronavirus pandemic accelerates the country’s digitalization process.

Pandemic accelerating digitalization in industry

The global coronavirus pandemic has accelerated the digitalization process in Germany with industry order books once again filling up and companies confident about the future. The corona pandemic has led to a digitalization surge among larger companies in Germany. Three quarters of large companies in Germany are increasing their digitalization investment commitments as a result of the coronavirus pandemic according to the preliminary findings of a report conducted by Bitkom Research and Tata Consultancy Services. Of the 955 companies with 100 or more employees surveyed in May and June, almost no companies (0.2 percent) believe that the Covid-19 crisis has not had an impact on digitalization plans. Eighty percent of companies in the mechanical and plant engineering sector have increased investment in digitalization according to Bitkom, followed by the banking and insurance sector (66 percent). Almost half of all chemicals & pharmaceuticals and banking & insurance companies surveyed are respectively accelerating their business model digitalization efforts. Bitkom believes that additive manufacturing could provide an effective remedy for disruptions experienced in global supply chains caused by the Covid-19 crisis. Germany is pressing ahead with its automation efforts, with 388 industrial robots for every 10,000 workers – only Singapore and South Korea can boast more.

E-commerce market grows by 23 percent in first half of year

E-commerce sales of goods increased by 19.4 percent year-on-year to more than EUR 24 billion in the second quarter of the year according to the German E-Commerce and Distance Selling Trade Association (bevh). The removal of restrictions on stationary retail outlets has not affected demand, with e-commerce market growth of EUR 8.5 billion (or 23.2 percent) for the first half of the year. Analysts believe that the e-commerce sector may exceed turnover of EUR 100 billion for the very first time this year based on current bevh forecasts. The biggest growth drivers among the product groups in the second quarter of the year were DIY products and floristry (37.3 percent increase), drugstore products and food ( 34.2 percent and 34.9 percent increases respectively), house and home textiles (31.5 percent increase) and medicines (30.6 percent increase).

Parcel industry booms during crisis

The coronavirus crisis has seen Germany’s parcel delivery sector boom – with three times as many parcels delivered to each household in 2020 compared to a decade ago according to the industry trade association (BIEK). Germany’s courier, express and parcel (CEP) market recorded a 400 million CEP shipment increase in 2020, with a total of more than four billion shipments transported during the crisis year. This is equivalent to a 10.9 percent increase on 2020 levels, with turnover similar growth of 10.5 percent to EUR 23.5 billion for the year. The major demand for deliveries was growth in the B2C sector, a trend reflected in annual online retail turnover of EUR 83 billion for the year according to bevh. The BIEK has now revised its forecast of 4.7 billion deliveries by 2025 to now be achieved in the coming year.

More German companies moving to the cloud

Around one in three German companies with at least ten employees used fee-based IT services on cloud computing platforms last year according to the Federal Statistical Office. This represents an 11 percent increase on 2018 levels when cloud share was just 22 percent. The degree to which companies make use of paid for cloud services varies greatly according to company size – just one quarter of the smallest companies (with up to nine employees) used cloud services compared to two thirds of larger companies (with 250 employees). Companies largely use cloud services to optimize internal processes, with email, office solutions and video conferencing solutions proving particularly popular in 2020 because of the coronavirus crisis.

One Fiber Interconnect reaches agreement with Deutsche Bahn to build fiber optic network

One Fiber Interconnect and Deutsche Bahn have reached an agreement to allow the start-up to build an optic fiber network along the rail operator’s network. The company, led by former Deutsche Bahn head of freight transport Klaus Kremper, plans to lay 27,000 kilometers of fiber optics as part of a five-year project worth EUR 1.8 billion. The two companies will now coordinate their efforts to expand Deutsche Bahn’s existing fiber optic network.

German financial start-ups raise EUR 2 billion in six months

German financial start-ups raised almost EUR 2.1 billion in the first half of the year according to analysis conducted on behalf of Barkow Consulting for Handelsblatt. This exceeds the previous record of EUR 1.8 billion raised in 2019, coming after a downturn in venture capital funding in 2020 as a result of the Covid-19 pandemic. The ongoing pandemic is continuing to drive digitalization efforts and is putting fintechs that are partners or service providers to banks and traditional financial institutions in a strong position. In May, Trade Republic raised EUR 615 million in fresh capital, taking the neobroker’s valuation up to EUR 4.8 billion. Other fintechs driving record capital volume levels include Wefox, Scalable Capital and Mambu.

Blockchain voting system being developed in Mittweida

A blockchain-based election system is being developed at the University of Applied Sciences Mittweida (Saxony). Smart voting systems have been posited for some time as a conceivable use case for distributed ledger technologies but have proved problematic due to the blockchain’s inability to guarantee whether the entry is correct in the first instance. The planned eVoting system will initially be used in university elections.

Network for Digital Information pilot project launched

An important part of Federal Minister for Digitalization Dorothee Bär’s “Network for Digital Information” went live in August. The search engine pilot project will allow cross-departmental searches for government ministry information for the first time. Members of the public can test the search engine and contribute to the further development of the software.

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