The service sector as an engine of growth
The service sector has for many years been an engine of Munich's economic growth.
It is a very heterogeneous sector that covers a broad spectrum of fields, including retail, transportation, hospitality, information and communication, property and housing, corporate services, public administration, healthcare and social services, and childcare and education. Finance and insurance constitute an exceptionally important segment for Munich.
Growth in employment
The service sector has for many years been the mainstay of employment in Munich. It is also the sector that experiences the strongest employment growth, accounting for around 94% of all the new socially insured jobs created here in the past five years. 22,000 new jobs were added in 2016, a year-on-year gain of 3.4%. In the same year, above-average growth was posted by public administration (+7.9%) and in childcare and education (+5.5%). Following the pattern witnessed in recent years, the information and communication segment expanded by +5.7%.
Of huge importance to Munich is the finance industry, which gives work to many people and provides an array of indispensable corporate finance and transaction processing services. Roughly 60,000 socially insured employees work in finance in Munich – 7.4% of the city's total socially insured workforce. Financial institutions, insurers and reinsurers predominate. Employment in the finance and insurance industry dropped slightly in 2016. However, new jobs in services that relate to finance and insurance paint a positive picture for this sector as a whole.
Insurance in Munich
Munich is Germany's largest insurance hub and the world's leading venue for reinsurance. Big-name companies such as Munich Re and Allianz are headquartered here. It follows that Munich, too, has been affected by the sustained and generally negative employment trend in insurance. In 2012, Munich's insurance industry still gave work to about 22,000 socially insured individuals. In the past five years, this figure has declined continually to around 18,000 socially insured employees – a drop of around 18.2%.
Banking in Munich
A study by the Bayerisches Finanz Zentrum [Bavarian Finance Center, BFZ] shows that six of Germany's 50 biggest financial institutions (measured by total assets) are headquartered in Munich. This makes the Bavarian capital the country's second-largest banking venue, after Frankfurt/Main.
Bayerischer Bankenverband [the Bavarian Banking Association] is somewhat concerned about the future: The positive macroeconomic situation is rooted largely in private consumption. Corporate investments – an important line of business for banks – have tended to stagnate for some years. Persistently low interest rates, heavy regulatory demands and the challenges posed by digitization are increasingly putting pressure on the banking industry. In Munich, the Bavarian Banking Association believes fiercer competition is the reason why banks must exploit all the streamlining and cost-cutting potential at their disposal.
FinTech and InsurTech in Munich
At the same time, new developments are emerging in the established financial hub that is the Bavarian capital: The technology-oriented start-up community in the banking and insurance industry is successfully gaining a foothold. comdirect sees Munich as second only to Berlin as the leading German FinTech center. In its global rankings, international commercial law firm White & Case singles out Munich as one of the world's top FinTech hubs, putting the Bavarian capital fifth behind Silicon Valley, London, Singapore and Hong Kong. The FinTech and InsurTech community in Munich is benefiting from the large number of locally based technology and I&C companies, as well as from a multiplicity of knowledge institutions such as universities and research organizations.
In May 2017, Munich was given the nod to become an InsurTech hub within the framework of the Digital Hub Initiative launched by the Federal Ministry for Economic Affairs. Under the same initiative, Munich had earlier already been chosen as a Mobility Hub.
Last updated: December 2017