For a future-proof financial system as a mainstay for competitiveness and employment in Germany – elements of a policy roadmap

“Germany, Europe and the world face a fundamental transformation, posing a challenge that will need to be mastered by all spheres of policy, business and society. In view of global warming, change is inevitable in order to secure the livelihoods of some ten billion people by the mid-21st century on a sustainable basis. Designing such change will ensure a transition into a climatically compatible and sustainable social order.” Read more

ECB Chief Economist concerned about “vicious circle”

Peter Praet, Executive Board Member and Chief Economist at the European Central Bank, worries about the impact of uncertainties in his address, “Maintaining Price Stability in the Euro Area.” The speech was held on February 20, 2019, at the 11th Financial Centre Breakfast, organized by Frankfurt Main Finance together with the Association of Foreign Banks in Germany, for an audience of more than 100 guests at the Deutsche Bundesbank. Since 2015, this event series has provided a platform for the finance industry’s top thought leaders to address the most pressing issues for the European and global finance sector. Read more

The Rhein-Main-Region celebrates Fasching

Where in Frankfurt and the surrounding areas is carnival being celebrated? On which parades and floats should we not miss out on? We have asked ourselves these questions and compiled a list of tips for the carnival season.

After doing some research, one thing is certain: The Financial Centre Frankfurt and the Rhine-Main area have a lot to offer when it comes to celebrating the foolish season to the fullest extent before Lent begins leading up to Easter. In many places, Fools take control over the cities from Weiberfastnacht on Thursday, 28. February, to Ash Wednesday, 6. March.

Financial Centre Frankfurt

Carnival is a grand festival– no one celebrates it like we do is the motto of this year’s Frankfurt carnival parade 2019: “As in previous years, the parade on Shrove Sunday will inspire both Frankfurters and visitors”, writes Frankfurt’s Lord Mayor Peter Feldmann in his welcoming address in the current carnival brochure of the Council of Carnival Associations Frankfurt am Main e.V. Where to celebrate after the great parade, which ceremonial sessions are worth experiencing and which balls are particularly traditional can be looked up on FRANKFURT.de. You will surely enjoy a visit to the carnival metropolis Mainz, should the events happening at the Financial Centre not be enough for you.

Mainz

The carnival stronghold Mainz is known throughout Germany for its large and colourful carnival parade. Political topics are often comedically addressed – but also in Wiesbaden, Darmstadt and surrounding areas people dance, laugh and throw confetti until Ash Wednesday.

Wiesbaden

In the Hessian state capital Wiesbaden, the young Fools take the centre stage on Saturday. The popular children’s festival begins at 10.00 a.m, of which the popular children’s parade starting at 14.11 p.m. is a major part. On Shrive Sunday, the infamous Sunday Parade starts at 13.11 p.m. at the Elsässer Platz and moves through the streets of the state capital. “On Ash Wednesday, 6 March 2019, the festive season comes to an end, and the Fools return the key to town hall to Lord Mayor Sven Gerich,” it says on the city’s website.

Darmstadt

In the neighbouring city of Darmstadt and the surrounding areas, the foolish season is widely celebrated. Since 1902, the Carnival Association AHOI cultivates the tradition of carnival in its hometown Gräfenhausen and is convinced that once again, visitors will be satisfied with the carnival festivities happening this year.  In Griesheim, South Hesse, and in proximity to Gräfenhausen, the largest Weiberfastnachtsparty will take place. In Weiterstadt the carnival club Weiterstadt invites visitors to a colorful mixture of carnival festivities, having something to offer for everyone’s taste: children’s session, Kräppelkaffee, Rosenmontagsball, and rag-ball. More carnival celebrations in Darmstadt and surroundings can be found here.

More Shareholders in Germany – Overcoming Missunderstandings and Desinterest

Misunderstandings, bad feelings and a significant level of desinterest prevent Germans from investing money into shares. Even historically low interest rates have not increased their interest in equity investments. This is the core result of this study conducted by Deutsches Aktieninstitut and Börse Stuttgart. The study also develops ideas how the reservations could be overcome. The biggest push would result from the system of old age provision.

Download here (german).

“The importance of the location for financial institutions and their extended ecosystem is beyond question.”

Frankfurt Main Finance (FMF) continues to grow! In an interview, information service & technology provider Wolter Kluwers | CCH® Tagetik, one of FMF’s newest members, explains why they joined the Financial Centre Initiative at the beginning of the year and where it sees the strengths of the Financial Centre Frankfurt.

Why do your company support the Financial Centre Frankfurt as a member of FMF?

The Financial Centre Frankfurt is of great importance to our clients; thus, we would like to promote it in the best possible way in line with our clients’ interests. We see this as a win-win situation for both sides: On one hand we support the Financial Centre Frankfurt with our expert knowledge and at the same time make our brand better known in the Frankfurt area.

Active participation in Frankfurt Main Finance also puts us in a position to maintain even closer and more sustainable partnerships with other partners in Frankfurt and to exchange information on opportunities and challenges in the Financial Centre.

How does your company contribute to the development of the Financial Centre Frankfurt?

By actively participating as an IT solutions provider in FMF, we would like to make our diverse process and digitisation knowledge in the financial sector available to companies in and around Frankfurt. We also believe that through our complementary network, we can provide great additional value for the FMF community, from which all members will benefit, and the Financial Centre Frankfurt will be supported.

Where do you see the strengths of the Financial Centre Frankfurt? What can be improved?

The importance of the location for financial institutions and their extended ecosystem is beyond question, Frankfurt is a world-renowned Financial Centre. The cultural diversity is strong, but its degree of popularity can be expanded across countries. The Financial Centre Frankfurt is already an emerging digital hub, which can boast many well-known – especially medium-sized – IT companies. As an IT company, however, we still see potential to make this aspect even more visible to and for the city and region.

CFS Index Standardfragen

CFS Index falls slightly

The CFS Index, which measures the business climate of the German financial sector on a quarterly basis, falls by 1.2 points to 112.8 points in the fourth quarter of 2018. The slight downturn can be attributed to weaker growth in earnings along with relatively constant revenue growth in the financial industry as a whole. In addition, the service providers report significantly weaker growth in investment volume, in excess of the decline predicted in the previous quarter, and a lower number of employees are being hired. At the financial institutions, the investment volume rises slightly and, contrary to their expectations, employee numbers remain constant. However, job cuts are still expected in the current quarter.

“Are service providers more adaptable than banks? A year-on-year comparison points to this conclusion. Capital expenditure is rising among service providers and the number of employees is falling, whereas the situation is reversed at the banks: investments are on the decline, while the number of employees is stable. In light of the deteriorating earnings outlook, this raises the urgent question for banks as to how they will manage the necessary adjustment of capacities,” Professor Jan Pieter Krahnen, Director of the Center for Financial Studies, interprets the results.

The future international importance of the Financial Centre Germany is rated positively

Notwithstanding the uncertainties surrounding the Brexit agreement, the financial industry continues to rate the future international importance of the Financial Centre Germany very positively. The corresponding sub-index shows a slight increase of 1.0 points to 127 points.

Dr. Lutz Raettig, President of Frankfurt Main Finance e.V., emphasizes: “For quite some time, the prevailing and well-founded conviction in the finance sector is that the Financial Centre Frankfurt will increase in international importance. The Index’s recent, slight increase most likely reflects the UK’s withdrawal from the EU, which draws nearer and becomes increasingly tangible with each passing day.”

Revenue growth in the financial sector largely unchanged / Earnings growth declines

Growth in revenues/business volume among the financial institutions is almost unchanged in the fourth quarter of 2018. The corresponding sub-index rises by 0.1 points to 112.7 points. A slight increase is forecast for the current quarter. The revenues of the service providers, at 120.9 points, are 2.8 points lower than in the previous quarter. The current level is expected to be maintained.

Earnings growth is on the decline among both groups. The sub-index for the financial institutions falls by 3.1 points to 108.5 points, yet still remains at a solid level. As previously anticipated, the service providers record a more significant decline of 4.8 points to 111.5 points. Both groups expect to see a slight increase in the current quarter.

Investment volume of financial institutions remains constant / Sharper decline than expected among service providers

The growth in investment volume in product and process innovations at the financial institutions reveals a slight increase of 1.3 points and remains at a moderate level of 112.1 points. No significant change is expected in the first quarter of 2019. By contrast, the service providers report a considerable decline in the fourth quarter, in excess of the decline predicted in the previous quarter. The sub-index falls accordingly by 6.7 points to 112.2 points. The service providers expect to correct this decline again in the current quarter.

Despite expected job cuts, financial institutions keep number of employees constant / Service providers hire fewer employees

The employee numbers sub-index for the financial institutions rises by 0.4 points and, as in the prior quarter, signals a neutral sentiment with 100.5 points. As previously expected, the growth in personnel among the service providers continues to slow. Despite falling by 6.4 points, the corresponding sub-index remains at a good level of 111.5 points. For the current quarter, the service providers expect to be able to maintain this level of employee growth. The financial institutions, on the other hand, continue to forecast job cuts.

 

The results are based on a quarterly management survey in the German financial sector.

The Center for Financial Studies (CFS) conducts independent and internationally-oriented research in important areas of Financial and Monetary Economics, ranging from Monetary Policy and Financial Stability, Household Finance and Retail Banking to Corporate Finance and Financial Markets. CFS is also a contributor to policy debates and policy analyses, building upon relevant findings in its research areas. In providing a platform for research and policy advice, CFS relies on its international network among academics, the financial industry and central banks in Europe and beyond.

CFS Index Sonderfragen

CFS survey: Majority of German financial sector expecting “no-deal Brexit”

The United Kingdom’s legally binding withdrawal from the EU is due to take place on 29 March 2019. Due to disagreements over the nature of a withdrawal agreement, there is the potential for a disorderly “no-deal” Brexit.

Aside from the potential consequences of a no-deal Brexit, a recent survey by the Center for Financial Studies revealed that the majority of the German financial industry (66% of respondents) feels that the EU should not make any further concessions, even though almost half of respondents (46%) are expecting a no-deal Brexit. 52%, on the other hand, expect the outcome of the dispute to be less severe.

While 51% of respondents do not believe that financial institutions in Germany are prepared for all scenarios, including a no-deal Brexit, 46% consider the German financial industry to be adequately prepared.

“Certain parts of the financial sector have placed too much confidence in an orderly Brexit. This could lead to market turbulence if indeed no deal is reached,” Professor Volker Brühl, Managing Director of the Center for Financial Studies, interprets the survey results.

Since the British rejected the EU’s proposal for a withdrawal agreement in January, concerns over the implications of a no-deal Brexit have grown considerably. With the consequences of Brexit being so difficult to predict, the German financial sector is in firm agreement (83%) that the Financial Centre Germany would derive less benefit from a no-deal Brexit than from an orderly Brexit.

“It is not only the financial sector that requires reliable frameworks. A disorderly Brexit will lead to great uncertainty on the markets, hinder investment decisions and cost many jobs,” Professor Brühl adds.

In case of a no-deal Brexit, London will most likely be unable to maintain its position as the most important European financial centre in the medium to long term. 57% of respondents agree on this point.

Hubertus Väth, Managing Director of Frankfurt Main Finance e.V., emphasizes: “The importance of the Financial Centre Frankfurt has increased due to Brexit. The distribution of business units will be realigned throughout Europe’s financial centres, competition will be tough, but without London it will also not work in the future either.”

 

 

The results are based on a quarterly management survey in the German financial sector.

The Center for Financial Studies (CFS) conducts independent and internationally-oriented research in important areas of Financial and Monetary Economics, ranging from Monetary Policy and Financial Stability, Household Finance and Retail Banking to Corporate Finance and Financial Markets. CFS is also a contributor to policy debates and policy analyses, building upon relevant findings in its research areas. In providing a platform for research and policy advice, CFS relies on its international network among academics, the financial industry and central banks in Europe and beyond.

Tomorrow’s financial industry will be digital

Tarek Al-Wazir, Hessian Minister of Economics, Energy, Transport and Housing

Frankfurt Main Finance asked Tarek Al-Wazir, Hessian Minister of Economics, Energy, Transport and Housing, three questions on the subject of FinTechs. During the interview, we learned, among other things, about the FinTech highlights awaiting us in 2019.

FinTech – Why is this topic important to you personally? And why is it important for the region?

The Financial Centre Frankfurt is not just an economic factor for the Rhine-Main region. As the fourth largest economy in the world, Germany needs a corresponding banking centre. For the same reason, Frankfurt needs innovative FinTechs – short for financial technology companies. Tomorrow’s financial industry will be digital; FinTechs are becoming established on the market, compete with traditional service providers and create completely new fields of business. For Frankfurt to remain competitive in the race for innovation, we need to offer highly qualified specialists an attractive working environment and future-oriented employment opportunities. And I’m convinced that the innovative power of FinTechs will also benefit other industries.

Which FinTech highlights do you expect us to see in 2019?

One of our goals is to position Frankfurt as a well-established FinTech location. In the upcoming months, several events will contribute to this: the Global Insurtech Roadshow (GIR 2019) with its partner country Israel in March, the ExecFintech in April, now returning to Frankfurt after having taken place in Berlin for the past two years, and the Growth Con in May. The artificial intelligence (AI) hub will continue to become established and launch its first financial programmes. Companies will set up headquarters, rounds of financing will take place. I’m certain there will be many reasons to report on Frankfurt’s success as a top FinTech location.

It is planned for the Frankfurt Rhine-Main region to be developed into the leading FinTech hub in continental Europe and an internationally recognised technology region within five years. What is still needed to create THE PERFECT start-up climate so that the master plan can succeed?

There will not be THE perfect start-up climate for everyone – neither here nor in Silicon Valley. The requirements are simply too diverse for that. We consequently need to start by building on our own strengths, which are FinTechs, cybersecurity and AI. Our master plan for the Frankfurt-Rhine-Main start-up region will lead the way. The Industry, academia and politics want to join forces to turn good ideas into marketable and successful products. Central measures have already been implemented or initiated. The TechObserver platform is online, the TechQuartier FinTech Accelerator programme is up and running. However, we still have a lot of work to do. We will continue to put great effort into the development of the region, but I’m still very happy about every contribution made by others.

“We should highlight the strengths of the location”, Matthias Hübner, Partner at Oliver Wyman in Frankfurt, in an interview on the FinTechGermany Award 2019

Matthias Hübner, partner at Oliver Wyman, is a jury member for the FinTechGermany Award 2019, the leading investor-driven FinTech Award in Germany. Amongst other things, we asked Matthias Hübner what he pays special attention to when judging FinTech applicants.

What is especially important to you when judging applicants for the FinTechGermany Award?

I find two aspects to be crucial: First of all, a need for a product should be clearly identifiable, which means that the product should offer a solution to an actual problem facing customers. Secondly, it must be innovative. Unfortunately, we have recently seen many copycat products that lack a clear differentiation from existing ones. In my opinion, most of them will not stand a chance in becoming established in the long run.

What are the biggest challenges for FinTechs in Germany? How can start-up companies be supported more? What can platforms like the FinTechGermany Award do to help?

The scalability (i.e. reaching the critical and long-term profitable size) is what most start-ups struggle with – and this doesn’t only apply to the FinTech sector. This is something the FinTech Germany Award helps with: It enables companies to get in contact with potential investors for financing of growth and award winners get a chance to increase their brand awareness.

How will the German FinTech ecosystem evolve in 2019?

With regards to the Fintech ecosystem, Germany still has room for improvement but is developing dynamically and catching up with other countries. This trend should continue in 2019, especially since some of the early FinTechs now have more sophisticated business models and are thus, increasingly growing out of their niche.

How can Frankfurt become one of the leading Fintech hubs in Germany or Europe?

I think that the decentralized structure in Germany is not very helpful in establishing a leading international FinTech hub. However, we should move away from the traditional “Frankfurt vs. Berlin” discussion and instead highlight the strengths of both locations. Frankfurt has the advantage that it offers companies proximity to leading partners such as banks or the stock exchange and has a well-established infrastructure of consulting services. Those are essential aspects for FinTechs with a focus on B2B.