FinTech Financial Centre Frankfurt

The Financial Centre Frankfurt has great chances to become the European Capital of Financial Technologies

A European consortium of universities and FinTechs is working to promote knowledge-sharing between banks, FinTechs, regulators, and financial supervisors on the risk management of financial technologies. Since 2019, the financial technology company Firamis GmbH has been part of this consortium. In an interview, Dr. Jochen Papenbrock, CEO and founder of Firamis, discusses the role of Artificial Intelligence (AI) in managing risks of financial technologies and its significance for the Financial Centre Frankfurt.

Dr. Jochen Papenbrock, CEO and founder of Firamis Gmbh

Dr. Jochen Papenbrock, CEO and founder of Firamis GmbH

What are the risks of FinTech’s increasing importance for the financial sector?

We understand the term FinTech to comprise of much more than start-ups using financial technologies such as Big Data Analytics, AI, and Blockchain. Traditional banks and insurers use new financial technologies as well and might face similar challenges as start-ups do, especially with regards to risk management. In addition, banks and FinTech start-ups are increasingly cooperating – more outsourcing relationships are emerging as a result of the continuous break-up of value chains. At the same time, many banks are invested in start-ups. As systems, data, and processes become increasingly intertwined, banks are equally affected by the risks of financial technologies. Therefore, we are currently observing a growing need for discussion between the industry, regulators, and supervisory authorities.

Against this background, Fintech Risk Management and model/data governance are of particular importance. While traditional banks most certainly have gained more experience in regulatory and supervisory practice, it is new territory for many FinTech start-ups.

Can you explain this in more detail?

Complex, non-transparent, and biased models and data pose a problem to new financial technologies. Several supervisory bodies have decided to reject black box models – i.e. non-transparent machine learning approaches such as multi-layered artificial neural networks (deep learning) – in production-critical processes.

We are currently working on these and other topics as part of a larger EU project on Fintech Risk Management. The exchange of knowledge between banks, FinTechs and regulators takes place throughout Europe over a period of two years. Standards are being developed that ensure the use of financial technologies in secure financial products and enable FinTech business models in Europe to be scaled as efficiently as possible. Our Fintech-AI-B2B-start-up Firamis is part of the consortium and member of the Executive Board. We are working to build an EU Research Sandbox and establish requirements for a Trustworthy AI. The EU also runs several programs on related topics.

Furthermore, the increasing use of financial technology may create systematic risks. If several FinTechs use the same technology, they will react quite similarly to certain market phases. In addition, the risks of a domino effect are rising due to the increased interconnectedness of value chains. The supervisory focus will continue to shift from individual companies to the entire value chain.

What regulatory framework is needed to keep risks under control?

We believe that risks can be managed by focusing on model validation as well as the entire model risk management process and data/model governance. Black box models will have a hard time with more intensive regulatory reviews by national and international supervisory authorities. On the other hand, the use of financial technologies will continue to increase due to competitive pressure. So the question of which modification of the technology is needed to meet the requirements remains.

Are there solutions to make these approaches more accessible and understandable for regulators and supervisors?

XAI (Explainable AI or Interpretable AI) is one of those approaches. New approaches, technologies, and data visualization are used to make the models more explainable. XAI is also one of the core competencies of our start-up Firamis, and we are currently expanding our resources in response to those developments. AI thus is implemented to, for example, explain black box models automatically. This is especially important for customers who want to know, for example, why they received a certain credit score or why they are assigned a certain risk profile by their Robo Advisor and how they can improve.

The question of how these regulatory controls should be implemented in practice is exciting. Several models are conceivable, ranging from independent control by supervisors to outsourcing to third parties. We will observe a certain degree of standardisation and also something like a technical inspection for financial algorithms.

What does the dynamic development of AI / Machine Learning mean for the FinTech industry in Frankfurt?

Current developments in financial technologies show that Financial Centres compete with each other. The game is changing due to disruption. The Financial Centre Frankfurt has great chances to become the European capital of financial technologies. (Central) banks, technology companies, FinTech ecosystems, supervisors, and regulators are already presented. AI may hold more potential for the Financial Centre Frankfurt than Brexit and Blockchain do.

So there’s still a lot to do. In 2017, we launched the annual Summit on AI, Big Data and Network Analysis in Financial Services with other partners. In addition, we founded the association  AI in Financial Services e.V., in which anyone can become a member who is interested in advancing AI.

“Frankfurt for Beginners” – A tour through Frankfurt with Matthias Arning and Eva Feuchter

“Frankfurt for Beginners” – A tour through Frankfurt with Matthias Arning and Eva Feuchter

The book “Frankfurt für Anfänger”, published in spring 2018, takes its readers on a journey through Frankfurt’s districts, passing along the city’s sights. Author Matthias Arning is a journalist and former chief of the local news section at Frankfurter Rundschau. The Frankfurt guide, published in English and German, contains by illustrations by Eva Feuchter.

Thera are usually two reason for living in Frankfurt:  professional fate or coincidence. The author explains this fact in the books preface as following: “Because who would ever move to Frankfurt by free choice – the way you relocate to Berlin or settle in Munich? People often end up in Frankfurt by chance – or to make money. It tends to start as unromantically as that. However, once they get over the initial shock, most realize: Life in Frankfurt is not just about work, it’s about enjoying a great place”.

“Frankfurt for Beginners” serves as a guideline for living in the metropolis. Frankfurt is no longer believed to be uninhabitable. Over time, the city has developed into a green, family-friendly home to more than 736,000 people – another 25,000 are expected to relocate to the centre within the next two years. The city is considered to be the centre of Europe, with a great network of motorways and Germany’s largest airport – but still is a city with short distances, ideal for cyclists.

The author moved to Frankfurt at a young age. He studied political science at the city and later in Berlin. In this declaration of love, he shows the entire world around the city he grew up in.

The city tour is divided into six chapters: Frankfurt Classics, Landmarks, Small Escapes, Milestones, Fotsam and Jetsam and Views of Frankfurt. In addition to illustrations, historical backgrounds on the individual topics account for the great reading experience.

“You have to get used to it, like you do to your first Handkäs – this Frankfurt specialty also tends to be love at second bite.”

Just like your love for Frankfurt, happiness must be conquered in this city, it doesn’t fall into your lap.

How to get to know the city is upon the reader. Frankfurt for Beginners gives readers the freedom to explore the city as they please – the book does not present a fixed order that should be followed.

In 210 pages, Matthias Arning takes the reader on a unique. Filled with insider tips, localities, landmarks and much more, the book is not only suitable for newcomers, but also for experienced Frankfurters, allowing for the rediscovery of the city.

Book details

Frankfurt for Beginners

210 pages

Edition Frankfurter Ansichten; Edition: 1000 (January 14, 2019)

Language: English

ISBN-13: 978-3000616198

Illustration: Eva Feuchter





Von: Tonia Sanner

Eschborn for Business explores an interesting range of topics – Location Magazine 2019

The 2019 edition of the magazine Eschborn for Business has been published. This year’s bilingual magazine, published annually by the Frankfurt Main Finance member, focuses not only on the title topic Pharmacy and Life Science as a growth industry in Eschborn, but also on the changes in the job market. Trainee marketing and the aspirations of the start-up scene play an important role here.

Pharma & Life Science: an efficient Health System for a balanced life

The importance of pharmacy and life science is growing – the healthcare sector has long been one of the main drivers of technological innovation. In this issue, you will find out why Eschborn is a key business location for pharmaceutical and life science activities in Hessen and what makes it particularly attractive for companies like Kaneka Pharma or Siemens Healthcare Diagnostics GmbH. “Hessen is one of the most efficient regions in Europe and is therefore also well ahead in international competition,” says Dr. Rainer Waldschmidt, CEO of Hessen Trade & Invest GmbH. The aim is to maintain and expand this innovative and fast-growing image of the region. Additional interesting interviews, reports and events on this title topic and the advantages of the city of Eschborn can be found on pages 6 through 9.

In addition to the ever more important health sector, marketing to junior staff and especially trainees are decisive factors for future-oriented transformations. This and the effects of economic networks are discussed in more detail in the section “Economy” (pages 20 to 37). The start-up economy is also attracting more attention. How the city of Eschborn, a Frankfurt Main Finance member, supports young companies and employers is also addressed in this section.

Diversity of the City of Eschborn

The magazine offers additional complex topics. How the compatibility of family life and career can be shaped in Eschborn and which improvements Mayor Mathias Geiger sees in the new exit off the A66, are examined more closely on pages 36 through 47.

The 2019 issue of Eschborn for Business also covers the various leisure activities. Find out more about restaurant recommendations or sports tips in the following articles.

  •  “Sports events for the whole family” – keeping the whole family on their toes
  • “Cosy Places, Ideas for Lunch Break” – Interesting Locations, Delicious Food
  • “With the job bike. Without traffic jams” – A cheap high-tech bicycle, also for leisure time
  • “Spectators from all over the world live” – The cycling classic Eschborn-Frankfurt

We hope you enjoy reading!