FMF Virtual Food for Thought with José Manuel González-Páramo – Digital Innovation & Data in the Financial Sector

José Manuel González-Páramo, Chairman of the Supervisory Board of European DataWarehouse and former member of the Executive Board of the European Central Bank and former Executive Board Director, Banco Bilbao Vizcaya Argentaria S.A., spoke about “Digital Innovation and Data in the Financial Sector” at the “Food for Thought” online event of Frankfurt Main Finance on 8 July 2020. In addition, Dr. Christian Thun, CEO European DataWarehouse, gave a brief insight into the monitoring of the impact of COVID-19.

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Metzler Asset Management: Franz von Metzler appointed Managing Director

With effect from 1 July 2020, Franz von Metzler has been appointed Managing Director of Metzler Asset Management GmbH, which he now manages together with three other Managing Directors. In his new position, he is responsible for the department Institutional Client Relationship Management. Gerhard Wiesheu, personally liable partner of the bank, is responsible for the core business division Asset Management, one of Metzler Bank’s four core business divisions.

Franz von Metzler joined Metzler Bank in 2014 and has worked in various departments since then. In 2019, he became Head of the Asset Allocation & Fixed Income team, where he had been responsible for multi-asset mandates and asset allocation in his role as Portfolio Manager since 2018. Prior to this, Franz von Metzler worked for two years in the core business division Capital Markets in the Fixed Income/FX department as a FX Sales Trader. From 2014 to 2015, he was a member of the Portfolio Management Equities team in Metzler’s core business division Asset Management.

Read the press release at: Franz von Metzler appointed Managing Director


B. Metzler seel. Sohn & Co. KGaA, Germany’s oldest private bank with an unbroken tradition of family ownership and more than 345 years of experience, focuses on individual capital market services for institutions and discerning private clients in its four core business divisions Asset Management, Capital Markets, Corporate Finance and Private Banking.

European DataWarehouse: Monitoring the impact of COVID-19

European DataWarehouse (EDW) has published a short paper showing that some of the effects of the COVID-19 crisis were already visible in the Loan Level Data (LLD) dated 31st March 2020.


Starting from a few cases in early February 2020, COVID-19 spread throughout Europe, forcing governments to enact severe social distancing measures. It is expected that the crisis will lead to substantial amounts of loan modifications. EDW used the reporting criteria suggested to flag loan modifications due to COVID-19 to see to what extent these are already visible.

Most governmental decisions on social distancing were enacted in March 2020. These measures have severely reduced the income of some borrowers from mid-March onwards. Governmental support, when available, was often delayed and often failed to fully compensate for lost income, leaving some borrowers having to pay more than they could afford. To compensate, some borrowers either withdrew on their savings or asked for a credit or payment holiday. Governments have encouraged lenders to grant forbearance measures to help borrowers and soften the blow to the economy. In several countries, it was reported that measures such as allowing a temporary switch to interest only payments or payment holidays have indeed been granted to a substantial number of borrowers.

In this respect, EDW’s data will make it possible to monitor these changes given that specific reporting guidelines are available to help data providers.

Read the short paper here: European DataWarehouse Report – Monitoring the impact of COVID-19


EDW became operational in 2013 in the wake of the 2008 financial crisis to satisfy the need for more transparency in the securitisation market. Their loan-level data will make it possible to assess the effect of the current crisis on securitised portfolios, in a way that would not be feasible looking only at investor reports.

Eschborn offers innovative ideas and drive – Location Magazine 2020

This year’s bilingual business location magazine Eschborn for Business 2020, published annually by the Frankfurt Main Finance member, pays attention on the topic of change management. It focuses on how to deal with accelerated change, as in the case of the current crisis situation with the Covid-19 pandemic. In addition, a popular AI champion for the pharmaceutical industry will be presented and Deutsche Börse’s commitment to the region will be outlined.


Collaborating in times of crisis

Protecting citizens’ health while mitigating the economic impact of the Covid-19 pandemic. This great challenge has generated great ideas and energy in Eschborn: from a shopping tour in the car, the first lifestyle drive-thru, to a shopping aid initiative “I want to help” launched by Mayor Adnan Shaikh, to bundled information about local companies and offers.

Through the websites of the city, the business development agency and the newly established website “Bleib-in-Eschborn.de”, not only is the recommendation “Stay at home” made, but practical options are also presented according to the motto “Be loyal – buy local”.

Let’s change – Turning Eschborn into a Smart City

“Digitalisation is at the service of humans, not the other way around,” says Eschborn’s new mayor Adnan Shaikh. This applies all the more in times of a pandemic as we are currently going through. Smart City is a project that is particularly close to his heart. What exactly is behind it?

In an interview, Mayor Shaikh reveals his vision of far-sighted urban development. As a so-called Smart City, administrative processes can be simplified and accelerated, making the service more accessible to citizens. The intelligent use of digital technologies of the future can also save costs and conserve resources.

AI champion for pharmaceutical research

Innoplexus AG started around ten years ago as a start-up in Eschborn and created a platform that structures all publicly available knowledge from the life sciences and makes it searchable according to relevance by using block chain technology. This kind of “supergoogle” enables an assessment of how promising a research project on a new medical substance is. Today, the company is the European leader in the development of artificial intelligence – and is in great demand on the stock exchange.

The 37-year-old founder of the high-tech company, Gunjan Bhardwaj, already decided on Eschborn as a suitable location in 2011: “It only takes me twenty minutes to get to the airport from here, which offers great connections to New York and India. The proximity to Frankfurt as a finance hub and pharma companies such as Merck are an added bonus. There’s a lot of e-commerce in Berlin, but the ‘real’ tech companies tend to be in Munich or Frankfurt.”

Committed to the region

One of the world’s top player celebrates its 435th anniversary: The German Stock Exchange. Ten years ago, the company moved its headquarters to Eschborn. An assessment of this by board member Hauke Stars.

Stock exchanges are of particular importance for the economic development in their respective home countries and are also hubs of global financial flows. “By extending its tenancy of “The Cube”, the head offices of Deutsche Börse Group in Eschborn, until 2038 and through the on-going redevelopment of the Frankfurt stock exchange, transforming it into an event and experience area in the heart of Frankfurt for customers and the general public, we are demonstrating our commitment to the region and are grateful for the good relations of trust and partnership.”


The diversity of the city of Eschborn

The magazine offers further complex topics:

    • “Attract and win young talent”
    • “Car sharing: Transparent, efficient and easy”
    • “Ökoprofit: Sustainable cost reduction”
    • “Infrastructure and Modernization”

The Eschborn for Business 2020 issue also covers the topic of leisure activities: Learn more about going out or sports tips in the following articles of the current edition:

    • “Events in Eschborn”
    • “A stone’s throw from the nature reserve”
    • “Sporty at the start”

We wish you an exciting read.

Download the 2020 edition of Eschborn for Business.

 

Europe lacks uniform rules – Marc Roberts in interview with Franz Công Bùi (Börsen-Zeitung)

The European Fintech Association (EFA) was founded in Brussels on 16 June. As a lobby group representing the interests of European FinTechs, it aims to advance topics on the digital financial agenda in the EU. Marc Roberts, Chairman of the EFA Board, discusses the association’s orientation, goals and potential in an interview.


The chairman of the newly founded European Fintech Association on the lobby group’s plans for financial start-ups.

  • Mr Roberts, the recently founded European Fintech Association is to become the mouthpiece of European FinTechs. Now eleven of the 21 founding members are from Germany, and the six-member board includes three German start-ups. Isn’t that an imbalance right from the start?

German FinTechs are still overrepresented in the association. We are in the process of balancing this out and acquiring FinTechs throughout Europe. Some will join in the near future. The initiative began in Germany, mainly as a result of a co-operation between Raisin, N26, Transferwise and Finleap. However, we try to create space within the board for a European perspective.

  • Among the founding members are four UK-FinTechs. In light of Brexit, what do they hope to gain from participating in an association that operates primarily in the European Union?

In the case of the British FinTechs, there are, of course, some restricted to the domestic market. Still, there are also many, including our members, who want to continue operating in the European market. What is essential is that they have an interest in European issues. The focus is not on Brexit issues, but on services within the EU. And for British FinTechs operating in Europe, the same questions continue to arise.

  • What requirements must members meet?

There are ultimately three prerequisites. First, it must be a European FinTech. This does not mean that it must have been established in Europe. It must have a genuine interest in focusing its activities in Europe and want to promote policy issues here. And it must operate across borders. In addition, it must have a tech background; in other words, it must provide technology-based services.

  • Your lobbying work for FinTechs will be based on the digital finance strategy of the EU Commission. Where is there a need for action?

A key point is that digital financial services bring real benefits for customers, businesses and also for regulators. For example, by making services particularly transparent, saving costs or reflecting product innovation. Current regulation is still very much tailored towards manual, rather analogue processes. This is particularly evident in the identification of customers. It does not take into account the advantages of digital services – when opening business processes, but also in many other regulations that protect the consumer. Ultimately, this is still based on the fact that a lot of paper is made available to the customer. In digital processes, this cannot be meaningfully depicted. Of course, consumer protection is essential, but one should still evaluate what is really useful in a digital process.

  • Could you illustrate this more clearly using the example of identification?

In this field, European regulation does provide uniform identification methods. It depends on whichever methods the respective Member State allows, which varies between each state. Basically, most Member States assume that a customer is identified face to face. This can be in a bank branch or in Germany, for example, through video identification or Postident procedures. These are not optimal processes for digital providers because the customer has to go out of the online offer and do something completely different. The normal course of business is interrupted and must then be restarted. Here, standardisation with a Europe-wide identification method would be desirable.

  • Where do you still see an acute need for action?

Some regulations make cross-border services considerably more complicated; for example, IBAN discrimination. In practice, this means, by way of example, that a French electricity bill can only be paid with difficulty from a German account. Accordingly, to operate on the French market, a German FinTech must have a branch in France just to obtain a French IBAN. In addition, there are special regulations in consumer protection, which mean that the interest rate has to be displayed differently for straightforward and transparent products such as overnight and fixed-term deposits. Each country has to develop its concept of how to do this – with taxes, without taxes and so on.

  • Fragmented regulations are often criticised when it comes to money laundering. What are your ideas here?

As already described, we have to deal on the one hand with varying regulatory specifications for digital identification. In addition, there is an area that is extremely important for co-operations, the so-called reliance on third parties. If a FinTech product is integrated into a bank, for example, the bank naturally does not want the customer to have to be identified again, since they are an existing customer. It should be possible to use the existing identification again for the integration of the new product. This is admittedly permitted within the European Union, including the provisions of the European Money Laundering Directive. But then there is so-called gold plating.

  • What do you mean?

Gold plating means that one has national regulations that have additional requirements for this reliance on third parties. For example, a time limit where the first identification must not be older than two years, or the requirement of a written contract or that the first step must have been a face-to-face identification. The new services under PSD2, i.e. payment initiation and account information services, are also subject to very different regulations as to whether these providers are obligated under money laundering law or not. The rules vary from one Member State to another, in particular the obligations that apply to these providers. In other words, you must always look at the regulations applicable to the service in question in the country in question.

  • How could this be solved?

The matter is primarily one of standardisation at the European level, which is a relatively lengthy process. It must first be decided, discussed with the Member States and ministries, and finally implemented. At the same time, however, certain areas could be regulated relatively quickly. One example would be to adapt the guidelines of the European Banking Authority (EBA) to allow certain areas to be regarded as low-risk and not subject to the corresponding obligations. There are also opportunities below the level of legislation to introduce significant simplifications for certain business models.

  • Some FinTechs would like to have a sandbox like in the UK. Is this also a direction for you?

Sandboxes are an exciting topic and an especially great opportunity for newer FinTechs or start-ups to get in touch with the regulator. What’s more, from our point of view, is the exchange on a European level between regulators on new business models. Often each country has to deal with each business model anew, and you always start from scratch. There is no cross-border exchange. We believe a kind of FinTech hub at the European level would be practical. This is also a point which we discuss with the European Commission.

  • Do you also see a need for change in the area of data protection?

Views on data protection, which is a concern for all our members, vary depending on the Member State. At the same time, GDPR provides uniform regulation at the European level, which is already a relatively far-reaching harmonisation. However, there are additional regulations at the national level, which are more or less strict. France, for example, is very strict compared with other countries. This is also the case in Germany. Especially in the financial sector, data protection plays a critical role. At the same time, however, we believe that the data protection issue should not be misused to discredit certain new developments.

  • What do you mean?

For example, in the area of opening up account interfaces within the framework of PSD2, we believe that this data protection issue has already been brought to the forefront in order to protect certain business models. As a consequence, regulation emerged that does not help anyone, especially not customers, and certainly not FinTechs.

  • It is often criticised that we do not have European Champions. How can Europe remain competitive? Where do you see disadvantages compared to other regions?

It is often said: If you cross the border by car, you have to obey the traffic regulations in the other country. The picture is a bit skewed when it comes to cross-border financial services. Because when you drive across the border, you don’t have to convert your car. But if, for example, you want to establish a platform across the border in another European country, then that is a project of six to eight months. You have to adapt the documentation and also the product, as well as design the conditions so that they comply with local law. There is no uniform regulation which would allow you to reach customers throughout Europe and use the full capacity of the market.

  • Are there any other obstacles?

It is much more difficult for companies to recruit talent in Europe because of the difficulties of employee participation in option schemes, especially from a tax perspective. This is a problem that needs to be tackled. It is bad for innovation in Europe if you cannot recruit the best talent, even though offering incentives could be a possibility. I understand the logic behind this, but a European stock option scheme is needed. The existing employee stock option schemes only ever work in one country according to the law of that country. If you have an employee who would rather live in Barcelona, then you have to set up a new programme. And of course, it is already challenging to set up an entirely new programme to acquire someone just because he wants to work elsewhere in Europe.

  • How do you assess the current situation for FinTechs in Germany and Europe affected by Corona?

The pandemic, of course, has a considerable influence on FinTechs. There is always a need for financing for rapidly growing companies, and we can see that the situation has not improved in the financing rounds as a result of this Covid-19 crisis. It hasn’t become impossible to get financing rounds underway, even large financing rounds, but the starting position is different from before the crisis. The same applies to recruiting.

  • In what way?

There is now a hiring freeze for the time being. It is complicated to train new employees with remote procedures. And of course, FinTechs also reduced staff. At the same time, it can be seen that most FinTechs are well-positioned. Firstly, through their business model, because digital services can basically still be offered. Secondly, the employees have had fewer problems with the necessary changes, because many of the services or working methods are very agile and Internet and cloud-driven. Overall, it must be said that FinTechs have proven at this stage that their product offerings are relevant.

 

Source: Börsen-Zeitung, July 7, 2020, Franz Công Bùi, © All rights reserved

Together under the umbrella of the big “Eagle Family”

With the start of the new 2020/2021 season, the women’s footballers of the 1. FFC Frankfurt will compete in the Adler jersey of Eintracht Frankfurt. From late summer, Eintracht Frankfurt football fans can look forward to matches in the highest German league in both men’s and women’s football.


For the 1. FFC Frankfurt, the merger makes sense because the demands on financial strength and infrastructure, for example, have increased significantly with professionalisation. Thus, in today’s women’s football in Europe, it is almost exclusively men’s licensed clubs that play at the top, while purely women’s clubs have now become the exception.

Under the umbrella of Eintracht Frankfurt, the success story of women’s football in Frankfurt will be revived with a new spirit. With an optimal structure, we are jointly striving for new goals. The 1. FFC Frankfurt emerged in 1998 from the women’s football department of the district club SG Praunheim. The Frankfurt women’s team is one of the most successful women’s football clubs in Europe. The club has won seven German championships, nine DFB Cup victories, four UEFA Champions League titles and first place in the All-Time Women’s Bundesliga Table.

For Siegfried Dietrich, manager of the 1. FFC Frankfurt, the clubs are “not only in line with the trend of the times with the merger, but also take advantage of the FrankfurtRhineMain location.” Axel Hellmann, member of the board of Eintracht Frankfurt, pointed out the advantages for his club. “As the largest and economically strongest club in the region, we also have a responsibility for Frankfurt as a sports location and want to keep women’s football at the top level. This step will particularly help us in the internationalisation of Eintracht.”

In the future, 1. FFC Frankfurt will continue to play home matches at their traditional location, the Brentanobad Stadium in Frankfurt’s Rödelheim district.

Data pool against money laundering before it starts

Major banks agree on standards – supervision gives BFS Finance the green light

Major German banks agreed on standards for a data pool for the prevention of money laundering, which is to go into operation by year’s end. Behind the initiative is Bertelsmann subsidiary BFS Finance, which so far operates as a factoring company and will be regulated by the financial supervisory authority BaFin. According to managing director Paul-Gerhard Haase, it has succeeded in doing what major German banks had long tried to do but failed in 2018: establishing a platform that collects, enriches and passes on customer data from institutions to combat money laundering.

According to information published by the Börsen-Zeitung, at least Deutsche Bank, Commerzbank, DZ Bank, Helaba and LBBW have agreed on a common standard for corporate data required in connection with Know your Customer (KYC) regulations, i.e. for the identification of new customers. “It is imperative that all three banking pillars are equally represented,” Haase said in an interview with the Börsen-Zeitung.

BFS Finance will collect and enrich data from companies for the banks participating in its Customer Information Network Intelligence (Cinfoni) platform. This network intends to prevent banks from incurring penalties or reputation loss stemming from involvement with dubious business partners and violating money laundering regulations, for example.

Saves time and money

Using Cinfoni, companies must only enter their KYC-relevant data once in the portal, then it is available in a standardized form to all participating banks, saving money and time. “Corporate customers want a single point of contact,” explains Haase. “That is the bundling effect we can achieve.” But the Cinfoni network should not be limited to Germany. Now that German supervisory authorities have already approved it, BFS Finance is in talks with supervisors in other European countries, Haase reports.

 

Source: Börsen-Zeitung, June 27, 2020, Tobias Fischer, © All rights reserved

Colourful gods astonish with the joy of colour of ancient sculptures – Project and exhibition in the Liebieghaus in Frankfurt