Financial Centre Report

Building Bridges – Frankfurt and Europe after Brexit. The new Financial Centre Report from Frankfurt Main Finance

The new Financial Centre Report, Building Bridges – Frankfurt and Europe after Brexit, from Frankfurt Main Finance has just been released. Designed as a magazine, the Main Metropolis is presented from varying perspectives and demonstrates the city’s strengths and the distinct characteristics that set it apart. The first section of the report is devoted to the many facets of the Financial Centre Frankfurt. The second part of the report, Insights, analyzes economic issues and takes a critical look at the opportunities for the Financial Centre following Brexit.

In the forward from Hessian Minister for Economic Affairs, Tarek Al-Wazir, the minister recalls the rise of Frankfurt as the most important Financial Centre in Continental Europe. He points to the multitude of challenges the financial industry faces today. Reflecting on the demands on the industry to re-invent and re-establish itself through digitization. Helping to tackle these challenges is the thriving FinTech scene in the Rhine-Main region.

Another current challenge is coping with the reorientation of the European financial sector following and finding future oriented solutions for this. The title of the Financial Centre Report, Building Bridges, is born from this challenge. The report explains how Frankfurt and the Rhine-Main region are helping to future-proof the European Financial Sector and continue ensuring it can efficiently support the real economy.

The publication from Frankfurt Main Finance casts a spotlight on the Financial Centre Frankfurt and introduces insights that work together to paint an impressive and coherent picture. After the lighter, more personal look at the Main Metropolis in the first section, the following half delves into a fact-based analysis of the Financial Centre Frankfurt and the region. Readers will appreciate the careful exploration of the day’s pressing topics: What does Brexit mean for Frankfurt? The current and future relationship between the real economy and banks. What is the state of long-term financing and how will the German economy be affected by Brexit?

Frankfurt Main Finance Celebrates New Membership of Oliver Wyman

Strategy consultancy Oliver Wyman has become a new member of Frankfurt Main Finance. Now, almost 50 members are hard at work in support if the Financial Centre Frankfurt. Through their membership, all representatives underscore their commitment to Frankfurt and commitment to its national and international importance.

“We are delighted to welcome Oliver Wyman GmbH as a sustaining member. For a long time now, Oliver Wyman has proved its commitment to the Financial Centre Frankfurt through its engagement,” explains Dr. Lutz Raettig, President of Frankfurt Main Finance. For example, the strategy consultants supported the FinTechGermany Awards 2017 as a sponsor. In addition, Matthias Hübner, Partner at Oliver Wyman in Frankfurt, was a juror for the award ceremony.

Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across nearly 30 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has more than 4,500 professionals around the world who help clients optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. In addition, Oliver Wyman regularly publishes studies, white papers, etc., and collaborates with leading academics to carry out research projects on future topics.

“In these uncertain times, the preservation and development of a strong financial centre continues to gain in importance for Germany. As one of the leading strategy consultancies in the German market, it is a great honour and important for Oliver Wyman to support Frankfurt Main Finance with our experience and expertise in the financial sector. We are looking forward to a successful cooperation,” says Matthias Hübner, Partner and FinTech expert at Oliver Wyman.

Brexit Negotiations

Frankfurt Main Finance hopeful for constructive Brexit negotiations

With the formal declaration by the United Kingdom’s government to withdraw from the European Union, Brexit has now entered a new and decisive phase. Hubertus Väth, Managing Director of Frankfurt Main Finance e.V. states, “The beginning of the exit negotiations between the United Kingdom and the European Union are imminent. The negotiating parties are entering uncharted territory. Of the utmost importance, will be standing fast to the maxim that maintaining stability in the financial system must take precedence over individual interests. Both parties must strike the delicate balance between averting a cliff-edge scenario while still maintaining the recognizable appeal of membership in the EU.”

Frankfurt Main Finance continues to regret the United Kingdom’s withdraw from the EU and anticipates the loss of rights, including passporting. Managing Director Väth further explains, “The Financial Centre Frankfurt is exceptionally situated to assume a position functioning as a bridge for London into the EU. As the home of the European Central Bank, the Europe’s insurance supervisory mechanism, Europe’s largest stock exchange and the largest internet hub for data traffic, Frankfurt offers best infrastructure for credit institutions and financial services providers active across Europe. Frankfurt’s TechQuartier and dynamic, growing FinTech ecosystem have been distinguished by the Federal Government with the Financial Centre Frankfurt’s appointment as Germany’s Digital Hub for the finance industry. Therefore, we still estimate that around 10,000 jobs will be relocated to Frankfurt in the coming years.”

Contact Person for Media Inquiries:
Dr. Ralf Witzler
Frankfurt Main Finance e.V.
Telephone 069 94 41 80 – 50
ralf.witzler[at]fmfinance.de

Holland Fintech and Frankfurt Main Finance e.V. continue successful FinTech Matchmaking

Following their successful start in Amsterdam, Holland Fintech and Frankfurt Main Finance, continued their joint FinTech matchmaking on November 25, 2016. For financial services technology companies, access to foreign markets is of considerable importance. Frankfurt acts as a gateway for German FinTechs into the global financial world. This is also shown by the results of a recent EY study on the German FinTech industry, which shows how quickly Germany is catching up internationally and Frankfurt nationally.

With regards to Frankfurt and the entire Frankfurt Rhein-Main region, there is now a very positive climate for FinTech. With the launch of the Accelerator Frankfurt, the opening of the TechQuartier, the designation of Frankfurt as one of five German digital hubs and the awarding of the FinTechGermany Awards, the Financial Centre Frankfurt has impressively demonstrated its innovative power. The proximity to banks and regulators proves to be a locational strength for Frankfurt. Amsterdam is one of the most agile locations where innovations are adopted early. The event was proudly sponsored by ING DiBa and supported by Hessen Trade & Invest GmbH.

“Innovations arise when the best and most creative come together and learn from each other. That is why we are happy to support the event and look forward to the exchange,” says Željko Kaurin, Board Member at ING-DiBa.
Dr. Lutz Raettig, President of Frankfurt Main Finance, elaborated further, “Many German FinTech companies have successfully established their business models in Germany and are ready to take steps to expand internationally. Through our partnerships with leading financial centres around the world, we are able to support these efforts and work to position the Financial Centre Frankfurt as an attractive destination for foreign FinTech companies. Fintech Matchmaking events like these are a great platform for these young start-ups.”

About Holland FinTech

Holland FinTech brings together people and organisations, who believe that creating a level playing field in the financial ecosystem will drive innovation. And that connecting mature players to innovative start-ups across borders, will accelerate financial innovation to its full potential. Leaning on the strengths and strategic position of the Netherlands towards continental Europe, Holland FinTech will is building a technology based market place in global financial innovation.

 

About Frankfurt Main Finance e.V.

Frankfurt Main Finance is the Financial Centre initiative for Frankfurt am Main, the leading financial centre in Germany and the euro zone. The initiative has more than 40 members including the State of Hesse, the cities of Frankfurt and Eschborn, and dozens of prominent actors in the finance sector. Frankfurt Rhine-Main region offers young FinTechs attractive working and living conditions. The proximity to the established banks is also advantageous for these young start-ups.

FinTechGermany Awards – And the Golden Garage goes to….

Business Angels FrankfurtRheinMain, WM-Gruppe and Frankfurt Main Finance honor top FinTech, InsurTech and RegTech start-ups.

Yesterday evening, this year’s FinTechGermany Awards were presented, along with a new concept and in an extraordinary event space. With this leading award, the Financial Centre Frankfurt not only recognized the most promising FinTech, InsurTech and RegTech companies, but cast a spotlight on them. In addition to the high ranking jury members and the creative FinTechs, this year’s award ceremony was made extraordinary by the astounding location and its décor. Everything stood as a symbol of the Golden Garage.

The idea of transforming the event space into a Golden Garage and giving the award a new form, succeeded in symbolizing FinTechs’ ideas. The awards sent a clear signal that the Financial Centre Frankfurt supports and values these companies and their creative power.

The Golden Garages were presented by Dr. Jens Zinke (Managing Director, Börsen-Zeitung), Andreas Lukic (Chairman, Business Angels FrankfurtRheinMain and Jury Chairman) and Dr. Lutz Raettig (President Frankfurt Main Finance). The FinTechGermany Awards ceremony took place in conjunction with the grand opening of the Tech Quartier, Frankfurt’s newest FinTech Centre on November 17, 2016. The jury, consisting of high caliber personalities and experts from finance, capital markets, regulation and FinTech, chose the winners from four categories: Early Stage, Late Stage, Growth Stage and Foreign New Entrant to Germany. Winners’ business models should show the most promise for future success and to add long term value to the marketplace. With a top sponsor like Deutsche Boerse Group, alongside other prominent companies and institutions like EY, Baker & McKenzie and the IHK Frankfurt, the awards were able to win over a broad base of support.

The founder’s prize also provides the start-ups with more access and visibility to investors, whether it be involvement at their founding, IPO or sale, or simply providing feedback on their intrinsic value.

The Golden Garage winners are:

 Seed/Early Stage: Scalable Capital

Scalable Capital’s proprietary technology uses forward-looking projections, based on recent market developments, to measure the level of risk in the ETF products the client is invested in, and then reallocates their portfolio according to their risk limit.

“We are very excited about this recognition. It shows that we are not only in tune with the smart private investors, but also that industry experts are convinced of the potential and value of our technology and our business model.” – Erik Podzuweit, Co-founder and Co-Managing Director of Scalable Capital

Late Stage: CRX Markets

CRX Markets is an independent marketplace for Asset-Based Financing solutions and connects Buyers, Suppliers, Banks and Institutional Investors.

 “We see our winning the FinTechGermany Award as a confirmation of our hard work over the past years and as a thank you to our corporate and banking customers for their trust in CRX. In the coming years, we would like to position CRX as a holistic liquidity platform for financing short-dated assets for our customers. In cooperation with banks, asset managers and family offices, we would like to make deep liquidity in all product classes available for companies, in order to depict transparent and competition oriented corporate financing.” – Moritz von der Linden, CEO of CRX Markets

Growth Stage: WebID Solutions

Heading the WebID Solutions Group, WebID Solutions GmbH is Europe’s leading provider of legally compliant online contract signature and identification products and a worldwide pioneer in the AML compliant face2face online identification segment.

“We feel this recognition strengthens us in our work and WebID’s international growth strategy. From our office in Frankfurt, we will continue driving our expansion together with our numerous WebID partners in 2017.” – Frank S. Jorga, Managing Director and Co-CEO of WebID Solutions GmbH

Foreign new entrant to Germany: Quantoz N.V.

Quantoz is a Dutch technology company that services open, decentralised concepts with pragmatic solutions. For this purpose, they create and implement blockchain-based applications.

“For Quantoz, Germany has been the most attractive market since the beginning and Frankfurt our preferred location. Using our software, banks are able to better able to support their corporate clients with financial handling of processes in conjunction with the continuing digitialisation of industry.” – Henri de Jong, Head of Business Development at Quantoz N.V.

The prize is a perfectly complements the FinTech landscape in the Financial Centre Frankfurt. Alongside the Dialogue Forum FinTech, being a founding member of the Global FinTech Hubs Federation and numerous other activities, the FinTechGermany Awards gave Frankfurt Main Finance another perfect opportunity to showcase the outstanding and innovative FinTechs in the Financial Centre Frankfurt.

 

Brexit Frankfurt Finance Summit

Decision time is here – Frankfurt Main Finance at the FT Banking Summit 2016

At today’s FT Banking Summit, Hubertus Väth, Managing Director of Frankfurt Main Finance, explained, “For London’s banks, the time for decisions has come. We believe that London should maintain its position as Europe’s leading financial centre; however, some operations will still need to relocate into the Eurozone. In this regard, Frankfurt is in the pole position. Most banks are not able to wait and see how the Brexit negotiations turn out because they need to start lengthy talks with regulators before they can move their operations. The risks associated with waiting are much too high. It is decision time and moves are being made.”

FrankfurtRheinMain GmbH and Frankfurt Economic Development GmbH joined Frankfurt Main Finance at the FT Banking Summit to promote the Financial Centre Frankfurt as the top destination for those who must leave London. The three organizations have worked in close cooperation for months, developing a constructive and solution-oriented approach to positioning Frankfurt as a bridge between London and the Eurozone.

The Financial Centre Frankfurt is particularly well positioned to attract banks and other financial services that must leave London for the Eurozone. Already one of Europe’s most important financial centres, Frankfurt is a regulatory hub, home to the ECB, EIOPA, ESRB and already a part of EBA. Boasting the world’s largest data exchange point, DE-CIX, and more than 1 million square meters of available office space at costs around thirty percent lower than Paris, Frankfurt’s infrastructure uniquely equips it to absorb a displacement from London like no other financial centre. Current estimates expect around ten thousand jobs to relocate to Frankfurt over the next five years.

FinTechGermany Awards honor top FinTech, InsurTech and RegTech Start-ups

On November 17, 2016, Business Angels FrankfurtRheinMain, Frankfurt Main Finance, and for the first time WM Gruppe (Börsen-Zeitung) will present the FinTechGermany Awards. The renowned prize for entrepreneurs will honor the most promising FinTech, InsurTech, and RegTech companies from the following categories:

  • Seed-/Early Stage
  • Late Stage
  • Growth Stage
  • Foreign new entrant to Germany

The first three categories are not exclusively limited to German FinTech companies.

The FinTechGermany Awards ceremony will take place in conjunction with the grand opening of the Tech Quartier, Frankfurt’s newest FinTech Centre on November 17, 2016 at 17:30. The main sponsor of the award is Deutsche Börse. Additional sponsors include EY, Baker & McKenzie and the IHK Frankfurt am Main.

The jury, comprised of the Financial Centre’s top actors and FinTech supporters, will award the prizes to the FinTech, InsurTech and RegTech companies whose business models show the most promise for the future success and to add long term value to the marketplace. The three most important criteria are financial viability, scalability, and exit-potential. The yearly presentation of the FinTechGermany Awards aims to promote the Financial Centre’s FinTech ecosystem and especially the flow of funding into the region. The founder’s prize also provides the start-ups with more access and visibility to investors, whether it be involvement at their founding, IPO or sale, or simply providing feedback on their intrinsic value.

Hauke Stars, Member of the Executive Board at Deutsche Börse , responsible for Cash Market, Pre-IPO & Growth Financing, explained, “We want to contribute to Frankfurt becoming the leading location for FinTech in Germany. To this end, it is critical that all involved work together to build up a community that is attractive to FinTechs and allows all actors to profit from one another. The FinTechGermany Award helps to spotlight these efforts.”

With regards to the Frankfurt FinTech hub, jury member and President of Frankfurt Main Finance, Dr. Lutz Raettig welcomes the awards, stating, “The prize perfectly complements the FinTech landscape in the Financial Centre Frankfurt. The new FinTech Centre will also benefit Frankfurt’s appeal to German and international investors. Regulators and practitioners will also see this as an advantage. Frankfurt is a global Financial Centre which presents entrepreneurs with the optimal conditions for developing their FinTech company.”

The head of the jury and Executive Chairman of the Business Angels FrankfurtRheinMain, Andreas Lukic, believes that holding the award ceremony in conjunction with the opening of the Frankfurt FinTech Centre sends a clear message. He explained, “This is the ideal environment for our activities. Through the awards, we can facilitate the somewhat difficult access to institutional capital and grants, as well as mobilizing private capital for these FinTech companies.”

The jury consists of:

    • Andreas Lukic, Executive Chairman, BA-FRM e.V., Investor/Entrepreneur, Frankfurt, Jury-Chairman & Award Coordinator
    • Franz Cong Bui, Chief Online Editor, Börsen-Zeitung, Frankfurt, Sector Expert
    • Dr. Marc Gille-Sepehri, SVP Product Management, FIS-Fidelity National Information Services Inc., Entrepreneur, New York City/Frankfurt, Finance and IT Expert
    • Eric Leupold, Head of Department Pre-IPO & Capital Markets, Deutsche Börse AG, Eschborn
    • Dr. Manuel Lorenz, Partner, Baker & McKenzie, Frankfurt, RegTech and Regulation Expert
    • Michael Mellinghoff, TechFluence, London & FinTech Forum Frankfurt, Fintech-Community-Insider
    • Simon Nörtersheuser, Co-CEO, Policen Direkt GmbH, Frankfurt, InsurTech Expert
    • Dr. Lutz Raettig, President Frankfurt Main Finance, Frankfurt, Capital Markets Expert
    • Christopher Schmitz, Partner EMEIA Financial Services, EY-Ernst & Young GmbH, Eschborn
    • Alfred Schorno, Global Head of Sales/Managing Director, 360T Group, Business Angel, Frankfurt, FinTech Expert

InsurTech continues to gain influence in Germany

German InsurTech start-ups continue to grow and attract more funding. A newly released study from EY shows InsurTech as a new rising star in the FinTech community. InsurTechs are financial technology start-ups that attempt to change the insurance industry and how customers access insurance products through digitalization. While other segments of the FinTech scene have been growing for several years now, InsurTech is still in its infancy.

According to the study, only four unicorns focus on the insurance industry and InsurTech only attracted $4.63 billion in funding globally between 2008 and 2015. In Germany, InsurTechs raised €53.52 million between 2012 and Q1 2016, most of this occurring in 2015. EY cites the surge in funding in 2015 as an indicator that the InsurTech segment will become more impactful in the coming years. Noteworthy representatives of German InsurTech are Friendsurance, Finanzchef24, Clark, Knip and Schutzklick who have all achieved series B funding as early as 2015. In addition, their funding accounts for €47.45 million or 88% of all disclosed funding to German InsurTechs. Drivers accelerating the expansion of InsurTech are connectivity and data, the consequences of the financial crisis with the resulting pressures on interest rates, and customer dissatisfaction with interest rates.

Commenting on the study, Dr. Lutz Raettig, President of Frankfurt Main Finance e.V., stated, “The growth in FinTech and InsurTech investment in Germany is a reassuring development. These entrepreneurs reimagine the financial industry and create technologies that will add value and efficiency not only for end consumers but also for established actors. Financial institutions are smart to recognize the importance of these start-ups. Frankfurt Main Finance is heavily invested in the development of Frankfurt’s FinTech ecosystem and has promoted the creation of FinTech hubs in the region. Sponsoring competitions like the FinTechGermany Awards should help to draw attention to these young and successful companies.”

The study further explains that InsurTechs in Germany and abroad have not been able to develop stand-alone business models, partially due to regulatory factors. However, the InsurTech market is still in its relative infancy leaving any ceiling still undefined. Many business models existing abroad have yet to be replicated in Germany. EY identified three areas they expect new business to grow from: Big Data and analytics, data driven products, and back office-supporting functionalities.

To this end, Christoph Schmitz, Partner at EY and one of the study’s authors, explained, “The insurance industry will be permanently transformed by digitalization and the changes for these companies will only accelerate in the future. Therefore, it is critical that they concentrate on digital business models and further develop their own in-house capacities. In-house Innovation Labs and Accelerator Programs will provide a platform for innovative and flexible testing of new business models.”

Concrete challenges for incumbents are already present and are expected to grow in the future. The study outlines the need of insurers to intensify their digitalization efforts and develop corresponding capabilities in-house. Most of all, the study urges insurers to make sure they do not lose their customer relationships. The study concludes, “Although the ‘monopoly’ of underwriting and risk ownership will stay with insurers for the time being, an ongoing inability to develop customer-centric products and services will sooner or later deprive insurers of their most value-adding services.”

The study is available for download on the EY Website.

FinTechGermany Award

CFS Survey: the issue of cyber security must be on every financial industry agenda

The issue of cyber security is of central importance. Germany’s financial industry is in firm agreement on this point, attributing it a significance of high (20%) to very high (75%). This is shown by a current survey of financial institutions and service providers in the Financial Centre Germany conducted by the Center for Financial Studies. However, the industry is also largely in agreement (78%) that the issue is not being sufficiently addressed at the moment.

Most of the financial industry only expecting some measure of support from FinTechs

Only 8% of the survey participants expect significant support from FinTechs in the area of cyber security. Half of them (51%) believe their company will receive at least some measure of support. On the other hand, 29% are anticipating little support from FinTechs, and 7% none at all “The issue of cyber security is a key topic for the future, and in fact it is tailor made for young technology companies. I therefore expect we will soon see more start-ups in this area,” Professor Volker Brühl, Managing Director of the Center for Financial Studies, interprets the results.

Cyber security can become a competitive factor in the future – Establishing European data centres is seen as important to crucial

The large majority of the financial institutions (86%) is in agreement that the issue of data security can become a competitive factor for financial service providers. Only 12% do not believe this is a relevant point. Since a large amount of data from European users is stored by social networks in the US, the necessity of providing data centres for critical data in Europe is under discussion. The majority of the financial industry (59%) believes it is important to establish such data centres, while 26% regard this as crucial. On the other hand, 12% see little relevance in where data centres are located.

“The study demonstrates how important a world-class data infrastructure is for today’s financial sector. The Financial Centre Frankfurt sets the bar pretty high with dozens of data centres and the DE-CIX internet exchange. More than half of the German data centres are located in Frankfurt and the surrounding region. Our status as the Data Capital of Germany is irrefutable and makes us an even more attractive location for FinTechs,” comments Hubertus Väth, Managing Director of Frankfurt Main Finance e.V.

Bitcoins not expected to gain in importance as a payment method in light of data security concerns

Bitcoins are supposed to be particularly suited to preventing hacker attacks in payment transactions. However, the majority of the financial industry (73%) does not expect bitcoins to gain in importance as a payment method in light of such concerns.

Frankfurt Main Finance introduces new Fintech Membership

On October 5, 2016, the general assembly of Frankfurt Main Finance passed a resolution to introduce a new membership for FinTech companies. This creates a third membership level in addition to the existing levels of Regular Member and Sustaining Member. FinTech Members can be FinTech companies from all over Germany which fulfil certain criteria. Potential FinTech Members should have no more than 50 employees and the company should be younger than five years old. FinTech Members can participate in General Assembly meetings but are not entitled to vote. They will receive regular updates on the association’s activities and work. Dues for the FinTech Membership are 500 Euros annually for the first three years.

Frankfurt Main Finance’s first FinTech Member is Peermatch Management GmbH, a subsidiary of the Amsterdam FinTech, Peermatch B.V., located in Frankfurt am Main. The basic idea behind Peermatch is to transform mortgage lending so that every market participant enjoys a maximum degree of mobility and always stays in control. The Peermatch ecosystem is put together to conduct mortgage lending under the different legal regimes in the European market.