Cairo Financial Industry meets Frankfurt to discuss options post Brexit

More than 1.2 trillion USD in assets will need to be relocated after Brexit. Frankfurt is poised to gain more than 800 billion USD. Frankfurt Main Finance, representing the Financial Centre Frankfurt, with the support of the Central Bank of Egypt, informed the Financial Industry in Cairo on the most recent developments on 25 March 2019, at the Diplomatic Club Cairo.

The event brought legal and regulatory experts together the financial industry to discuss Frankfurt’s increasing role as a financial hub in the wake of the United Kingdom’s impending exit from the European Union, not just for continental Europe, but also the larger MENA region.

“As the financial centre of Europe’s leading economy, Germany, and the home of the European Central Bank, Frankfurt is in the pole position to benefit post Brexit. 48 Financial institutions, mainly from the US, Europe and Asia have decided to relocate all or part of their European banking business to Frankfurt,” explains Hubertus Väth, Managing Director of Frankfurt Main Finance e.V.

“We now see a second wave coming from the MENA region.” Yusef Ahmed, Founder and Managing Director of FIC Frankfurt International, notes. “As companies and banks finalize their Brexit contingency plans, Germany is committed to supporting Frankfurt’s key position in the new landscape of Europe’s financial industry.”

From a legal perspective, regulatory issues faced by banks moving to Frankfurt have been discussed in the context of new political conditions. Brexit also hosts opportunities for Frankfurt to establish itself as an M&A centre as well as a transaction-financing hub,” says Dr. Nicolas Bremer, Partner at the international law firm Alexander & Partner.

Dr. Rüdiger Litten, Partner at the international law firm Fieldfisher, who supported the Kuwait Finance House in establishing their fully licensed bank in Frankfurt, adds that “in the past months, we have experienced an increasing number of banks and financial institutions from the MENA-region seeking our advice on opening shop in Frankfurt.”

 

From the garage to the Financial Centre Frankfurt

Accelerator Frankfurt was founded in 2016 by Ram Shoham and Maria Pennanen, based on their first-hand experience working for corporates that struggled to form partnerships with start-ups. Their unique go-to-market program accelerates B2B software startups in the fields of Fintech, Regtech, Cybersecurity, Insuretech, Proptech and Blockchain. The startups receive mentorship from experienced entrepreneurs and investors, consulting and professional services, in addition to a co-working space. “We wanted to set up this program as an interface for corporates and startups,” says Ram Shoham, co-founder of Accelerator Frankfurt. The program focuses on FinTech because of their professional backgrounds and Frankfurt’s draw as a financial centre, but also accepts startups in Cybersecurity, Blockchain, RegTech and more. Accelerator Frankfurt also powers the Blockchain Labs, which help corporates get access and education to blockchain technologies.

We asked Ram Shoham in an exclusive Interview: What does the path from the Garage to the Financial Centre Frankfurt look like?

Accelerator Frankfurt in 2 sentences: What makes the success of Accelerator Frankfurt GmbH?

We are the gateway to Germany’s financial sector for start-ups. We help advanced stage start-ups, who have paying customers and products break into the German market through our three-month, sales-focused acceleration program.

What impresses you the most when talking to young founders?

We have accelerated thirty startups since 2016 and screened thousands of founders before accepting anyone to the program. The founders we work with, all have one thing in common: Passion. We only select founders who love what they do. Running a startup is very stressful and intense. You must love what you do if want to achieve great things.

What is the typical path from the garage to the Financial Centre Frankfurt? Is there a single path? What hurdles must start-ups master?

There is not one typical path. Some start-ups are disruptive, some are complementary. We primarily focus on Business-to-Business (B2B) solutions. This means that for our start-ups to succeed, partnerships with the banks must be formed. For this, one needs perseverance because the sales cycles can be quite lengthy, but the rewards also quite great.

Frankfurt has become a FinTech hub, above all due to its proximity to established banks. How would you describe the current FinTech ecosystem in Frankfurt?

When we first established Accelerator Frankfurt, there was hardly a start-up ecosystem in the city. We were the first accelerator in Frankfurt and certainly the first to attract international start-ups to the city. Nowadays, we are delighted to see the network effect this has had on the city. There is certainly more vibe, more complementary programs and hopefully, in the near future, more Venture Capital funds investing in Frankfurt’s start-ups.

What future challenges face the Frankfurt FinTech ecosystem? And what opportunities arise from this?

The main challenge for Frankfurt is banks becoming more open to new innovations. FinTechs are gaining traction in the financial world, especially blockchain solutions. Still, there remains huge potential for banks to work alongside these innovative start-ups.

Do you have a favourite start-up? 😉

I do not have favourite start-ups. I have favourite entrepreneurs, and those are the people who inspire me every day. So far, the biggest lesson in my career is that hard work puts you, where good luck can find you. There is some element of being in the right place at the right time.

Why is Frankfurt the ideal location for (FinTech) start-ups?

Over 240 banks. Good airport. Rich environment. Good universities and talent.

 

 

About Ram Shoham

Ram Shoham is to Fintechs what George Martin was to the Beatles. He is the Founder of Accelerator Frankfurt with 16 years of international corporate experience in finance and general management before becoming an entrepreneur. Ram is also the Founder of the Blockchain Labs, which is focused on building an ecosystem for promoting blockchain technologies and education in this sector.

 

Photo: Jonas Ratermann

”Welcome to the German Capital Market“ – new video lecture for capital market professionals from abroad

Deutsche Börse’s Capital Markets Academy announced in a press release that it is offering a new video lecture for bankers and other capital market professionals from abroad. In 150 minutes, the participants are made familiar with the market structures and the legal framework of the German capital market.

The international markets share many similarities, nevertheless, each domestic market has its own special characteristics. The Capital Markets Academy’s new e-learning programme takes this up and is aimed at capital market professionals who are experienced in their home country but not familiar with the specific German conditions and regulations.

“Our video lecture offers a compact but precise introduction to bankers who are new to Germany and want to gain a good overview of the market structure as well as its rules and regulations,” explains Ulf Mayer, Head of Capital Markets Academy at Deutsche Börse.

The video lecture in English can be watched flexibly and independently of time and place. The content is divided into two parts: 1) market structure in Germany and 2) capital market law and regulation. The lecture lasts about two and a half hours and consists of ten chapters. The corresponding handouts can be downloaded. A certificate of attendance will be provided in the end.

Further information on the video lecture is available at www.academy.deutsche-boerse.com/e01.

The Capital Markets Academy is the training provider of Deutsche Börse Group. It offers first-hand stock market knowledge in interactive classroom events with a high practical relevance and digital learning formats. With a focus on trading, clearing and settlement, it is geared to the products and services offered by Deutsche Börse Group. Other financial market topics, such as the functioning of capital markets and new technologies such as blockchain, round off the offering.

“Frankfurt has great potential for many major companies.”

Kirsty Sharp, Headteacher of King’s College – The British School Frankfurt

At the beginning of the year, we welcomed King’s College – The British School of Frankfurt as one of our newest Frankfurt Main Finance members. In an interview with Headteacher Kirsty Sharp, we discuss why they joined the Financial Centre Initiative and where she sees the strengths of the Financial Centre Frankfurt.

Why join FMF as a supporter of the Financial Centre Frankfurt?

King’s College – The British School of Frankfurt was opened as the 10th school of the King’s Group in August 2018 in Friedrichsdorf, 20 km north of downtown. Our schools have historically worked closely with international companies, diplomatic missions and institutions to learn more about educational needs locally. Across its schools, the King’s Group currently has students from more than 80 nations, providing us with a wealth of experience in teaching students from different cultures and backgrounds. Relative to the forthcoming Brexit, as a member of FMF we would offer support to families interested in British curriculum arriving new to the region.

How does Kings College contribute to the development of the Financial Centre Frankfurt?

A British school is present in most major cities and is an integral part of an international educational culture. A wide range of internationally oriented schools is vital to the attractiveness of a metropolis in providing a convincing infrastructure for global companies, their employees and families. With King’s College Frankfurt, the city now offers a British school of international renown, with sufficient capacity for up to 600 students in a state-of-the-art campus easily accessible to the Financial Centre and residential areas.

Where do you see the strengths of the Financial Centre?

Frankfurt – a strong economic area and centre of European monetary policy – is a very attractive location for international companies, especially banks. Due to the international airport, its geographical location as the cosmopolitan heart of Europe and the close-to-nature surroundings, Frankfurt has great potential for many major companies.

As a Spanish/British company recently established in Germany, the King’s Group finds the often cited ‘German thoroughness’ and interaction with public, fiscal and infrastructural official facilities very positive, transparent, and requirements are easy and quick to implement. We have received excellent support from many sources in all areas, so that in a very short time, our institution and all employees here in the Frankfurt Rhine-Main region feel welcome and as part of the community

Lucie Haß Interview zum FinTechGermany Award 2019

FinTechs need to highlight their unique selling points

What challenges will young FinTechs be facing in the future and how can the FinTechGermany Award help in overcoming them? Lucie Haß, Managing Director at Helaba Digital and jury member of the FinTechGermany Award 2019, discusses these questions in an interview with Frankfurt Main Finance.

Lucie Haß, Managing Director at Helaba Digital and jury member of the FinTechGermany Award 2019; © Stefan Krutsch Photographie

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

Does the start-up idea solve a real problem? Is it scalable? Those questions are always the first ones coming to my mind when assessing FinTechs. Furthermore, I take into consideration whether we know the founders and trust them with implementing their idea and overcoming any obstacles that may arise.

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?

By now, the B2C FinTech market is filled with digital finance solutions. This makes it rather difficult to succeed in a highly competitive market and highlight USPs. However, the range of solutions that are offered is much smaller in the B2B sector. The biggest challenge here is to find partners who recognize the potential of the solution and are willing to implement it in their own company. The resistance is clearly noticeable, when B2B FinTech solutions are focusing on core processes of banks rather than just “scratching” the surface. To overcome this, you need power and partners who believe in you. Platforms such as the FinTechGermany Award help to highlight FinTechs, bring them together with companies and thus overcome the first hurdles of cooperation.

How will the German FinTech ecosystem evolve in 2019? In the next 5 years?

I expect more progress to occur in the B2B FinTech market. In addition, we can observe that German Venture Capitals and companies are increasingly investing in start-ups. However, we still observe a lack of cooperation between FinTechs and companies. I do hope that in the upcoming years, companies and banks will recognize the potential of start-ups even more, part with their reservations and engage in cooperation.

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

There are very different approaches to this. In cooperation with the State of Hesse, the TechQuartier – of which we are a sponsor – has developed an action plan, which covers the entire spectrum of measures needed to build an ecosystem. Furthermore, banks play an essential part: The more they are open to innovations, the more likely start-ups are to settle nearby. Financial expertise and capital are both concentrated in the Financial Centre Frankfurt. Thus, we must promote the attractiveness of the city and existing cooperation to appeal to German and international founders. I believe this works best when we draw attention to the many advantages the city has to offer.

Football in the heart of Europe – FMF and Eintracht host Frankfurt’s newest bankers

An exciting game, an impressive choreography, rousing atmosphere and great conversations. Frankfurt Main Finance and Eintracht Frankfurt invited Brexit newcomers for football in the heart of Europe: an event with the aim not only to introduce the newcomers to the financial centre community, but also to convey a piece of Frankfurt’s attitude to life, to demonstrate the city’s pragmatic approach, its willingness and its ability to perform.

The first leg of the UEFA Europa League round of sixteen brought Eintracht against Inter Milan for an exciting 90 minutes. The Frankfurt side was particularly convincing in the second half, with several close chances to take the lead. The exciting atmosphere was certainly not reserved to just the pitch or the singing choral of fans packed into Commerzbank Arena’s northwest curve, but soon also overtook the newcomers at the event, which was held in the arena’s Business Club for the second time in this format.

The first edition of the event, held in November 2018 when Eintracht faced off against Marseille, was a complete success – on and off the pitch. Therefore, the sponsors for the second event quick to find. The second round featured many of the same as the first, which shows how well the format was received. Frankfurt Main Finance and Eintracht Frankfurt would like to thank Deutsche Börse AG, White & Case LLP and Drooms GmbH and Meltwater Deutschland for their commitment and support in making this event possible.

“Predominantly rational reasons have persuaded companies to relocate to the Main Metropolis. As an Eintracht family, we try to bring the people behind these institutions together and to inspire enthusiasm for our region. The electric atmosphere in the stadium is exactly the right backdrop for this. This turns the head’s decision into the heart’s decision for Frankfurt. Because Eintracht Frankfurt plays in the heart of Europe,” says Axel Hellmann, member of the board of Eintracht Frankfurt Fußball AG.

Hubertus Väth, Managing Director of Frankfurt Main Finance and himself a lifelong member of Eintracht said, “Football and the Financial Centre Frankfurt belong close together. We want to show how easy it is to arrive in Frankfurt and belong to it. Frankfurt is cosmopolitan. It is the city of short distances, communicative and full of joie de vivre.”

“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.