New edition of Banking Business in Germany

The financial crisis, extensive regulatory requirements and the impending Brexit confront the international and national banking sector with daunting challenges. Yet, uncertain as the environment may be, the German market still offers opportunities to international banks and investors keen on setting up a branch or subsidiary in Germany.

The updated 5th edition of the guide to the Banking Business in Germany is a mine of information for international decision-makers and industry observers as well as bankers from abroad, already located in Germany and their headquarters in their country of origin. In the current edition of the guide, which is written in English and runs to more than 400 pages, financial services experts from PwC and the Association of Foreign Banks in Germany elucidate the manifold amendments and specifics of the German regulatory framework. They also furnish an overview of ongoing developments in the German banking system as well as deposit guarantees, labour law and taxation.

Equally beneficial for English-speaking banking representatives is a glossary, explaining common abbreviations in German banking usage, such as “GroMiKV”, short for “Großkredit- und Millionenkreditverordnung” or “Large Exposure Regulation”. No less helpful is a comprehensive index for easy guidance through the new publication.

At the book presentation on 14 October, Dr Andreas Dombret, member of the Executive Board of the Deutsche Bundesbank, addressed a large gathering of members of the Foreign Banks Association on the impact of Brexit on banking and banking supervision. His remarks highlight the relevance of these and other issues for international business leaders, who regard Germany as an important financial location now and especially in the future.

The 5th edition of Banking Business in Germany can be purchased here.

Frankfurt FinTech

Frankfurt FinTech Report #3

The Frankfurt chapter of Startup Grind hosted their eighth event in the Financial Centre on Thursday, October 13, 2016. Startup Grind is a global community in which local chapters organise monthly events featuring successful local founders, educators and investors who share lessons learned on the road to building great companies. October’s event featured a fireside chat with Ivonne Arold, COO and Head of Funding at Peermatch, a Frankfurt FinTech company and Frankfurt Main Finance member. For 20 years, Ivonne Arold held management roles in the capital markets divisions of international investment banks. Despite her success working for traditional banks, she decided to transition to the Frankfurt FinTech scene and joined Peermatch in 2015. During the fireside chat, moderated by Startup Grind Frankfurt’s Director, Dr. Osman Sacarcelik, she described the differences between the start-up culture and life in a big bank. Arold explained that she did not miss the formality and glamour of the big bank and enjoys the balance found in the start-up environment.

Peermatch is a mortgage lending app allowing investors to directly invest in loans and receive risk-adjusted yields. There is always an underlying property value and borrowers enjoy low capital market rates. The platform was originally intended for institutional investors and commercial borrowers; however, Peermatch intends to roll out products for private borrowers and investors in October 2016. They hope to capture the digital affine segment on the retail lending side who prefer doing business online or have become dissatisfied with brick and mortar institutions. Arold explained that they think Peermatch will be able to attract these customers with the ease of the platform and competitive rates.

The company aims to handle as many processes on the app as possible. Peermatch’s proprietary Cryptographic Chat Search Engine which ensures the secrecy and privacy of all communications made over the app. Although creditworthiness is evaluated traditionally, customers’ first interactions are with a robot before being quickly transferred to the appropriate Peermatch representative.

On the commercial side, Arold explained that these customers would normally need a couple of partners to complete their financing; for example, a bank for a loan and other partners for mezzanine capital. The Peermatch system is designed to be a one-stop-shop for the borrowers and Peermatch will organize the different investors. According to Arold, the borrower just needs to complete the requisite credit paperwork and they will organize the rest. Investors so far include German insurance companies and pension funds looking for safe investments with positive interest rates. Family offices and UK investment funds have financed riskier parts of loans. Arold clarified that Peermatch differs from Asset Backed Securities in that investors are buying risk in individual loans, not bundled, tranched or packaged products.

The Future of Frankfurt FinTech

Peermatch recently became the first FinTech Member of Frankfurt Main Finance. This new membership is an important step in Frankfurt Main Finance’s efforts to advance and support FinTech in the region, currently home to nearly 60 FinTech companies. Arold was quick to emphasize the importance of developing a rich FinTech ecosystem in the Financial Centre. “We welcome every FinTech that settles here in Frankfurt. […] It is important to have other FinTechs around, to exchange and to work cooperatively together. Every FinTech has its one business area, so maybe in a couple years’ time it will be time to collaborate and find which pieces fit together.” Furthermore, according to Arold, Frankfurt’s Financial Centre and infrastructure “predestines it to become the leading FinTech hub in Germany or possibly Europe.”

Frankfurt FinTech Report #2

Catch up on recent goings on in the Frankfurt FinTech Scene with the FinTech Report!

FinTech Bachelor Kicks Off at Frankfurt School and FinTech Group AG

The first group of students in Europe’s first dual Bachelor degree “Digital Innovation and FinTech” have begun their studies. The study program was brought to life by Frankfurt School of Finance & Management and the FinTech Group AG. Currently, students are in an orientation module at FinTech Group AG. During this period, they work with a mentor who guides them through work in various departments and projects in order to gain different perspectives on the diverse FinTech landscape and applications.

New Membership for FinTechs

Frankfurt Main Finance has introduced a new membership level, FinTech Member. As part of their ongoing effort to promote the FinTech scene in the Financial Centre Frankfurt, FMF hopes that this new membership will help to bring promising start-ups from all across Germany closer together with the established finance community. The first FinTech Member is Peermatch Management GmbH. Read more about the new membership level here.

Between the Towers

On October 4, 2016, main incubator’s monthly event, Between the Towers, took place at the Goethe University. This month’s speakers and pitches focused on blockchain technology. The evening’s keynote, Dealing with Disruptive Technologies: A Blockchain Case Study, was delivered by Philipp Harrschar and Daniel Scheu of Zühlke Engineering. This was followed by a panel discussion moderated by Sven Koschinowski of KPMG, sponsors of the event, with Frank Brigge of Commerzbank, Burkhard Blechschmidt of Cognizant, Johann Horch of niiio, Dr. Matthias Terlau of Osborne Clarke and Philipp Harrscharr. Before networking and discussing the night’s presentations over cold beers, the audience enjoyed pitches from Quantoz, Berries, Diversifaktor and Blockchain Helix. Between the Towers is held on the first Tuesday of every month and is one of the most popular, well-attended FinTech events in Frankfurt.

FinTechGermany Award

FinTech Matchmaking Events in Amsterdam and Frankfurt

Financial services technology companies, known as FinTechs, are making moves and currently the latest trend in the financial sector. Across the globe, start-ups are pursuing the goal of digitalization in the finance industry, making it more efficient and customer oriented.

FinTech is a global game that cannot be played in one hub alone. Digitalization is a global process. Even though information travels at the speed of light across the world, the local connection to people is what creates value. Therefore, creating a worldwide network of Fintech hubs is the only way to really accelerate Fintech growth and reduce time to market both for start-ups and large corporates.

The large number of FinTechs in both the Netherlands and Germany presents the perfect opportunity to increase cooperation between the FinTech Communities. Therefore, Frankfurt Main Finance and Holland FinTech will organize two events, one in Amsterdam on 4 November 2016, and one in Frankfurt on 25 November 2016. FinTechs from across both countries are encouraged to participate in these events, present or pitch their company and discover potential cooperation partners, investors and friends.

“Our FinTechs and their innovative power are essential to Frankfurt maintaining its position as a leading international financial center. Supporting their expansion internationally by leveraging our global network of partners is of utmost concern for us. Together with Holland FinTech, we want to bring Amsterdam and Frankfurt closer together,” said Hubertus Väth, Managing Director of Frankfurt Main Finance e.V..

The event in Frankfurt will be sponsored by ING DiBa.

If you are interested in joining either event, please contact us and for further information. Download the agenda for the Amsterdam and Frankfurt events.

Contacts:

Francesca Aliverti, Holland FinTech, francesca@hollandfintech.com

Dr. Jochen Biedermann, Frankfurt Main Finance, jochen.biedermann@fmfinance.de

Financial Centre Breakfast with François Villeroy de Galhau: Sustainable Monetary Policy ensures Economic Stability

On August 31, 2016, the Association of Foreign Banks in Germany and Frankfurt Main Finance hosted the seventh edition of their successful Finanzplatz Frühstück (Financial Centre Breakfast) event series. More than eighty entrepreneurs and representatives of the financial sector, were in attendance to hear François Villeroy de Galhau, Gouverneur of the Banque de France, speak on the topic “European Growth – Challenges in uncertain Times.” Welcoming the audience, Dr. Oliver Wagner, Managing Director of the Association of Foreign Banks in Germany, stressed the importance of foreign banks as a critical economic factor for Frankfurt. “Foreign banks assume responsibility for the local economy and recognize the German Financial Centre as the core market in Europe.”

Villeroy de Galhau wasted no time delving into the current state of monetary policy within the EU and how to ensure sustainable growth. Stressing the importance of investment for growth, especially amongst SMEs, he expressed the need for the Capital Markets Union and the movement of risk and capital across borders. He also weighed in on the ECB’s current strategy of negative interest rates, which has been openly criticized by several German bankers. He described the strategy as a crucial instrument in fighting deflation, which he explained would be more damaging than the negative rates. Villeroy de Galhau continued, stating “Negative interest rates are useful but they are just one among many instruments and have their limits. This is why we have to stick to the current monetary policy. And yes, we’re doing so sustainably.” He did, however, reject the notion of the ECB providing helicopter money directly to consumers.

France and Germany are the major drivers of growth in the Union and, according to the Villeroy de Galhau, still have untapped opportunities to ensure sustainable growth for the future. One proposal highlighted in his address would be a so-to-say Erasmus Pro programme which would offer young people the opportunity to gain vocational training outside of their home country as well as provide them the European experience. Such a programme could be particularly useful for France and Germany. France has a demographic advantage in that they have many more young people than Germany, who boasts one of the best training and educational infrastructures in the world. Alleviating this deficit in skilled labour in both countries, and across the EU, would help to ensure sustainable growth for years to come.

Cooperation between France and Germany in the EU is critical for future growth and the success of the European Project. How does this look, however, in a Europe without the United Kingdom? Speculation is still the name of the game when it comes to Brexit, but Villeroy de Galhau did make it clear that they still want London to be at the centre of European Finance, but as Villeroy de Galhau stated, there will be “no free ride, and no cherry picking.” In other words, the UK must accept and abide by EU rules and regulations in order to gain access to European markets post-Brexit.

Frankfurt Main Finance’s Managing Director, Hubertus Väth, summarized the event, “Mr. Villeroy de Galhau encouraged German entrepreneurs to prepare to invest and take on risk. Only France and Germany can set European growth on an adequate track for growth.” Väth continued, stating, “Monetary policy can only be successful if the economy embraces monetary stimulus by accepting and making investments. In this case, trust plays a central role. Mr. Villeroy de Galhau’s contribution today in further developing this trust is not to be underestimated.”

Global Fintech Hubs Federation

FMF Founding Member of Global FinTech Hubs Federation

Frankfurt Main Finance is excited to announce becoming a founding member of the Global FinTech Hubs Federation, an initiative supported by Innovate Finance and Innotribe. The Global FinTech Hubs Federation is an independent and inclusive global network of emerging and established FinTech hubs to help foster innovation across the world’s financial services industry. Hubertus Väth, Managing Director of Frankfurt Main Finance, explained Tuesday that, “This is another important step in Frankfurt Main Finance’s work to position Frankfurt as a global destination for FinTech. We look forward to working closely with the UK’s Innovate Finance and SWIFT’s Innotribe, both exemplary initiatives for advancing FinTech around the globe. FinTechs play an increasingly critical role in the finance industry and therefore, their advancement is of the utmost importance for the Financial Centre Frankfurt.”

Frankfurt Main Finance is no stranger to promoting FinTech. As the initiator of Dialogforum FinTech Frankfurt Rhein-Main, FMF worked to develop FinTech ecosystem in the region today. Part of Dialogforum’s work will culminate with the opening of Frankfurt’s new large-scale FinTech Centre, Tech Quartier, in October 2016. Supporting numerous initiatives across the region, Frankfurt Main Finance has facilitated cooperation and dialogue between entrepreneurs, academics, regulators, politicians and financial institutions to advance the Financial Centre Frankfurt as a destination for FinTech and innovation. Furthermore, in May 2016, Frankfurt Main Finance dedicated its flagship event, the Frankfurt Finance Summit, to exploring trends in digitalisation and FinTech. Titled On the Move – the Future of Finance, central bankers, politicians, regulators and executives met there to discuss the current trend of digitalisation and it’s consequences for the industry.

Expanding International Network with Global FinTech Hubs Federation

As the FinTech sector develops globally, it is creating a growing international community. The Global FinTech Hubs Federation is bringing together FinTech hubs to provide a neutral, cross-border platform to encourage greater collaboration, engagement and knowledge sharing in this growing global community. In addition to work within the region, Frankfurt Main Finance strives to maintain and develop relationships with other FinTech and financial centres around the world. This international network has advanced understanding and cooperation between FinTech centres and allowed for a productive dialogue to address the needs of young FinTech companies in a global environment. “We actively support German FinTech companies to expand internationally. Via our global network, we help them to easily find peers, clients and investors in our partner hubs. Furthermore, we welcome international FinTech companies in Frankfurt Rhine-Main. Frankfurt, the leading financial center of the Eurozone, offers them first-class infrastructure as well as easy access to capital, talent and regulatory know-how. Via the Global FinTech Hubs Federation, we will broaden our network and we are very much looking forward to sharing knowledge and to cooperate with other leading FinTech hubs and communities,” says Dr. Jochen Biedermann, Senior Advisor to Frankfurt Main Finance.

FinTech in Frankfurt Rhein-Main Region

Over the past years, the Frankfurt Rhein-Main region has distinguished itself as a dynamic centre for fostering FinTech innovation and growth. According to a 2016 study by consulting firm EY, the number of FinTech companies in the region rose by 22% in 2015 to 56 at the beginning of 2016. The study also shows a huge increase in investment in German FinTech companies, which totalled 1.2 billion Euros in 2015. Furthermore, the Financial Centre Frankfurt is home to several FinTech centres, including the forthcoming Tech Quartier, Main Incubator, FinTech Headquarter, Deutsche Börse Venture Network’s FinTech Hub, Accelerator Frankfurt and Goethe University’s Unibator.

16 September 2016: Joint ESAs’ Consumer Protection Day

The Joint Committee of the European Supervisory Authorities (ESAs) is pleased to announce that the 4th “Joint ESAs Consumer Protection Day” will take place on 16 September 2016 in Paris. For the first time, the ESAs will livestream the event so that the content is available to everyone. The event aims to promote exchanges of views on consumer protection topics between regulators, consumer representatives and the finance industry.

Since its inception, the Consumer Protection Day has become an important milestone for stakeholders across the EU that have an interest in the topic of consumer protection. In June 2015, the third annual Joint ESAs Consumer Protection Day hosted by the European Insurance and Occupational Pensions Authority (EIOPA) in Frankfurt attracted over 300 consumer representatives, academics, consultants, national supervisors, experts from EU institutions and members of the financial services industry.
Consumer and investor protection is a common statutory objective of the three ESAs – the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and EIOPA. The Joint ESAs Consumer Protection Day aims to gather consumers, regulators and industry participants together to discuss consumer protection-related issues in the financial services area.

Picture: ESA Joint Committee

Frankfurt Main Finance Cup 2016: Eintracht bests Celta De Vigo 3:1

For the third year, the football season opened in the Financial Centre with the Frankfurt Main Finance Cup. This year’s Cup pitted the Spanish RC Celta de Vigo against hometown heroes Eintracht Frankfurt in a friendly match on Sunday, August 14, 2016. The event has become a favorite for families and football fans across the region, who look forward to the events surrounding the game. This year fans enjoyed autograph and photo sessions with their favorite players as well as a presentation of this season’s team and their new home jersey.

Finance meets Football at the Alte Oper

The previous evening, Saturday, August 13, representatives of the Financial Centre and the city celebrated the Frankfurt Main Finance Cup at a reception in the Alte Oper. They were joined by the players and coaches from Eintracht Frankfurt as well as Celta de Vigo. In short podium discussion with Fredi Bobic, Eintracht trainer Nico Kovač expressed his optimism for the upcoming season. Representing Frankfurt Main Finance, Managing Director Hubertus Väth emphasized the importance of football for the Financial Centre and the finance industry for football. “Again the Frankfurt Main Finance Cup is sending the message from the Financial Centre that both the financial sector and Eintracht are playing in the international spotlight. Football always dominates Monday morning discussions throughout Frankfurt’s banks. Tomorrow, we will experience that close relationship between the finance industry in the game against Celta de Vigo.”

 

Frankfurt Main Finance Cup – Schwarz weiß, wie scheeee!

On match day, Eintracht came out as strong as their 40,000 fans in attendance. In the eleventh minute, Branimir Hrgota scored off an assist from Alex Meier and then scored again in the 49th minute. Celta de Vigo found the goal in the 58th minute, closing the gap with a score of 2:1. But Eintracht sealed the deal in the 80th minute and with a two-score lead, the Frankfurt Main Finance Cup was as good as theirs. With a final score of 3:1, Eintracht Frankfurt remained on the pitch to accept the Frankfurt Main Finance Cup. Frankfurt Main Finance’s Dr. Jochen Biedermann presented the Cup to Eintracht Captain Alex Meier. The Cup will join the trophies from the 2014 and 2015 Frankfurt Main Finance Cup in the Eintracht Museum.

Frankfurt Main Finance Cup

Frankfurt Main Finance Cup 2016 – Eintracht Frankfurt vs Celta de Vigo

Schwarz-weiß wie Scheeee! Das ist die SGE! On Sunday, August 14, the Commerzbank-Arena will again be filled with the joyous sounds of Eintracht Frankfurt fans cheering on their home team as the official opening game of the new season. Gates will open at 10 a.m. for the traditional season-opening party which will include plenty of activities, fun and games will throughout the day. The highlight will be the Frankfurt Main Finance Cup, a friendly match pitting Eintracht Frankfurt against Europa League contenders, Real Club Celta de Vigo, kicking off at 15:00. The game and the events around the stadium are included in the cost of the tickets.

Frankfurt Main Finance is proud to be a sponsor of the Cup for the third year in a row. In the previous two years, Eintracht has faced off against Inter Milan and F.C. Tokyo in front of more than 50,000 spectators. Hubertus Väth, Managing Director of Frankfurt Main Finance, weighed in on the importance of football for Frankfurt. “In London, every Monday begins with an analysis of the weekend’s games. With this in mind, Eintracht Frankfurt plays a big role when it comes to showing the bankers in the City and on Canary Wharf that Frankfurt is a world class Financial Centre. Once you’ve experienced an Eintracht game, you’re sure to become a fan. We hope to see more coming soon!”

The match against Celta de Vigo will be a great occasion, they finished 6th in La Liga last season and participate in the UEFA Europa League campaign coming up. One of their star players John Guidetti featured at EURO 2016 for Sweden. Eintracht and Celta have met before, pretty much 10 years ago the Eagles managed a 1-1 draw away to Celta in the UEFA Cup group stage.

BaFin-Tech – Fintech caught between Regulation and Digitalisation

On June 28, 2016, Germany’s Federal Financial Supervisory Authority (BaFin) hosted a new conference, BaFin-Tech 2016, in Frankfurt. The sold out conference was attended by around 200 participants representing FinTechs, investors and the broader financial sector. The aim of the conference was to explore regulatory issues that could affect young FinTech companies and new business models. BaFin-Tech consisted of panel discussions and smaller workshops where attendees could gain closer insight into specific themes like Blockchain, Robo-Advisory, Crowdfunding or alternative payment methods.

In his opening address, President of BaFin Felix Hufeld explained that they operate under the principal of same business, same risk, same rules. Hufeld continued, elaborating that, “Supervisors are not a jury delivering verdicts on business concepts. We don’t put up barriers to insulate established companies and we don’t run an incubator for cool newcomers. We are supervision and will remain so. However, what we do want, is to align our administrative procedures accordingly for you as a growing and increasingly more important audience. Accordingly means understandable, fast and, as far as possible, electronic.” Hufeld even invited promising business models which may fall below the required threshold to work with BaFin.

The second panel discussed whether FinTech is a disruption or an innovation. This conversation juxtaposed those in the FinTech sector like Dr. Oliver Vins of vaamo with established actors like Michael Mandel of Commerzbank. After this discussion, FinTech can arguably be characterised as inspirational. While the new innovations from the start-ups may shake up business models and customer demands, it also inspires the old guard to put their full weight behind their digitalisation efforts. Mandel detailed that Commerzbank’s efforts, like integration with PayDirekt, and the board’s goal to completely digitise the customer experience. The conference ended with a reflection from Hufeld, who reminded the audience not to overlook all factors that go into deciding whether a technology is permitted, such as security, anti-money laundering and consumer protection.

As the German FinTech scene has grown substantially over the past year, BaFin-Tech 2016 clearly demonstrated that Germany’s top regulators take FinTech seriously and are invested in fostering innovation in Germany and Europe’s financial sector. The event also proved another advantage of the Financial Centre Frankfurt for young FinTech companies looking for a home. Frankfurt is not just a centre for finance in Europe but also a centre for regulation and supervision, home to the ECB, EIOPA in addition to BaFin.

You can find more information and the presentations from the event on the BaFin website.