FIRM Research Prize 2020 for Benjamin Clapham – Article in Börsen-Zeitung

30,000 euro prize for the winner and the Goethe University in Frankfurt am Main

The Frankfurt Institute for Risk Management and Regulation awards the third FIRM Research Prize. This year’s winner is Benjamin Clapham, who competed against 14 researchers from Germany and abroad, was chosen for his dissertation on the Integrity and Efficiency of Electronic Securities Markets. Read more

Study quantifies job growth in Frankfurt due to Brexit

What is the total job growth in Frankfurt and its surrounding area as a result of the Brexit? This and other questions were discussed by journalists with representatives of WHU, company Frankfurt Economic Development, and Frankfurt Main Finance. The occasion was the publication of the study Winning Frankfurt: Brexit Bankers Bring More Welfare To Frankfurt Than Just Their Jobs.

13 journalists came together in the premises of Frankfurt Main Finance, where Professor Dr. Lutz Johanning and Moritz C. Noll from the Chair of Empirical Capital Market Research at the WHU – Otto Beisheim School of Management, Oliver Schwebel, Managing Director of Frankfurt Economic Development, and Hubertus Väth, Managing Director of Frankfurt Main Finance, presented the latest study “Winning Frankfurt: Brexit Bankers Bring More Welfare To Frankfurt Than Just Their Jobs” on August 24th.

It was already obvious in advance that the Brexit would lead to a relocation of jobs in the financial sector from London to Frankfurt. Well-founded estimates assumed a figure of around ten thousand jobs over the next four years. But the growth in jobs as a whole generated by the Brexit is much higher, according to the results of the study. The study has focused on the multiplier effects, and therefore on the question what growth will result for other sectors and industries from an increase in the number of Frankfurt banking jobs. The result shows that this effect is 2.1 to 8.8 times higher – depending on the area under consideration. Therefore, in the most optimistic case, if one assumes a figure of ten thousand new bank jobs in Frankfurt, up to 88 thousand new jobs can be created during the following four years in the Rhine-Main region.

Winning Frankfurt: Brexit Bankers’ Welfare Effect Beyond Bringing Their Jobs [Download]

Picture credits: Frankfurt Main Finance

Potential for further growth of the German start-up scene

The German start-up scene has developed considerably over recent years. However, in international comparison with Israel, the United Kingdom and California, there is still room for improvement regarding entrepreneurial spirit and framework conditions. This is the result of an EY study on the attractiveness of start-up ecosystems, which has been conducted in cooperation with Deutsche Börse. There is especially enough upside potential for the regulatory and tax frameworks. Simultaneously, the authors praise the potential for future growth and progress, as well as the economic framework conditions in Germany. Germany and particularly the Frankfurt/Rhine-Main region scores with good infrastructure and moderate real estate prices.

The promotion of the financial sector’s digitalisation at the Financial Centre Frankfurt was especially positively mentioned. A total of seven incubators in the Rhine-Main region (FinTech Hub from Deutsche Börse, Unibator from Goethe University, Accelerator Frankfurt, Main Incubator, FinTech Headquarter, Digitalfabrik from Deutschee Bank, Tech Quartier, FinTech Lab VABN) promote the development of still-young FinTechs and their business ideas. As an incentive for the improvement of the FinTech scene in Germany, the study suggests the expansion of co-working desks. Here again, Frankfurt sets a good example: The incubator Tech Quartier, for instance, offers working space for FinTechs of any size. Business Angels FrankfurtRheinMain – Germany’s largest organisation with around 100 business angels – brings together start-ups and business angels.

The study also highly praises the “Digital Hub Initiative” by the Federal Government. Within the scope of this initiative aimed at strengthening Germany as the leading industrial nation, the Federal Government honoured the Financial Centre Frankfurt as Digital Hub for FinTechs and Financial Services. Thus, the Financial Centre Frankfurt offers a wide range of emerging FinTechs.

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.

Accenture Study Shows Rapid Growth in FinTech Investment

A recent study from consulting firm Accenture shows rapid growth in investment in the FinTech sector. Venture capitalists, private equity firms, corporates and a number of other players have poured an unprecedented amount of money in the global FinTech start-ups.

“The FinTech scene’s innovative drive reaches far beyond the world’s traditional financial centres,” explains Friederike Stradtmann, Senior Manager at Accenture Strategy for the areas financial services and digital business models. According to the study, investment has reached $22.3 billion, a 75% increase compared to the previous year. The share of investment in Europe and Asia, now at 62%, has nearly doubled. Accenture’s analysis shows that the growth his being primarily driven by America, Asia and Europe. In 2015, investment in China grew by 445% to $1.97 billion, followed by India with $1.65 billion. In Germany, the investment volume grew by 840% to $770 million.

Even though there are currently more disruptive FinTechs than cooperative, the analysis does show a growing trend towards cooperation between financial institutions and the start-ups. Disruptive FinTechs brand themselves as competition for the established players in the financial sector, while the cooperative FinTechs offer innovative solutions for existing firms. Investment in collaborative FinTechs grew by 138% in 2015, now totalling 44% of all FinTech investment.

The study’s conclusions stress that banks must make short and long-term plans for transforming their business models to keep up with digital trends. The study poignantly states, “Banks should place themselves closer to the center of their customers’ digital lives, embedding customer-centric thinking at the core of the corporate strategy along with the right skillsets at every level of the organization.”

The complete study can be found on the Accenture website.