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.”