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Three new members join the financial centre initiative Frankfurt Main Finance

Frankfurt am Main – The financial centre initiative Frankfurt Main Finance e.V. welcomes three new members. CRIF Bürgel, Deloitte Deutschland, and European DataWarehouse join the initiative as sustaining members.

“We bid our new members a very warm welcome! With their added support and the support of our long-standing members, we work towards the sustainability and efficiency of the Financial Centre Frankfurt. Our joint efforts significantly benefit the financial centre and have a lasting, positive impact on its worldwide prominence and reach,” says Dr. Lutz Raettig, President of Frankfurt Main Finance.

“Just like CRIF Bürgel, Frankfurt Main Finance stands for openness to innovation. We are, therefore, extremely pleased about our membership and future cooperation with an excellent network within the financial industry. Frankfurt has not only established itself as the leading financial centre in Germany through the strong concentration of financial firms, but is also one of the most important financial centres in the world. We will endeavour to make the best possible use of the resulting synergies with Frankfurt Main Finance and the other members, so that Frankfurt can continue to consolidate its pole position in the financial market. In line with our strategy, we also look forward to the collaboration and contact with one of the most progressive international FinTech hubs,” comments Christian Bock, Managing Director of CRIF Bürgel.

“As Germany’s leading financial centre, Frankfurt is one of Deloitte’s largest and most important locations. The membership in Frankfurt Main Finance fills us with eager anticipation of a noticeable deepening in our relationships with all actors in the financial metropolis. We are certain that our work can provide the Frankfurt community not only with many important stimuli, as it has in the past, but also with many benefits,” says Prof. Dr. Carl-Friedrich Leuschner, Deloitte auditor and partner. Head of Banking Practice at Deloitte Hans-Jürgen Walter adds, “Deloitte has supported the development of the Financial Centre Frankfurt in the competition between European and global financial centres for many years. In addition to the European Competence Centre for the Banking Union, Deloitte is also active in a number of initiatives with banks, associations, universities and politics with the goal of strengthening Germany’s most important financial centre. Membership in Frankfurt Main Finance is an additional resolute and active step in this direction, which includes, in particular, the further development of Frankfurt as an attractive location for the start-up and FinTech community.”

Dr. Christian Thun, Managing Director of European DataWarehouse, emphasises his excitement at the prospect of working with Frankfurt’s financial centre initiative. “We see our membership in Frankfurt Main Finance as a commitment to the Financial Centre Frankfurt, to which we owe a great deal and whose development we aim to pursue and actively shape with the keenest interest. Frankfurt Main Finance provides us with the requisite platform to do this, and we look forward to the exchange with the fellow members and market participants.”

Advantages of the Location Frankfurt

Frankfurt Main Finance wins four new members

The Financial Centre Initiative Frankfurt Main Finance e. V. welcomes four new members, growing its ranks to 69. KPMG AG Wirtschaftsprüfungsgesellschaft, Quirin Privatbank AG and Sumitomo Mitsui Banking Corporation (SMBC) join the initiative as sustaining members and Frankfurt Solutions as a Fintech member.

Through their membership, the representatives from academia, the financial industry, public administration, and the up-and-coming FinTech sector express their solidarity with the Financial Centre, take up current topics of the finance sector and demonstrate their commitment to the growing domestic and international importance of the Financial Centre Frankfurt and the Rhine-Main region.

“In times when there is considerable uncertainty in many areas, it is all the more important to combine the various strengths of the financial industry, to actively shape the future of the Financial Centre in concert, and to grow and flourish together. With the support of our longstanding and new members and thanks to our steadily growing industry network, we can jointly develop coordinated approaches to resolve the issues of the future,” insists Dr. Lutz Raettig, President of Frankfurt Main Finance.

Sven-Olaf Leitz, Member of the Board at KPMG Germany with responsibility for Financial Services, is delighted that KPMG has joined Frankfurt Main Finance. “A financial sector has grown up in ‘Mainhattan’ that enjoys an excellent reputation across the world. It is therefore not surprising that the Squaire building at Frankfurt Airport houses the largest of the more than 20 branch offices we maintain in Germany. This underlines the importance of the Financial Centre Frankfurt for us in our activities as one of the largest consulting and auditing companies. We value the close proximity to a wide range of financial actors and market players and appreciate the intensive exchange between the domains of academia, science and business practice that the Main metropolis offers. As a result, the Financial Centre is constantly evolving, and we are pleased to be able to make a further contribution to this development by becoming a member of Frankfurt Main Finance e.V.”

Holger Clemens Hinz, Managing Director in the capital market business of Quirin Privatbank AG, explains, “We are happy to be a member of Frankfurt Main Finance with immediate effect, as this gives us the opportunity to actively shape the future of the Financial Centre Frankfurt together with the other partners and the financial community. As a result, we can participate as a financial institution not only in the orientation of the operational banking business in Frankfurt, but we can also inform important strategic decisions made by politicians and the city government. This is something we see as highly valuable, just as we also value the exchange that is possible with universities.”

David Kleinz, founder of Frankfurt Solutions, points out, “Just as the name Frankfurt Solutions signals a commitment to the location of Frankfurt, so does our membership in Frankfurt Main Finance. With active involvement and the fertile exchange of views and ideas, we would like to become a strong link in this network and consolidate and benefit from the promising developments in the heart of Europe. We look forward to creating new ideas, events, contacts and joint projects with the other members.”

Astana Finance Days

Astana Finance Days

What are the challenges that international and regional financial centers around the globe are facing? What new trends can be observed and what new opportunities are arising that can shape the future of regional and global financial markets? Those and many other questions were discussed by global thinkers, policymakers, representatives from business, public service, and academia discussed at the Astana Finance Days in Nur-Sultan, Kazakhstan, in July 2019. During the 4 day-long conference, the participants debated issues and opportunities related to governance, infrastructure, financial technology as well as global cooperation of International Financial Centres (IFCs).

With a shift in the balance of power between leading IFCs in Asia, North America, and Europe, that has occurred in the last decades, the role of IFCs has changed and so has their collaboration. Thus, on the second day of the conference, a panel moderated by the World Alliance of International Financial Centers’ (WAIFC) Managing Director Dr. Jochen Biedermann discussed the competitiveness of IFCs in a rapidly changing economy as well as the attractiveness of established IFCs vs. emerging IFCs. Frankfurt Main Finance’s president Dr. Lutz Raettig joined the panel “International Financial Centres: the outlook to 2025 and beyond” alongside Sandy Frucher, Vice Chairman of Nasdaq, Frederic de Laminne de Bex, Secretary-General of the Belgian Finance Club and James Martin, Deputy CEO of  AIFC.

Another theme that receives increasingly more attention was discussed by WAIFC representatives from Brussels, Busan, Casablanca, Frankfurt, London, Luxembourg, Mauritius, Moscow, Nur-Sultan, and Paris: FinTech talent development and capacity building, both of which are highly important for the success of Fintech ecosystem building. A lively panel discussion evolved around including FinTech into the curriculum of business schools, foreign education programs funded by local governments, short-term courses as well as professional certification and re-training of seasoned financial professionals.

However, global cooperation between IFCs was not just a topic during the conference: On the last day of the event, the WAIFC presented an Honorary Award to Nursultan Nazarbayev, First President of Kazakhstan, for creating the AIFC and his significant contribution to fostering global cooperation among International Financial Centres.

FinTech Financial Centre Frankfurt

The Financial Centre Frankfurt has great chances to become the European Capital of Financial Technologies

A European consortium of universities and FinTechs is working to promote knowledge-sharing between banks, FinTechs, regulators, and financial supervisors on the risk management of financial technologies. Since 2019, the financial technology company Firamis GmbH has been part of this consortium. In an interview, Dr. Jochen Papenbrock, CEO and founder of Firamis, discusses the role of Artificial Intelligence (AI) in managing risks of financial technologies and its significance for the Financial Centre Frankfurt.

Dr. Jochen Papenbrock, CEO and founder of Firamis Gmbh

Dr. Jochen Papenbrock, CEO and founder of Firamis GmbH

What are the risks of FinTech’s increasing importance for the financial sector?

We understand the term FinTech to comprise of much more than start-ups using financial technologies such as Big Data Analytics, AI, and Blockchain. Traditional banks and insurers use new financial technologies as well and might face similar challenges as start-ups do, especially with regards to risk management. In addition, banks and FinTech start-ups are increasingly cooperating – more outsourcing relationships are emerging as a result of the continuous break-up of value chains. At the same time, many banks are invested in start-ups. As systems, data, and processes become increasingly intertwined, banks are equally affected by the risks of financial technologies. Therefore, we are currently observing a growing need for discussion between the industry, regulators, and supervisory authorities.

Against this background, Fintech Risk Management and model/data governance are of particular importance. While traditional banks most certainly have gained more experience in regulatory and supervisory practice, it is new territory for many FinTech start-ups.

Can you explain this in more detail?

Complex, non-transparent, and biased models and data pose a problem to new financial technologies. Several supervisory bodies have decided to reject black box models – i.e. non-transparent machine learning approaches such as multi-layered artificial neural networks (deep learning) – in production-critical processes.

We are currently working on these and other topics as part of a larger EU project on Fintech Risk Management. The exchange of knowledge between banks, FinTechs and regulators takes place throughout Europe over a period of two years. Standards are being developed that ensure the use of financial technologies in secure financial products and enable FinTech business models in Europe to be scaled as efficiently as possible. Our Fintech-AI-B2B-start-up Firamis is part of the consortium and member of the Executive Board. We are working to build an EU Research Sandbox and establish requirements for a Trustworthy AI. The EU also runs several programs on related topics.

Furthermore, the increasing use of financial technology may create systematic risks. If several FinTechs use the same technology, they will react quite similarly to certain market phases. In addition, the risks of a domino effect are rising due to the increased interconnectedness of value chains. The supervisory focus will continue to shift from individual companies to the entire value chain.

What regulatory framework is needed to keep risks under control?

We believe that risks can be managed by focusing on model validation as well as the entire model risk management process and data/model governance. Black box models will have a hard time with more intensive regulatory reviews by national and international supervisory authorities. On the other hand, the use of financial technologies will continue to increase due to competitive pressure. So the question of which modification of the technology is needed to meet the requirements remains.

Are there solutions to make these approaches more accessible and understandable for regulators and supervisors?

XAI (Explainable AI or Interpretable AI) is one of those approaches. New approaches, technologies, and data visualization are used to make the models more explainable. XAI is also one of the core competencies of our start-up Firamis, and we are currently expanding our resources in response to those developments. AI thus is implemented to, for example, explain black box models automatically. This is especially important for customers who want to know, for example, why they received a certain credit score or why they are assigned a certain risk profile by their Robo Advisor and how they can improve.

The question of how these regulatory controls should be implemented in practice is exciting. Several models are conceivable, ranging from independent control by supervisors to outsourcing to third parties. We will observe a certain degree of standardisation and also something like a technical inspection for financial algorithms.

What does the dynamic development of AI / Machine Learning mean for the FinTech industry in Frankfurt?

Current developments in financial technologies show that Financial Centres compete with each other. The game is changing due to disruption. The Financial Centre Frankfurt has great chances to become the European capital of financial technologies. (Central) banks, technology companies, FinTech ecosystems, supervisors, and regulators are already presented. AI may hold more potential for the Financial Centre Frankfurt than Brexit and Blockchain do.

So there’s still a lot to do. In 2017, we launched the annual Summit on AI, Big Data and Network Analysis in Financial Services with other partners. In addition, we founded the association  AI in Financial Services e.V., in which anyone can become a member who is interested in advancing AI.

Financial Centre Frankfurt welcomes new financial institution – Chinese CICC will be based in Frankfurt

The China International Capital Corporation (CICC) has decided to establish a continental European office in the Financial Centre Frankfurt. The Beijing-based investment bank has been listed on the Hong Kong Stock Exchange since 2015. Alongside CICC, more than 24 banks have chosen to relocate their European headquarters to or expand their capacities in the Financial Centre Frankfurt since the Brexit referendum two years ago.

“We are extremely delighted by CICC’s choice in location,” says Hubertus Väth, Managing Director of the Financial Centre initiative Frankfurt Main Finance e.V. “With the opening of the CICC office in Frankfurt, the leading investment bank from the world’s second-largest economy is now represented in the Financial Centre. We see this as another glowing affirmation of the high quality of the Rhine-Main region. CICC’s decision confirms that the city’s strong appeal extends far beyond Europe and can attract financial institutions from Asia, a region whose impressive significance continues to grow,” comments Väth.

Just recently, the Chinese bank, Essence Securities, chose to establish its base in Frankfurt. The Frankfurt-based China Europe International Exchange (CEINEX) was a decisive factor for both Chinese financial institutions. A fact that is clear to CHEN Han, Co-CEO of CEINEX.

“We are convinced that the city will become the leading Financial Centre in the Eurozone, which is why we came to Frankfurt. The city is the ideal stepping stone for Chinese financial institutions, who plan on establishing a foothold in Europe or seek to expand their market presence,” says Dr. CHEN. “We are happy and proud that we could play a significant role in attracting an important institution like CICC to Frankfurt.”


About Frankfurt Main Finance

Frankfurt Main Finance is the voice of the leading financial centre in Germany and the euro zone, Frankfurt am Main. The initiative has more than 50 members including the State of Hesse, the cities of Frankfurt and Eschborn, and dozens of prominent actors in the finance sector. Through their membership and engagement, they all demonstrate their close relationship to Frankfurt and desire to position Frankfurt amongst the top national and international financial centres. Frankfurt Main Finance leverages the influence of its members to advocate for the Financial Centre Frankfurt and provide high-caliber dialogue platforms. For more about Frankfurt Main Finance and its members, please visit www.frankfurt-main-finance.com.

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About China Europe International Exchange AG (CEINEX)

Based in Frankfurt/Main, Germany, CEINEX is a joint venture established by the Shanghai Stock Exchange, the Deutsche Börse Group, and the China Financial Futures Exchange. As the first market place for RMB-related and China-related investment products in the Chinese offshore market, it acts as a unique bridge between the Chinese and international financial markets. CEINEX is dedicated to providing reliable offshore RMB- and China-related financial instruments to investors, so as to promote RMB internationalization.

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Financial Centre Frankfurt belongs to most secure cities in Europe

The Safe City Index 2017, conducted by The Economist, ranks the Financial Centre Frankfurt 4th in Europe and 11th globally, in a comparison of 60 cities. The Financial Centre Frankfurt scored top ratings in the categories health, digital security and personal security on a European, as well as on a global scale, ratings which are clear indications of a successful security concept developed by Frankfurt.

In the health category, Frankfurt counts among the top three cities, placed right behind Tokyo and Osaka; thus, first in Europe. Meaning, there is no other European city which offers their citizens a better public health system than Frankfurt. The study’s authors were convinced by the equipment of the hospitals, the efficiency of emergency services as well as the network of care facilities. The multitude of parks and green spaces, as well as the high quality of water, lifted Frankfurt to a high ranking within the sub-field of environment.

Frankfurt’s digital security concept has clearly evolved since 2015

Through the ever increasing utilization of intelligent technologies, cities are clearly growing to be smart cities. The central question within the category remains, despite all of the safety advantages of this trend, how cities are securing themselves against hacker attacks and the failure of complex technological systems.

The city gained seven spots within this category in comparison to the Safe Cities Index 2015. The improvement in this category illustrates, that Frankfurt has recognized the challenges posed by digitization regarding security and that it applies increasingly successful measures. Frankfurt reaches the 3rd position in a European and ranks 16th globally.

One more Frankfurt-related stereotype that is no longer applicable

Frankfurt is not dangerous. The study again refutes the outdated and persistent stereotype of the Main Metropolis regarding personal security. After all, ranked 3rd in Europe and 11th globally, Frankfurt achieved a particularly high ranking regarding personal security. If the statistic were to be adjusted by leaving out such crimes that were committed at the airport, then Frankfurt would surely rank even higher. The study results regarding personal security do however go beyond the topic of crime rate and identify terrorism as the currently biggest challenge for global cities in achieving personal security. In this respect, too, the concept developed by Frankfurt convinces the The Economist‘s Safe Cities Index team.

The study attests a successful as well as integral security concept to Frankfurt

As the Safe Cities Index indicates, the considered categories cannot be regarded as separate, but are in fact deeply influencing and dependent on one another. Thus, the success of a security concept hinges on it being integral as well as considering all of the mentioned sectors and categories. Certainly, a challenge that cities will have to address considering the areas of tension of regional and local particularities, global developments and threat scenarios as well as limited financial resources regarding the cooperation with federal and international institutions, challenges that they will have to champion for the purpose of the protection and welfare of their citizens. Frankfurt’s high ranking at position 11 in the overall ranking and the respective 5th position among European cities clearly shows, that Frankfurt has recognized the need for a comprehensive understanding of security and that the implementation of an integral security concept was successful. In the overall rankings, London (20), Paris (24) and Milan (25) all scored lower.

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?

Financial Centre Frankfurt emerges as major winner of Brexit

Germany’s financial industry is in firm agreement that the Financial Centre Frankfurt will profit from a British exit from the EU, although the outcome of the British vote largely came as a surprise to the industry. The potential impacts on the German economy are also regarded as neutral to positive. These were among the results of a survey of financial institutions and service providers in the Financial Centre Germany. Securities trading and settlement in the Financial Centre Frankfurt will receive a particular boost, according to 78% of respondents. Just over half the survey participants believe the European Banking Authority (EBA) will move from London to Frankfurt. Regarding potential shortages in Frankfurt in case of an influx of business, 72% of the surveyed financial firms are concerned about adequate living space.

“The survey results confirm that many financial market participants had not expected the Brexit outcome at all. This surprise effect is reflected in the high level of stock market volatility we can expect to see in the coming months,” Professor Volker Brühl, Managing Director of the Center for Financial Studies, interprets the results.

For almost all companies surveyed (95%), the Financial Centre Frankfurt emerges as the major winner. In addition, just over two thirds see Paris as another beneficiary of a British exit. 15% expect Amsterdam to profit. Just 6% see a positive effect for London. Hardly any respondents expect to see Milan or Madrid benefit, but one third expect positive impacts on other financial centres.

For almost all companies surveyed (95%), the Financial Centre Frankfurt emerges as the major winner. In addition, just over two thirds see Paris as another beneficiary of a British exit. 15% expect Amsterdam to profit. Just 6% see a positive effect for London. Hardly any respondents expect to see Milan or Madrid benefit, but one third expect positive impacts on other financial centres.

“Frankfurt was well prepared for a Brexit. We will make every effort to take advantage of this once in a century chance. It is clear to us that London will maintain its position as the central financial centre. We hope that the Financial Centre Frankfurt will become the bridge between London and the Eurozone,” explained Hubertus Väth, Managing Director of Frankfurt Main Finance e.V..

When asked in which business areas the Financial Centre Frankfurt could benefit in particular, 78% of respondents pointed to securities trading and settlement. Half the participants see opportunities for the areas of asset management and corporate banking, followed closely by professional services (43%). By contrast, only 7% named retail banking in this regard.

“The results reveal the market participants’ high expectations about the future role of the Financial Centre Frankfurt. Yet other financial centres are also hoping to benefit. I therefore anticipate stiff competition between various locations, so it will be crucial to highlight Frankfurt’s specific strengths to top decision-makers,” adds Professor Brühl.

It is unlikely that the European Banking Authority (EBA) will be able to keep its headquarters in a country outside of the EU. However, it remains to be seen where the EBA will choose as its next location. The majority of the German financial industry (57%) believes the EBA will move to Frankfurt. However, 33% of respondents expect the EBA to relocate to another city.

The German financial industry is also anticipating certain bottle-necks in case business activities shift from London to Frankfurt. Almost three quarters of those surveyed (72%) point to a shortage of living space; half (53%) are concerned about having enough qualified personnel; 27% believe the transport infrastructure may not be sufficient; 22% point to the availability of office space. By contrast, only 11% see Frankfurt’s IT infrastructure as a potential bottle-neck.

Majority of the financial industry in favour of limiting Britain’s access to the EU interior market and expects a Brexit to have neutral to positive impacts on the German economy

In the opinion of most financial institutions and service providers surveyed (68%), the EU should not grant Britain unrestricted access to the EU interior market after a Brexit. By contrast, 22% advocate not introducing any restrictions in spite of a Brexit. Around half the respondents (48%) regard the potential impacts of a Brexit on the German economy as neutral, while 35% see them as positive. Just 15% are anticipating negative impacts.

The results are based on a quarterly management survey of around 400 companies 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.