If your daily activities include any of the following: creative thinking, coding, designing, hardware tinkering and lots of coffee, this one is for you! Deutsche Börse invites you to think about new, innovative financial services business applications. Deutsche Börse’s upcoming dojo is all about crypto assets – or, to be more specific, about Ether, bitcoin, […]
As in recent years, in January a FinTech delegation will be traveling under the leadership of Dr. Raettig to Hong Kong for the Asian Financial Forum (AFF). The Asia Financial Forum is the most important meeting of the Asian financial sector and will be held for the eleventh time on January 15 and 16, 2018. AFF’s topics include financial innovation and technology, AI and robotics, green finance, insurance technology, Fintech, Blockchain and banking innovations.
Frankfurt Main Finance will present itself with a joint stand with FrankfurtRheinMain GmbH and Hessen Trade & Invest to the Asian financial community as an attractive international financial center – not only in the Brexit context.
For years Frankfurt Main Finance has maintained close ties with the FinTech community in Hong Kong, among others with HKTDC, Invest.HK, the FATHK and Cyberport and Metta as leading FinTech Hubs in Hong Kong.
The FinTech delegation will travel to South Korea already on January 11, 2018, where it will present itself at FinTech events in Seoul and Busan. Frankfurt Main Finance is closely linked to both South Korean financial centers through a number of agreements, among others in the areas of FinTech and Blockchain. For several years there has been a regular exchange at the level of the financial centers as well as the supervisory authorities. South Korea is an important partner for Frankfurt and also a regular destination for delegation trips of the state of Hesse.
About the Asian Financial Forum in Hong Kong
For the eleventh time, on January 15 and 16, 2018, top-class international representatives of the financial and business world will meet at the Asian Financial Forum in Hong Kong. During the two days they will discuss developments and trends in the dynamic markets of Asia and over and above that. The event, organized by the Hong Kong Special Administrative Region (HKSAR) and the Hong Kong Trade Development Council (HKTDC), has this time the motto: steer growth and pave the way for innovations, both in Asia and around the world. In 2017, the Forum had over 2,900 participants, including more than 100 internationally renowned speakers. There was also a great interest in the Deal Flow Matchmaking Sessions, where more than 490 projects were discussed with investors in over 600 conversations. Overall, the organizer has already arranged 3,800 meetings with more than 1,800 companies since the start of these sessions.
Among the contributors in 2018 are Jacob J. Lew, US Secretary of the Treasury until 2017, David Lipton, First Deputy Managing Director of the International Monetary Fund, Pierre Gramegna, Minister of Finance of Luxembourg, Hu Huaibang, Chairman of China Development Bank Corporation, and Takehiko Nakao, President of the Asian Development Bank. From Germany comes Dr. Andreas Dombret, board member of the Deutsche Bundesbank. Speaker at the Keynote-Luncheon on January 16 is this year the expert for AI and Robotics, Professor Daniela Rus, Director of Computer Science and Artificial Intelligence Laboratory (CSAIL) and Professor for Electrical Engineering and Computer Science at the MIT.
The AFF visitors are also offered to have pre-arranged meetings for participants with common interests, the InnoVenture Salon for Startups, who want to present their business ideas to international investors, a free financial and service advisory zone and sessions with project owners, presenting their projects to potential investors.
To the HKTDC homepage: http://bit.ly/2kpfT38
More articles on the topic:
o “Think Asia, think Hong Kong” in Germany
o FinTech Breakfast with Invest Hong Kong
o Leading Korean FinTech companies visit the Frankfurt financial center
o Delegation from South Korea visits the financial center Frankfurt
Contact: Dr. Jochen Biedermann
The Tech Quartier celebrates its 1-year anniversary. Lars Reiner, founder and Manager of Ginmon, Thomas Schalow, founder of AsiaFundManagers.com, Andreas Mang from easyfolio and Christopher Schmitz, author of the EY-study „Germany FinTech Landscape“ take a look at the FinTech scene in Frankfurt and the Rhine-Main-Neckar region.
The FinTech scene in particular continues to grow in the financial centre. These are the findings of the EY study Germany FinTech Landscape – Insights into the respone of financial institutions to FinTechs and inter-FinTech collaboration, which was published in September 2017. Of the 300 German FinTechs, 73 alone are located in the Rhine-Main-Neckar region. 19 of them have settled in the TechQuartier, between Messe and Tower 185.
Frankfurt offers the best conditions for FinTechs
Lars Reiner, founder and managing director of Ginmon, a Frankfurt-based FinTech company, explains why Frankfurt is a particularly suitable location for FinTech. It enables private investors to invest in an automatically managed ETF portfolio. “The Frankfurt region combines important location factors that are unique in Europe in this combination. The most important financial institutions and regulatory authorities have settled here in the Main metropolis. As a technology company, Ginmon also relies on IT specialists to constantly optimize existing algorithms. The region can exploit the potential of numerous universities, especially the TU Darmstadt.”
Thomas Schalow, founder of AsiaFundManagers.com, shares this view: “Frankfurt has an established financial ecosystem with many relevant national and international players. Especially for B2B-FinTechs this is a decisive factor. Brexit will further increase the importance of the city as THE financial centre within the EU.”
FinTech cooperates with banks
The results of the EY study also show that FinTech’s links with traditional companies in the financial sector are becoming increasingly close. Christopher Schmitz, author of the study and partner for EMEIA Financial Services at EY, explains, “FinTechs and Incumbents are increasingly working together in digital ecosystems. This creates new opportunities and models for the industry.”
A glance at the partners of the TechQuartier shows this. Deutsche Bank, Frankfurter Sparkasse and Landesbank Hessen-Thüringen are among the handpicked but established partners who round off the diverse mix of the world’s best start-ups. The exchange between the “big ones” and “newcomers” is promoted and desired through various networking events and workshops in the TechQuartier. Here, people work together instead of against each other.
This means that Frankfurt can also hold its own internationally, says Andreas Mang of easyfolio, who offers private customers individual investments on a digital basis, “There is more space than just one or two FinTech hubs in Europe. In addition, the Brexit discussion could also make Frankfurt more interesting for international start-ups.”
Thomas Schalow of AsiaFundManagers.com also draws an international comparison, explaining, “If the strengths of AsiaFundManagers.com are used consistently and quickly, in the long run, Frankfurt can also hold its own internationally. The advantages of the location are obvious: an existing financial ecosystem, the position as the most important financial centre within the EU and the infrastructure. However, I also have a direct comparison with other FinTech ecosystems such as London and Singapore. Unfortunately, Frankfurt is still years away from them.”
Short distances distinguish Frankfurt as a location
Nevertheless, Frankfurt has become home to him. He likes the mixture of Hessian down-to-earthness and internationality and is always looking forward to returning to Frankfurt. The founder of FinTech particularly appreciates the short distances between international investment companies, which can be covered well with Vespa or the subway. It is also the short distances that Lars Reiner of Ginmon at the Mainmetrople enjoys. “Frankfurt is the city of short distances. From our office, we can reach important partners in a few minutes. This makes it possible to work effectively,” Reiner explains. “In addition, a broad network has been established in Frankfurt by promoting and inspiring each other.”
Nevertheless, there are still some things that could be done better in Frankfurt. Lars Reiner von Ginmon wants affordable office space and the expansion of public transport. Thomas Schlaow also has concrete wishes like “networks, low-cost office space, simple regulation, venture capital and easy access to B2B partners. All this should go hand in hand. Andreas Mang from easyfolio sums up what all three FinTechs think, simply stating, “We feel very comfortable in Frankfurt.”
The complete EY study can be found here.
- Consortium comprising High-Tech Gründerfonds and lenders from Business Angels FrankfurtRheinMain e.V. invest more than EUR 775,000 in node.energy
- EY Start-up Academy sets the stage for the round of financing
- Hessen’s economics minister, Tarek Al-Wazir: Frankfurt/Rhine-Main region has the highest FinTech growth in Germany
The young Frankfurt-based company node.energy, a provider of digital solutions for managing microgrids, secures itself EUR 775,000 in growth capital. This was announced yesterday by the investors, comprising High-Tech Gründerfonds (HTGF) and lenders from Business Angels FrankfurtRheinMain e.V. The investors and node.energy met through the EY Start-up Academy, a three-month program for Tech and FinTech start-ups. The EY Start-up Academy’s closing event, which is staged in cooperation with Deutsche Börse and TechQuartier (TQ), took place on Tuesday at TQ in the West of the city, close to the Frankfurt exhibition center.
Frankfurt establishes itself as a Start-up Tech hub
The fact that node.energy successfully managed to raise this amount of investment capital at the EY Start-up Academy is testimony to Frankfurt establishing itself as a Start-up hub for Tech companies, says Christopher Schmitz, partner at EY and curator of the initiative. The Hessen economics minister, Tarek Al-Wazir, who helped set up TechQuartier and brings it political support, referred to the TQ on its 1st anniversary as “a place where people network.” The Frankfurt/Rhine-Main region exhibits, for example, the highest growth in FinTech companies across Germany. node.energy is a start-up of founders Matthias Karger (35) and Lars Manuel Rinn (30) that specializes in the commercial optimization of local energy supply concepts. The company focuses on housing companies as well as industrial and commercial customers. “The fact that node.energy was able to convince both our Business Angels and HTGF is testimony to the quality of start-ups in Frankfurt. A practicable innovation and an experienced team of founders have come together. The fact that it is a product for improving energy use and making it more efficient pleases us greatly as we are focusing keenly on this sector,” says Dr. Burkhard Bonsels, Managing Director of Business Angels FrankfurtRheinMain e.V., who was also personally involved in the financing round. The fresh capital is to be invested in expanding the team as well as enhancing the platform and financing the market entry in Germany.
Contact with around 40 investors established
Seven selected start-ups – Asteria, Creditlinks, EVANA AG, F ECTIVE AG, MES & DAK, StudySmarter and node.energy – participated in the EY Start-up Academy. They have met various investors, representatives from banks, experienced founders and other start-up experts at approximately 30 events over the past few weeks. At the evening event on Tuesday, seven companies gave a closing presentation and received the EY Start-up Academy Award. “This seal of quality should help the participants on their continued growth course and assist them in dealing with lenders and regulators as well as tax and legal advisors,” comments Christopher Schmitz. “During the EY Start-up Academy we have established many valuable contacts and significantly improved both our business plan and our investment pitch,” explains Tilo Kraus, Co-Founder of CreditLinks, just one example from the founders taking part. Overall, contacts with approximately 40 investors were established during workshops and one-on-ones, some of the participants are currently in negotiations and due diligence phases for further potential seed financing rounds.
Promote the start-up ecosystem
The EY Start-up Academy will be continued in 2018, and potentially expanded to include other hives of founding activity in Germany. “Our aim is to help create highly attractive conditions for Tech and FinTech startups,” explains Christopher Schmitz. “Frankfurt’s contribution to the Germany-wide start-up ecosystem is enormously important.” FinTech expert Schmitz names four agenda points on which cooperation partners from the private, public and educational sector should focus: promote entrepreneurship and entrepreneurial spirit, cut bureaucracy, bring about a business-friendly tax system and ensure the improved availability of risk capital.
It is the focal point of the FinTech and start-up community in continental Europe’s biggest financial centre – and it is celebrating its first birthday: TechQuartier in Frankfurt. A discussion with the director Dr. Sebastian Schäfer on the FinTech ecosystem in Frankfurt. In the interview, he discusses the milestones they have reached and the goals that TechQuartier has set for the future. Finally, he discusses the insecurity from Brexit facing FinTech scene.
Mr. Schäfer, You are looking back at one year of TechQuartier. Which milestones have been reached during this period?
First of all, we are really happy about the reception we’ve had from the start-up scene. With around 80 start-ups, we have a full house now. Within the first months, we had already let the first 1,600 square metres with around 110 working spaces. In June, we added another floor with further 114 working spaces. From the very first day, we kept asking ourselves how to create a lively community and how this should look. We know it is not only about a nice place to work but about inspiration, learning from each other and networking. So, we brought together interested parties, members and supporters along with fitting topics – and successfully developed and started interesting formats. For example, Landing Pad, Papillon, Money meets Idea, or the Start-up Academy.
From the experience you have gained – where do you see further potential for TechQuartier, what are its strengths?
You can always improve. Our claim is to become a globally recognised Hub. This includes strengthening engagement on the venture-capital as well as marketing of our success stories in Frankfurt. Obviously our strength is that all participants are pulling in the same direction.
Brexit is occupying the financial sector. Is it a subject-matter for FinTechs as well?
Of course we are talking about Brexit and possible consequences for the FinTech ecosystem. We can see that insecurity levels are huge. Since nobody knows exactly how things will develop you can primarily feel indirect effects. If, for example, a FinTech from Asia wanted to come to Europe, they would probably have chosen London as their location. Now Frankfurt is an option people think of. We can see that by the fact that FinTechs from over 20 different countries applied for our last LandingPad where we offer the possibility to get to know the FinTech-Hub in Frankfurt. This interest bears the possibility for Frankfurt and the region to develop itself into a powerhouse of innovations thanks to systematic measures.
If you look ahead: Which goals has the TechQuartier set for the future?
Our goals are well-defined: More start-ups, more partnerships, more success stories. We want to make a contribution to Frankfurt’s start-up scene becoming internationally recognised.
Thank you very much for the interview.
Germany’s segment of emerging technology companies operating in the financial services sector (FinTech) is increasingly successful in establishing itself as a dynamic and diversified cluster on its own steam. This is one of the key findings of the recent study “Germany FinTech Landscape” carried out by auditing and consultancy company EY which, together with Frankfurt Main Finance, analysed the German FinTech sector and outlined additional opportunities for its promotion. According to the study, there is a clearly discernible trend among financial institutions to respond more vigorously to the challenge posed by the products and services offered by FinTech companies. The majority of the ten biggest banks are today investing in and/or cooperating with FinTechs. The study also shows that the business models of the FinTechs are becoming more mature, and that the companies are entering the next development phase, e.g., through cooperative ventures with each other, in order to strengthen their market position sustainably.
In the first half of the year, the number of FinTech companies in Germany rose by five per cent year-on-year to 295 (2016: 280). The inflow of capital had already reached 307 million euros in the first half of the year, whereas the FinTech companies in Germany collected 400 million euros for the full year 2016. The number of deals also went up, as did the average size of the deals, rising slightly from 7 million to 7.3 million euros.
While absolute growth rates may have levelled off slightly, consistent positive momentum persists for all key metrics. This showed that the FinTech landscape in Germany continued to be on an encouraging path, said Jan-Erik Behrens, co-author and partner at EY: “The trend we are observing here in Germany is headed for another record year, and it impressively demonstrates the innovative power of Germany as a location, with differing regional strengths.”
FinTech sector shifts focus, with business models gaining maturity
The German FinTechs are increasingly moving in on the core functions of the financial services providers. This applies, for example, to payment systems via the Internet or mobile devices (Payments), loans (Lending), but also to offerings for the property sector (PropTech), the insurance industry (InsurTech), the investment sector (InvesTech) and electronic marketplaces (Financial eMarketplaces & Aggregators). Approximately 67 per cent of the new FinTechs come from these core segments, 33 percent are start-ups in the field of Enabling FinTechs, which includes financial and process control software (Processes & Technology), financial data analysis and regulatory management services (RegTech).
The study reveals that there has been a shift in FinTech activities. The segments that had been strong growth drivers in recent years were InvesTech, Financing & Funding and InsurTech. In the first half of 2017, however, there was a very high level of activity in the PropTech area, which is probably due in part to the robust real estate market in Germany, as the study assumes.
Berlin and Rhine-Main-Neckar are the leading FinTech locations in Germany
The regions of Berlin and Rhine-Main-Neckar in particular are consolidating their status as FinTech hotspots within Germany: Berlin currently boasts 80 FinTech companies, while 72 corporations are active in the Rhine-Main-Neckar region. Munich, the third-ranked FinTech location in Germany, is a distant third, with 45 FinTechs based in the Bavarian capital.
The study confirms that the Rhine-Main-Neckar region, led by Frankfurt, is making significant progress towards establishing itself as the leading destination for settlement of FinTechs. The study identifies the special strengths of the Rhine-Main-Neckar region as being events & networks, as well as in infrastructure. Numerous incubators, accelerators, investor meetings and networking initiatives have been initiated and launched successfully. However, the region still has further potential for growth in terms of image and financing opportunities. “International investors continue to focus on London or Berlin,” Behrens notes. “For this reason, the FinTech community needs to work on its international visibility, so as to attract foreign investors as well.”
Amongst the trends that will influence the development of FinTech in the future, the study suggests that Brexit –the UK’s exit from the European Union (EU) –is likely to enhance the appeal of GermanFinTech centres. Like many financial institutions that have already decided to relocate business units from London to the EU, and especially to Frankfurt, FinTech companies are likely to follow suit.
“Frankfurt’s strong appeal to banks makes the region even more interesting for FinTechs,” says Hubertus Väth, managing director of Frankfurt Main Finance. “The EU’s leading financial centre is well placed to attract FinTechs and become a leading location for young, innovative and agile companies. It is a matter of further enhancing the location’s appeal to FinTechs. Frankfurt and the Rhine-Main-Neckar region are facing global competition, and for the foreseeable future London is likely to remain the benchmark in Europe against which company founders will judge us. In particular, we still need to improve in terms of our openness to cooperation with company founders, the social acceptance of failure and subsequent new starts, and the tax treatment of venture capital losses sustained.”
Financial institutions becoming increasingly active in the FinTech segment
The growing presence of FinTechs in the financial sector has prompted banks and other financial institutions to launch various initiatives in an effort to respond to the challenge posed by FinTechs. Nine of the ten largest banks in Germany have already entered into co-operative ventures with FinTech companies; some of them have invested in FinTechs themselves, such as Commerzbank via its investment vehicles Commerz Ventures and Mainincubator, or Deutsche Börse via db1 Ventures. “The banks are closely monitoring the FinTech companies and their solutions – they cooperate with the start-ups and in some cases invest in them directly. However, they still have some catching up to do in the development of their own innovative solutions and products,” observes Christopher Schmitz, co-author and partner at EY. The banks’ current initiatives are still isolated and largely uncoordinated responses to the FinTech challenge. An extensive range of services on a digital platform, where both own products and those of external service providers are offered, would be an appropriate response to FinTechs – banks are working on it, but as yet there has been little by way of tangible added value for customers.” Such digital ecosystems could also be created in co-operation with FinTechs. The DZ BANK Group’s travel bank, with its Bankomo Smartphone Banking product, is in the process of establishing such an ecosystem.
FinTechs cooperating with FinTechs
While financial institutions are still busy working on finding an appropriate response to the FinTech challenge, more and more FinTechs are expanding outside their core market segment, Schmitz observes. In doing so, they are increasingly relying on partnerships with other FinTechs. It is also noteworthy that the more mature FinTechs are already attempting to build their own ecosystems around their core product portfolios. This can be clearly seen in examples such as N26, which have rapidly expanded their range of services by co-operating with other FinTechs. The PSD2, which will be establishing access for third parties to payment accounts from 2018 onwards, in combination with the expected further opening-up within the framework of “open banking” efforts, is paving the way for the digital platform economy in the financial services sector. Competition with established financial institutions will therefore intensify, according to Christopher Schmitz: “Financial institutions should now consider strategies that will be appropriate to the competitive environment and establish their digital ecosystems with recognisable added value for customers, in cooperation with innovative players.”
The study is available as a pdf document here.
EY has founded in cooperation with Deutsche Börse and the TechQuartier in Frankfurt the EY Start-up Academy with the aim of supporting Tech- or FinTech start-ups in their founding phase as well as contributing to the growth of the start-up ecosystem.
The 12-week program consists of more than 30 events (about 2 or 3 per week). Founders will receive important information regarding their preparation of founding rounds, as well as other financial, legal and tax-related aspects – basically everything that is relevant for their further growth. Apart from EY experts, start-ups will also benefit from access to investors, businesses, banks and experienced founders. At the end of the 12-week program the best start-up will be rewarded with the EY Start-up Academy Award.
The program is directed to start-ups that have gone through the Alpha-Phase with an existing proof of concept or alternatively a minimum viable product, as well as start-ups that are bootstrapped financed or were able to convince a Business Angel, and are now looking for an investor to initiate further growth. During the 12-week program, the TechQuartier will offer participating start-ups two workstations, allowing them to integrate into the TechQuartier’s dynamic ecosystem.
The application process has already started and the deadline is August 4th, 2017. The program will start in mid-September.
Start-ups from all over the world have presented their entrepreneurial ventures to investors and potential customers on July 13th in Frankfurt. The Demo Day was the highlight of a four-month accelerator programme in which a total of eight young companies went through a tight training schedule.
Accelerator – long a familiar concept in the start-up scene. It is mostly backed by institutions that support young entrepreneurs and want to kick-start and accelerate their development process with the help of intensive coaching. “For an entrepreneur, courage alone is not enough, you also need 100% commitment,” warns Ram Shoham, the founder of Accelerator Frankfurt. Accordingly, the programme offered for new company founders is extremely demanding and highly challenging. Covering topics such as legal and tax issues, financing, communication, digital marketing and strategic planning, the promising business ideas are elaborated and matured in more than 200 hours of consultancy sessions to make them ready for presentation to investors and potential customers. What start-ups normally need around two years to accomplish can be effectively achieved here in just four months.
International start-ups present their concepts to investors and potential customers
A great deal is demanded in the programme from young entrepreneurs. Those who successfully pass through the application process come to Frankfurt. Together, they all work in an open-plan office, they meet together with mentors who have a lot of experience in the fields of industry, start-ups and finance, they are individually assigned a lead mentor, and they have the space to develop their business concept in meticulous detail. After all, every aspiring company wants to score points at the Demo Day.
The second wave of the Accelerator programme went into its final round in Frankfurt on July 13. Seven of the total of eight start-ups – Adjesty (Adtech, Israel), Aeroplan (Insurtech, Israel), AsiaFundManagers (Fintech,Germany), EcoKraft (Fintech, Germany), Norma (Cybersecurity, Korea), Smart Mile Solutions (Smart Cities, Netherlands) and Travel to Live (Traveltech, Canada/Sweden) – have successfully mastered their pitch. In addition, three start-ups from the VABN, a joint workspace in Frankfurt for business start-ups, also presented their ideas. The many international start-ups at the Demo Day underline the fact that Frankfurt is an attractive location for ambitious, up-and-coming start-up entrepreneurs from all over the world. There was also great interest from the other parties taking part in the event: around 200 investors were there, including many from abroad, for example venture capital lenders from Israel, along with representatives from the Ministry of Economics in Hesse and from the state’s economic development agencies.
The event was a complete success. Accelerator founder Shoham, who, together with co-founder Maria Pennanen, is enthusiastically committed to the objectives of this programme, is delighted with the results. He hosted the event together with Prof. Elmar Schütz, head of the VABN and co-organiser. The keynote address from Björn Weigel, co-author of “The Innovation Illusion”, also attracted great interest among those attending.
The next Accelerator programme will start on 25 September 2017. Those interested can find all the information they need about the application process here.
Picture credits: Jochen Biedermann, Accelerator Frankfurt
The number of start-ups settling in Frankfurt has more than doubled over 2014. As a result, the banking capital on the Main can now boast the largest growth in Germany.
Although for many years almost all FinTechs preferred Berlin as a location, Frankfurt is now catching up, as the Portal Internet World Business reports. Experts see Frankfurt’s increased commitment and support for the start-up companies as the main reason. “Frankfurt invests a great deal, not only from the public purse but above all from the private sector as well,” says Remigiusz Smolinski, for example, an innovation expert at the Commerzbank subsidiary Comdirect. Peter Barkow, whose consulting firm draws up and maintains the FinTech Money Map database, adds: “The banking sector has long been very sluggish.” That’s the reason why almost all FinTechs have been going to Berlin for a number of years, he points out. “The start-up ecosystem has only recently crystallised in Frankfurt.”
The state-supported TechQuartier hub in Frankfurt is meanwhile regarded as a central point of contact and focal access point for the FinTech Scene.
Fintech 2.0: The young financial services company Catana Capital GmbH relies on innovative investment on the basis of Big Data and Artificial Intelligence.
For the first time, a company has taken the risk of, and also succeeded in, mapping the entire value-added chain of a truly automated asset management – from the collection of data and evaluation to the automated order execution – and then creating a robust, risk-optimised asset management approach. For this promising business model, Catana Capital GmbH received the FintechGermany Award in the category Seed/Early Stage conferred by Business Angels Frankfurt/Rhine-Main, Frankfurt Main Finance and the WM Group in April 2017. “There are indeed competitors who also offer or use parts of the value-added chain of an automated asset management, but not the entire process,” says Bastian Lechner, Managing Director and founder of Catana. “We are therefore delighted that the jury at the FintechGermany Awards has recognised this potential and its innovative character.”
Optimal processing of information
The start-up is a licensed financial services institution under Section 32 of the German Banking Act (KWG), was founded in August 2015, and is the world’s first asset manager that relies entirely on Big Data and Artificial Intelligence. “This kind of data usage is the basis for the fact that, in comparison with the competitors, information can be much more effectively identified, or that information can be incorporated in the investment process that may possibly be completely hidden to other providers,” as Bastian Lechner explains the young company’s approach. He goes on to draw a preliminary conclusion: “Catana’s trading strategy is superior to traditional forms of investment through the combination and real-time evaluation of millions of opinions and news items and through its being embedded in an integrated, holistic process.”
The system keeps learning
According to Lechner, information derived from the Internet from six different countries is automatically collected, filtered, weighted and compared with historical price patterns as the basis for every investment decision. Via voice and text recognition, several hundred thousand pieces of capital market-relevant news are evaluated in real-time per day – that corresponds to around two terabytes of data per month or seven information messages per second – and nearly 30,000 securities are covered, including currencies and commodities. The key question to categorise the signal in terms of direction and strength is: who says what to which security? The system assigns to every security a preliminary positive or negative signal based on the collected information. However, before a final trading signal is generated, the Artificial Intelligence system analyses how a security has performed in the past after a similar assessment, i.e. after such a positive or negative signal. “The system therefore checks what the signal has meant for the security. The decisions taken and their results inform the future investment recommendations – so the system keeps learning,” Lechner explains. “In this manner, buy and sell recommendations for German large-cap stocks and index futures are generated in a purely data-based process.”
Exploiting growth opportunities
As Lechner points out, the origins of the Fintech 2.0 company Catana Capital hail from two directions: technology and the need for change in what is still a very traditional asset management climate. “Many asset managers assume that the use of Big Data could help improve investment decisions and returns. But although Big Data and Artificial Intelligence are a huge market with very big growth prospects, there are still practically no investment strategies at the moment that are implemented on the basis of an evaluation of Big Data information and the findings derived from Artificial Intelligence,” the expert notes. Catana Capital GmbH took this as an inducement to develop a new kind of asset management concept based on such analyses in combination with a rigorous risk management. “Two founders of Catana Capital have been working for almost ten years now on financial market forecasting using large quantities of data. We are collaborating in these activities with Stockpulse GmbH in Bonn, which acts as a research and development partner for Catana,” informs Lechner.
Frankfurt offers attractive conditions
Catana Capital GmbH has chosen Frankfurt am Main as its headquarters. “The Frankfurt financial centre offers attractive working and living conditions. At the same time, it also boasts an excellent infrastructure and enables a close integration with traditional suppliers,” as Lechner explains the reasons behind the decision. He is also convinced that the current developments in the wake of the Brexit will further enhance the status of the financial centre. In his view, additional advantages are provided by the various funding programmes at the city or state level as well as the existence of an active and constantly evolving FinTech community with ideal networking opportunities.
According to Lechner, young start-ups have particular potential when their product or service is really completely new or when it is better and/or cheaper than similar products. A large market and customer demand should exist at the same time, he adds. “It’s also decisive that the team has a complementary line-up. Apart from team strength in entrepreneurial aspects, a certain mental toughness is additionally important so as not to lose sight of one’s positive belief in the success of the company during any temporary phases of defeat or failure and to further pursue one’s goals with courage and spirit,” is the final piece of advice Lechner would like to share.