"The FintechGermany Award is a platform for active knowledge transfer".
Fintech Germany Award
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"Regulation is probably still one of the biggest challenges for young FinTechs in Germany," says Philipp Sandner, Head of the Frankfurt School Blockchain Center. Read how the FinTechGermany Award can help young FinTechs overcome the hurdles of regulation in the Frankfurt Main Finance Interview.
What do you pay particular attention to when assessing applicants for the FinTechGermany Award?
The main focus is always on the business model of the company to be judged. Especially in the area of FinTechs, the degree of innovation of the idea is of particular importance. The implementation, the associated cost efficiency and especially the integration of new technologies such as blockchain and artificial intelligence are decisive factors for whether a FinTech can survive on the market - or not. The Frankfurt School Blockchain Center has set itself the task of advising young and highly innovative companies that use these new technologies and supporting them in their implementation and commercialisation. We firmly believe that the use of blockchain technology in particular will have a strong influence on the financial industry and thus, of course, also on the chances of success of the FinTechs applying.
What are the biggest challenges for FinTechs in Germany today? What needs to be done to support these young companies? How do platforms like the FinTechGermany Award help?
Regulation is probably still one of the biggest challenges for young FinTechs in Germany. Due to the interaction with the financial market, strict regulations on the part of BaFin often have to be followed, which are more difficult to achieve for FinTechs than for large financial institutions due to cost pressure and a lack of staff. Therefore, it is important to impart knowledge to young entrepreneurs and show them ways to adapt their business model, for example, so that the need for BaFin regulation is reduced or even becomes obsolete. Platforms like the FinTechGermany Award can be used as a basis for this knowledge transfer.
How do you assess the development of the German FinTech ecosystem for the coming year? What prospects do you see in an outlook for the next five years?
A constant or even expanding degree of regulation of FinTechs by BaFin during the course of the coming year could lead to a consolidation of the market and force some FinTechs to give up. Despite any impending consolidation, I believe FinTechs will continue to grow in importance because, unlike banks or other large financial institutions, they can innovate and deploy new technologies in a more agile and targeted manner. Banks will have to be prepared to face serious competition from smaller companies, which could diminish their monopoly position. Therefore, banks can be encouraged to seek proximity to FinTechs in order to actively promote innovation on the one hand and not to lose out on new technologies on the other. For this reason, an increasing number of cooperations between large financial institutions and FinTechs can be expected in the coming years. In the medium term, topics such as artificial intelligence, machine learning and crypto assets will gain central importance and determine whether a business model can survive on the market.
What should be done in Frankfurt to become one of the leading fintech hubs in Germany or in Europe?
First and foremost, places need to be created where young companies can creatively try their hand together and receive advice. Such a platform serves not only to exchange ideas among each other, but also to establish contact with potential investors and partners. Unfortunately, there are still far too few opportunities in the financial centre of Frankfurt. This infrastructure is much better developed in other countries in Europe and the rest of the world. Here, the state as well as the federal politics are in demand and called upon to provide enough funding in order to be able to provide a sufficient number of facilities for young companies. In this context, knowledge transfer is also indispensable. Many decision-makers have still not adjusted to the upcoming paradigm shift in the financial industry. This is regrettable, as it threatens their business model and, on the other hand, the increased financial strength could be used to drive innovation in partnership with FinTechs. The Frankfurt School Blockchain Center wants to contribute to this knowledge transfer and thus regularly organises seminars, events and large conferences to draw attention to new developments and to sensitise management to topics such as blockchain.