Frankfurt, Germany March 24 – The German Association of Investment Professionals DVFA held its first FinTech Forum in Frankfurt. While Frankfurt is one of the leading finacial hubs in Europe and THE hub in Germany, the city has strong competitors when it comes to the startup scene. Not surprisingly many of the panelits came from Berlin… On the other hand there have always been a lot of new companies in Frankfurt founded to offer new services arond the financial industry, but before the hype they just did not call themaelves a „FinTech“.
The FinTech Forum gave a good overview of the current state of the development in the sector and where the concentration of deals and activities has been so far and where might be the next area in focus of FinTechs.
Since the audiance was mainly from the financial sector, many participants were wondering how FinTechs can operate without having the relevant licences in place which drag the existing palyers in so much regulatory burden that they hardly can spend any ressources on innovation. Bird & Bird was presentig some nice examples how to reduce the regulatory pain for Fintechs. The main solition was to team up with an existing player who has a correspondig licence. Well this might not sound quite innovative, but seema to be at least efficient.
So this led to the finding the regulation and licences will be some hassel but will certainly not protect the business of existing players of the financial industry.
An other topic which has been discussed was whether or not the FinTech offerings have a disriptive character or rather mean innovation and solely a decelopment of the existing value chain. The qestion was ask to the audience initially and at the end of the conference and the fear of Fintechs doing something disruptive decreased when looking closer into their business models. Also the expectation of Banks being able to internalize or replicate the FinTech offerings rather increased. The FinTechs on the stage were not so impressed by that finding as they are confident that until Banks have replicated their business model they will be gain two steps ahead by finding innovative solitions for other client needs.
This left me with some mixed feelings, since if FinTechs think their business is rather innovation than finacial services, then they might not have the right passion to meet client demand in the mid and long term.
Last but not least it was debated if „at the end all players (existing or FinTech) will need to earn money with their services“. Again – and this was especially mentioned for the payment sector – it has been pointed out that existing player may have a much to norrow view and that they can not even think of how FinTechs will male money out of their business models. Pyments may only be a necessary service to collect client data and they revenues will come from leveraging this data but the services will be offered at costs or even below. And even if Banks do understand this, would they consider such a business model to expand into? I would have strong doubts about this and so my conclusion is ….
…that the financial sector will defenitely see a number of changes caused by FinTechs.
The penalits mentioned that banks currently have a quite deep value chain and this might change and some banking services will get redefined to comon other services and internalized by other players…