Unless you have been living under a rock, you must have noticed that OMR recently took place in Hamburg from the extensive social media coverage. The two-day “German Web Summit” hosted 1000 exhibitors and 70.000 visitors, including many celebrities and executives.
Just like a Matryoshka Doll, OMR hosted conferences in conferences and then some more. One of these side-tracks, the Finance Forward Conference (FFWD), has been serving as an independent event due to its excellent FinTech content and curation, and as expected, we took our seats. Let’s take a look at what happened and what was said during the event:
The Finance Forward stage welcomed prominent actors and influential players from Germany and the world, including speakers from Klarna, Bitpanda, Qonto, N26, Solaris, and much more.
- The Co-Founder of the bootstrapped start-up Parqet stressed the importance of “having fun at work and not focusing only on the exit” when asked about his fundraising pointers. He advised fellow entrepreneurs to invest in a big network, stay away from the investor pressure, and prepare well for fundraising. According to Sumit Kumar, the MVP can lack many elements and features, but it should prepare a decent ground for user feedback. Kumar believes that money-making isn’t so important at the early stages as collecting real feedback takes time.
- Fabian Spielberger and Philipp Klöckner’s conversation with Caspar Schlenk kicked off with a heated discussion about the crypto market status quo.
According to Fabian Spielberger of pepper.com, the post-FTX crisis will continue for a while, and therefore start-ups should keep the cash, keeping in mind that the funding is low, and the regulations are getting tougher.
When the panel moved toward the AI trend, the speakers highlighted that AI replaced the past year’s super app trend. According to the panelists, super apps are not feasible due to the super app idea’s conflict with the first rule of product building and profitability: “focus.” They go as far as calling Twitter a “clown car.” In addition, the panelists claim that European customers’ lack of smartphone addiction, unlike other geographies, is also a barrier for potential super apps. Fabian Spielberger believes that changing the original use case for super apps is extremely hard, making it hard for providers to reach the super app status.
The dynamic duo also has suspicions about neobanks. They believe that in the past years, customers of European neobanks were overvalued. “When looking at the existing clientele, you can see that the early adopters are happy, but neobanks are still not replacing traditional banks as house banks,” discussed the panelists, questioning whether the current neobanks will be around in the following years. They advise neobanks to halt expansion until they are sufficiently strong in their house market.
- The following panel, including Peter Großkopf, Henrik Gebbing, Florian Adomeit, Friederike Ernst, and Daniel Seifert, questioned the purpose of web3. The panelists were asked to define web3, and they answered with “a chance to improve web2,” “internet of values,” and “giving back the user their ownership and control.” According to Friederike Ernst, it is too early to make statements like “blockchain is a failed technology” as “blockchain is no Instagram” and needs more infrastructure and time. Peter Großkopf, the Co-Founder/CTO at Unstoppable Finance, believes that web3 is about responsibility and can make banking more usable, highlighting that “blockchain is a global core banking system.”
All panelists agree that web3 makes remittances cheaper and better, and the use cases will improve over time. Henrik Gebbing additionally believes that web3 will improve the KYC-related challenges since “a digital ID tied to social media accounts is likely to dissolve fake account-related issues.”
During the event, Peter Großkopf revealed that his company Unstoppable Finance plans to build a “fully regulated DeFi-native bank and a fiat-backed euro stablecoin.” The news about the financial service provider bridging traditional banking and DeFi verticals seemed to have excited the ecosystem following economist Nouriel Roubini’s analysis of cryptocurrencies, claiming that “they are useless, worthless, and systematically susceptible to fraud.” Nouriel Roubini stated, “A currency needs a function, and so far, cryptocurrencies couldn’t demonstrate this function.”
The ecosystem disagrees. Despite the so-called crypto winter, Bitpanda’s Founders, Eric Demuth, and Paul Klanschek, even reported an increase in interest. When asked for her thoughts on the matter, Hopa’s Co-Founder Sylvia Durach also expressed enthusiasm and added, “There are a lot of blockchain-based solutions, but nothing really combines the best of both worlds; traditional payments and the agility of blockchain. So, the industry, including Hopa, is working to solve that.”
- The panel moderated by Miriam Wohlfahrt of Banxware focused on corporate and start-up marriage, following up on Tink’s acquisition by Visa for EUR 1.8B in 2022. According to Daniel Kjellén of Tink and Albrecht Kiel of Visa, corporate and start-up collaboration is no piece of cake. Still, he states that creating a functional symbiosis won’t take long when there is a good fit of cultures and direction. Daniel Kjellén says, “Play the set of cards you have been given. Tink was founded when raising (money) was hard, and there wasn’t too much money around. Now it’s a similar environment. There are many moving pieces, and you have to adjust accordingly.”
Solaris, the famous BaaS provider from Berlin, was also investigated closely during the event. The CEO Carsten Höltkemeyer mentioned that Solaris is eyeing profitability this year, and there is a catch: apparently, Solaris doesn’t want to be dependent on FinTech clients anymore and will instead focus on corporates. The decision might disappoint Solaris fans, but other local players seem keen on filling the gap. Lennart Swoboda, Varengold’s Banking-as-a-Service Lead, shared his thoughts exclusively with us ” “For years, we (BaaS Providers) have praised Embedded Finance. However, after this year’syear’s FFWD, brands and platforms seem to have taken their stand. The industry offerings have matured in a way, and blueprints have been shown, demonstrating that you can actually build all nuances of financial services, depending on your requirements and needs. Nevertheless, there still seems to be a lot of space for BaaS players and new brands, making the future of “as-a-service” very exciting.”
Incidentally, the new German BaaS player Paydora announced its market launch around the same time.
Many other panels and speeches focused on the funding gap and its potential impacts. The FinTech funding panel, including Jasmine Zhang, Julia André, Ophelia Brown, and Amy O’Brien, discussed the impact of the recession. It was agreed that the ecosystem shifted from ” growth and visibility” to “efficiency” and should prioritize profitability and core markets over longevity. The panelists advised entrepreneurs to “be conscious about every dollar spent” and to ” ensure that they have the fundamentals while approaching a consolidation period in 2024.
During the event, Caspar Tobias Schlenk, one of the names behind the Finance Forward conference, interpreted the current situation exclusively for us:
“Just last year, you could feel a real hype on stage at the Finance Forward conference.
Millions of dollars were still flowing, and companies were growing. Now, in 2023, it was noticeable that the most important founders and CEOs of the German fintech scene grew more cautious. The days of growth at all costs are over. Nevertheless, many have a positive outlook for the coming year. That surprised me personally.” Caspar Tobias Schlenk, Redakteur/Koordinator Finance Forward
BNPL has been in the middle of a lot of controversy lately. Thus, as expected, Buy-now-pay later was one of the hot topics of the event and was discussed from all angles:
- Susanne Krehl (Fabit) and Christian Grobe (Billie) had an entire panel dedicated to the pros and cons of BNPL. According to Christian Grobe, the current Schufa data doesn’t back the claim about BNPL creating a “debt trap.” Susanne Krehl responded that although there was more consumer saving potential during the lockdowns, the saving behavior went backward, and consumers had to fight for their daily costs. According to Krehl, although the product isn’t different from credit cards, the easy usability creates financial issues, and an HBR study supports that BNPL encourages retail purchases. Grobe disagrees, arguing that “BNPL is not new compared to the invoice payment or cards, but we have these issues now due to the easy online payment options. You order more thinking that you’ll spend at least half of the purchases back, making the issue a trending issue rather than a product issue.” The panelists agree that the BNPL branding using Snoop Dog, etc., converted the payment product into a “consumer product,” giving the wrong impression. Strong financial education in Germany is needed, allowing consumers to differentiate better. However, Christian Grobe believes that although it’s not the responsibility of the advertisement to get into debt, it should explain the process and consequences better, and there is a need for a regulatory framework.
- Sebastian Siemiatkowski of Klarna’s talk was among the most interesting ones as it answered all the open points of the debate from the day prior. Siemiatkowski talked about how creating a bank that looks like a fashion brand was intentional “…Banking is about trust, and trust is communicated via middle-aged white men in suits, talking. We saw that consumers do not resonate /connect with these bankers, and we wanted to speak the customers’ language and simplify topics. How do you engage younger people to talk about finance? If you use Paris Hilton or Snoop Dog instead of a banker hiding in the office, that is clear to me.” Siemiatkowski confirmed that Klarna had moved away from the “super app” ambitions. He believes that “Mac OS is a super app on its own,” and in Europe, a super app isn’t as necessary. Instead, Klarna wants to build an e-commerce ecosystem, enabling trade and connecting merchants and consumers.
During his speech, Siemiatkowski also stressed the importance of identification for the product. Apparently, Klarna is working on offering an alternative sign-up experience as an alternative to Facebook log-ins, allowing users to control their data better.
Sebastian Siemiatkowski blames banks in Germany for the issues they are having now. He believes that the banks feel threatened by Klarna as they are challenging a huge industry, and the banks are lobbying against them. He believes that the regulatory wave around BNPL is due to the misunderstandings around it. According to Siemiatkowski, BNPL is a “better form of credit than credit cards, providing better rates,” however is threatening for banks. It sounded like Klarna didn’t mind tough regulation as it would provide better consumer protection. Nevertheless, he believes that creating friction for using services may sound like consumer protection, but it is usually a way to buffer big companies.
Varengold, WebID, Pleo, Verimi, Treezor, Sastrify, PPI, Swan, Unzer, Granite Shares, and Fio Systems were among the exhibitors of FFWD23.
