Frankfurt Digital Finance 2024 Impressions

The Frankfurt Digital Finance Conference, alongside the inaugural European Fintech Day, attracted nearly 1,000 participants from the private sector, community organizations, and academia from February 7th to 8th, 2024.

The speakers offered invaluable perspectives and foresight into the pivotal themes steering the financial industry, mainly through the lens of artificial intelligence (AI) and environmental, social, and governance (ESG) considerations.

The new concept, including the showcase of different European FinTechs, revealed FDF’s intentions to become a European hotspot rather than a German one. The European FinTech Day introduced over twenty companies from various countries, active in the ESG, GenAI, Open Finance & Payment and Digital Assets verticals.

The event was sponsored by household names like ING, LBBW, Boerse Stuttgart Group, and Veripark.

The conference highlights included vivid side events as well as surprising speeches, and we were there to report the learnings for our readers:

• Main Conference Themes: Throughout the event, AI and ESG principles emerged as a central focus, reflecting the growing significance of technology-driven innovation in tandem with sustainable and ethical financial practices. Speakers delved into the transformative potential of AI applications in finance, exploring its role in enhancing efficiency, risk management, and customer experience while underlining the imperative of ensuring responsible AI deployment to mitigate ethical risks and biases.

Moreover, discussions surrounding ESG factors resonated deeply, illuminating the evolving landscape of sustainable finance and corporate responsibility. From integrating ESG metrics into investment strategies to fostering greater transparency and accountability within financial institutions, the discourse underscored the pivotal role of the financial sector in driving positive societal and environmental outcomes.

• Bitpanda’s Keynote Speech: Austria’s first FinTech unicorn, Bitpanda’s Co-Founder & CEO Eric Demuth, kicked off the event, discussing the hardships, including funding access, profitability pressures, and the crypto regulation discussions.
  • According to Demuth, the entrepreneurial idea is irrelevant, and it’s all about the execution and the fantastic team that could execute a mediocre idea. Demuth advises founders to try their ideas early, as overplanning prevents ideas from going live. He suggests going live with the most minor version possible (MVP) and growing from there, which is the opposite of a corporate philosophy. “Our initial idea was creating a webshop for Bitcoin. Back then, you were engaged in complicated purchase processes for bitcoin. Still, people don’t know how.”
  • Demuth admits that they over-hired too fast around 2020 and consequently spent all their time recruiting. He believes that the team was the most extensive back then; however, it was not as efficient as hoped. After the cost-cutting in the summer, Demuth believes his team to have reached the ideal efficiency and foresees a lot of start-ups failing in 2024 due to cost inefficiency. Market correction seems to work to Bitpanda’s advantage as no initial competitors exist.
  • Another significant remark from Demuth was regarding MiCA. “Coming to Europe is not the right approach. When you come to Europe, you come to 27 different states with no common ground. That makes it harder to create Europe-wide products. With MiCA, it will be easier for non-EU companies to come.” Demuth agrees that navigating regulation can be challenging; however, it could also serve as a USP with the right twist for start-ups.

• ESG Transformation Debates: On the first day of the conference, FDF brought together parties from International Sustainability Standards Board (“ISSB”), Bayer, Deutsche Bahn, ING Germany, Bilfinger, Deloitte, and Merz Asset Holding to create a multifaceted ESG discussion.
  • ISSB Member Jenny Bofinger-Schuster opened the discussions stating that ESG is a strategic issue. “As a company, do I understand sustainability-related risks and opportunities is the key question for corporates,” stated Bofinger-Schuster, and continued with explaining ISSB’s role: “ISSB aims to harmonize sustainability reporting and complexity. Reporting is hard to streamline due to the lack of standard reporting frameworks, leading to frustration for corporations as it lessens the impact feeling.”
  • Deutsche Bank and Bayer representatives stated that Chief Sustainability Officers (CSOs) will remain relevant for many more years. Nevertheless, according to Matthias Berninger of Bayer, CSOs can only succeed if sustainability is integral to the business. Jörg Eigendorf of Deutsche Bank added that sustainability should be seen less as a philanthropic act and instead internalized in internal pricing systems for a more successful transition. Apparently, Bayer is already enforcing this idea by requesting emission transparency from its suppliers.
  • The last question was controversial, yet essential. “Is the European Green Deal too much stick or too much carrot?” The panelists stated that the Green Deal is too complex, as expected, and argued that it should be simpler. “EU is overdoing the regulation. Brussels is the Silicon Valley of regulation at this point. We should make a better deal, enabling regulation, collaboration, and participation. It would only work if industrial policy and the Green Deal come together.

• The Digital Euro Panel: “Digital Euro: What, why and for whom?” panel aimed to explain the Central Bank and the industry perspective.
  • The European Payments Initiative (EPI) representative talked about the untapped wallet needs in Europe.“Digital Euro won’t change anything to EPI. There is an untapped wallet need, and instant payment needs are growing substantially. There are more than seventy available solutions; however, nothing Europe-wide. There is a rulebook but not a solution as the rulebook doesn’t address the merchants.” Accordingly, only Digital Euro’s final design could determine whether it’ll be a competition for the EPI solutions. However, it could also create a distribution opportunity. “Competitors are progressing while we are doing theoretical discussions. Let’s test first and see later,” concluded Martina Weimart of the EPI.
  • The German Bundesbank representative believes that a successful Digital Euro requires a comprehensive marketing campaign, just like the introduction of the Euro.
  • All panelists agreed that the consumer needs to have the choice and control regarding the Digital Euro.

• Open Finance Debates: FIDA, the package aiming to amend and modernize the current Payment Services Directive (PSD2), which will become PSD3 and establish, in addition, a Payment Services Regulation (PSR), was at the heart of the open finance debate at the FDF. The panel discussed the importance of open finance and FIDA, including participants from Qwist, VeriPark, Bitkom, Neodigital Insurance, and Ernst & Young. It concluded with the following suggestions for financial service providers:
  1. Read and understand the regulatory draft,
  2. Work with industry bodies to clarify challenges and opportunities,
  3. Set up your own strategy,
  4. Influence the market development by lobbying,
  5. Find the right partners.

• Data Utilization: The panel including ING Germany, Google, McKinsey, and Wise, discussed embracing open finance. According to the panelists, digital transformation is not a tech challenge but more of a strategy one. Most banks don’t know how to use the existing data, let alone understand how to acquire and use more data. Therefore, a data strategy is crucial for banks and corporates who want to move forward. In addition, banks interested in becoming “tech banks” need to become API-first companies via reusable API strategies.
• European Fintech Day: Day two of the conference was dedicated to FDF’s first European Fintech Day, bringing together best-in-class FinTechs across different verticals representing Europe’s top digital finance hubs and connecting them directly with potential clients, co-innovation partners, and VC investors. Start-ups from Luxembourg, Germany, the Netherlands, Belgium, Italy, Poland, and Turkey.

Nicole Czollek presented Identify’s onboarding solutions, making Identify the first-ever Turkish company to present at the FDF.

• Side Events: The two-day conference offered side events, including the VIP dinner and the Botanical Garden party that featured a banker DJ.

The Dutch Delegation led by the Netherlands Enterprise Agency (RVO), Netherlands Business Support Office Frankfurt, Embassy of the Netherlands in Germany, Handelsroute and Holland Fintech organized an event introducing their portfolio companies (Blue10, BlueMonks B.V., Business Radar B.V., Cognito, Deeploy B.V., EclecticIQ, iO, IoT Nederland B.V., Mail To Pay, Ortec Finance B.V., Payt B.V., SCOPE FinTech Solutions, Sprinque, XMDS and ZYNYO) to German banks.

The Turkish Delegation gathered with local banking executives and entrepreneurs at an event sponsored by Veripark at the Frankfurt General Council’s residence.

Frankfurt Digital Finance 2024 offered many lively debates and talks about marketing, personal branding, and regulations for its participants. The conference closed with a discussion between European ecosystem enablers, featuring TechQuartier Germany, Fintech Belgium, the LHoFT, Holland Fintech, Fintech District Italy, and FinTech Poland.