- Date 31 January 2017
FintechInsider: Mr Spahn, about a year ago you gave an interview in which you complained that many of your favourite bars and restaurants in Berlin only accept cash. Have things changed?
Jens Spahn: Things have got a bit better. More and more waiters now have tablets and mobile card readers that allow customers to pay by card. But compared with other European capitals, Berlin still has some catching up to do.
FintechInsider: Is mobile payment the next big thing in the fintech industry? What other priorities are there, in your view?
Jens Spahn: The success of individual products or services depends on various factors. With any innovation – be it a mobile phone payment system or a new investment platform – the benefit to customers is key. Financial services need to be instantly available at all times, including weekends, wherever the user happens to be. Solutions that fit this bill have a chance to become the “next big thing”. China is well ahead of us when it comes to mobile payment solutions. People there can use an app to book a table at a restaurant, place their order, settle the bill, and even lend others money for their meal.
FintechInsider: What are the main features of a good fintech company?
Jens Spahn: I think there are three factors: First, user-friendliness. That’s something fintech companies are often especially good at. Products and services need to be tailored precisely to customer needs. In many cases, we aren’t talking about completely new products, but rather new ways of providing easier access to existing financial services. Second, a sustainable and scalable business model: Fintech companies should aim to achieve the necessary market penetration and to be able to finance themselves after the innovation and start-up stages. Third, corporate responsibility: The fact that something is within the rules doesn’t automatically make it a good idea, especially if the risks are not in proportion to the benefits to society.
FintechInsider: Until now, Berlin was the fintech capital. But a recent study by FintechInsider and Joblift24 has shown that other big cities are catching up and becoming increasingly interesting to new start-ups. What will the German fintech map look like in three years?
Jens Spahn: It’s great news that other places in Germany are offering attractive conditions for start-ups. As they say, competition is good for business.
FintechInsider: The German Federal Ministry of Finance has just published a major fintech study. What are the German government’s conclusions about the industry?
Jens Spahn: Cooperation is the key to success. 87% of the banks that took part in the study commissioned by the Finance Ministry are willing to work together with the fintech industry. Far from being challengers or competitors, it seems that fintech companies and conventional banks are growing closer. They need each other. Fintech companies often have innovative ideas, agility and lean structures. Banks have years of experience, large customer bases, regulatory expertise and – at least in Germany – enjoy higher levels of customer trust than tech companies. Fintech companies have boosted development among established banks. Banks have had to accept that innovation and digital technology strategies are not optional; rather, they are the only way to retain customers in the long term.
FintechInsider: And what’s the growth strategy?
Jens Spahn: Each company is responsible for its own growth strategy. We make sure the right policy conditions are in place and that they are updated to reflect changing circumstances. What’s important to us is to promote innovation and entrepreneurship without losing sight of emerging risks to users and to financial stability. We need to strike the right balance.
FintechInsider: Experts predicted that many London fintech companies would come to Germany after Brexit. So far, that hasn’t happened. What does London have that Germany doesn’t?
Jens Spahn: Many companies are waiting for more clarity before they decide where to locate. In any case, Germany is in a good position. We are the largest financial centre in continental Europe and offer excellent infrastructure, a stable political and economic environment, efficient administration, a high level of legal certainty, first-class research facilities and a high quality of life.
FintechInsider: Entrepreneurs always see regulation as an obstacle. Are there any plans to loosen or tighten rules in the near future?
Jens Spahn: We have taken a number of positive steps for start-ups. Let me give you two examples. The first is a reform of the tax rules for carrying forward losses, which will make it easier for companies with innovative business models to grow. The aim is to eliminate tax obstacles that prevent businesses from gaining access to capital when new shareholders are introduced or existing ones are replaced. We have just presented draft legislation for this change. At the moment, companies that need to find new shareholders or replace existing ones in order to raise sufficient capital are forced to forfeit unused losses. The new rules take account of this situation. Second, we are currently working on a law to implement the EU’s second Payments Services Directive, which will allow for new business models. Credit institutions will have to give regulated service providers access to payment accounts subject to certain security conditions. This will open up new business opportunities to both traditional banks and innovative companies.
FintechInsider: Do you still have an account with a traditional bank? If so, how long are you planning to keep it?
Jens Spahn: I see no need to change at the moment; I am happy with the online banking services offered by my bank.
FintechInsider: Thank you very much for the interview.
The Interview was published on 31 January 2017 on www.fintechinsider.de