Better Future for the Financial Future of Germany

We do not think we are exaggerating by saying that we are at a turning point regarding innovation in financial services. Some expect new technologies to completely disrupt traditional financial institutions, allowing businesses and households to access more convenient and personalized services. Entrepreneurs also find applications that go far beyond finance, and these new technologies could transform other areas, including humanitarian aid.

These innovations in financial services, known as financial technologies or fintech are very popular, but they also generate a lot of hype, depending on everyone’s point of view. The number of searches for the term “fintech” in Google has increased more than 30 times over the last six years.

Financial technologies have also attracted capital

In Germany, more than 100 start-ups in the commercial technology sector raised more than $ 1 billion in funding over the same period. In the last year alone, nearly $ 20 billion has been invested in global financial technology. With FinTech Germany the deals come perfect now.

In Germany and abroad, the range of services being deployed is comprehensive. Many of you may already be using Apple Pay or Google Wallet. You may also receive investment advice from “robot counselors.” There are also peer-to-peer loan platforms such as Lending Club. And many other services are being developed.

  • We had the opportunity to participate in several fascinating discussions on financial technologies in recent months – with my colleagues at the Financial Stability Board (FSB) and other international organizations, as well as financial technologies and traditional financial institutions around the world. We can tell you that, despite all the impact of financial technologies, it is unclear whether these investments will pay off economically and socially. And since these technologies are still in their infancy, no one knows what their evolution will ultimately mean for business models or the financial system in general. But we are all trying to imagine it.

We know that we in the payments industry are interested in this because the industry itself is transforming. This symposium is the perfect opportunity to present a central bank’s point of view on financial technologies. That’s why I want to thank Payments Germany for inviting me to speak today.

  • First, financial technologies have the potential to transform a wide range of services within the financial system. And that’s a good thing because there are significant gaps in efficiency that we can fix.
  • Second, while some technologies may seem revolutionary, their overall effect on the financial system is likely to be evolutionary. Adapting financial institutions will survive, and new service providers will integrate into the financial ecosystem. This is happening rapidly in some areas, while in others, the most transformative technologies still face development challenges.

Finally, the time has come for financial institutions, new participants and policymakers to work together. This is the best way to create an environment conducive to the modernization of the financial sector and sound risk management. And this applies to many areas. For the Bank of Germany, the goal is to preserve financial stability and maintain the safe and reliable operation of Germany’s basic payment systems.