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FinTech events from EBS Alumni Insights

2017 marked the beginning of a new series of EBS Alumni Insights events in which former students of EBS Universität für Wirtschaft und Recht meet and network with various German institutions, companies and start-ups. In the Rhine-Main and Rhine-Neckar regions, two such events took place in February which focused exclusively on the FinTech industry: a FinTech round table in Frankfurt and a visit to GetSafe in Heidelberg. Read more

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Brexit does not kill the Financial Markets: An Ode to Regulatory Oversight

Brexit – The unthinkable! While most market commentary is focusing on what has happened so far, there is less attention to what failed to materialize: a financial market meltdown similar to the financial market crisis in 2008. To a large degree, the resilience of the banking industry is due to the reluctant adoption of bank regulation. Regulators were often enough subject to harsh criticism – it is time to applaud some of their work.  Read more

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WebSummit 2015 in Dublin: 40,000 visitors, 2,100 startups and 1,000 investors

From the 3rd to the 5th of November, the WebSummit 2015 took place in Dublin again. Within five years, the small technology event in the time-honoured “Royal Dublin Society” (RDS) with 500 visitors has grown to an exhibition of global reach with more than 40,000 visitors, approx. 2,100 startups and 1,000 investors. This year, a zeb team visited the event for the first time and was absolutely enthusiastic about it. As a management consultancy that focuses on the financial services industry, the 110 fintech companies were the center of our attention, including the 16 representatives from the DACH region—but more about this at the end of the article. Read more

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IFZ conference — Innovative offers in retail banking

135 participants flocked to the sold out conference on “Innovative offers in retail banking” at the Institute for Financial Services (IFZ) on June 25, 2015. Actually, the conference lives up to its title. During a short introduction, the organizer Prof. Dr. Andreas Dietrich examined innovative trends on the Swiss market from macro perspective. Afterwards, representatives of leading banks presented their digital offers. It is good to see that banks have increasingly aligned themselves accordingly and that several promising offers are already in the pipeline to be launched in the near future.

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Are banks worth more dead than alive?

Classic Net Present Value (NPV) techniques define the value a project, a firm, and potentially a whole industry, as the sum of probability-weighted discounted profits and losses. However, this approach can produce misleading results if asymmetric risk sharing arrangements between owner and debtors are ignored. Here, option-pricing theory may better explain the conundrum of low profits resulting in comparably high valuations. I derive three seemingly surprising propositions for the banking industry that run counter to conventional wisdom.

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How Central Banks create incomplete markets

While comprehensive studies have been carried out regarding the optimal monetary policy under incomplete market, the opposite causal direction, how monetary policy can cause formerly complete markets to become incomplete, has not yet received much attention. The recent monetary policy of the Swiss National Bank (SNB) may serve as a case study for such an event.

Complete vs. incomplete financial markets

“Complete” financial markets can be defined as those in which any possible future state of the world can be replicated/hedged with existing financial instruments with minimum friction. For example, central banks’ overnight interest rates can be hedged with reasonable accuracy through Fed Funds futures, overnight index swaps (OIS) or certain repo-based products (such as Switzerland’s SARON, a reference rate based on data from the Swiss franc repo market).
“Incomplete” financial markets, on the other hand, refer to situations in which market participants lack certain financial instruments to hedge against all undesirable outcomes. Causes for this may include: A lack of financial innovation has not (yet) led to the development of such instruments; required instruments are prohibited, over-regulated, taxed or otherwise impaired in their ability to serve as a hedge; fiscal and/or monetary policy has created financial exposures that cannot be (easily) replicated by financial markets.

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Does non-interest income boost banks’ bottom lines?

A recent study performed by the NYU Stern School of Business and the University of St. Gallen’s Swiss Institute of Banking and Finance offers some promising empirical evidence about whether bank performance is positively impacted by diversification into non-traditional (ie, non-interest related) activities[1]. The underlying question is as old as banking itself. However, a more powerful data set, including the years surrounding the financial market crisis of 2007-2009, now enables scholars to take a fresh look. Read more