"We actively accompany disruption"

The financial sector is in a state of upheaval: on the one hand, banks are under strong regulatory pressure, while on the other hand they should continue to be able to serve their customers in the best possible way. But the latter are finding more and more alternatives to their financing needs outside the realm of traditional banking. Reason enough for financial institutions to offer themselves as partners to their business customers again.

What is the current state of the financial markets and what impact will this have on Swiss companies? Marc SteinkatWe still have a lot of liquidity in the market - especially in the Swiss market. This is because the negative interest rate environment makes it unattractive to park money in a bank account and even have to pay for it. Investors prefer to invest their money in companies. This is clearly to the benefit of SMEs. It provides them with a new source of financing for further growth or investments in digitalisation.

Commerzbank describes itself as a "Mittelstandsbank". It has only been active in the Swiss market for a few years. What has been your experience with SME customers in Switzerland so far?

We started our business activities in Switzerland in 1985 with a focus on private clients. Since 2014, we have clearly focused on corporate clients - both SMEs and large companies - and have completely discontinued business with private clients in Switzerland.

Why this change of strategy?
The reason for this is that Swiss companies are strongly export-oriented. The local domestic market only allows for limited growth momentum. In this respect, I consider Swiss companies to be export champions, because they are much more oriented towards foreign markets than elsewhere. In Germany, Commerzbank handles around 30 percent of German foreign trade. After all, it was founded in 1870 in Hamburg for the purpose of supporting companies in their export activities abroad. We are present in almost 50 countries in all the major international financial and business centres. Our idea is to take account of local conditions in Switzerland at six locations - Lausanne, Berne, Basel, St. Gallen, Zurich and Lucerne - and to base this on our international activities. As an added value, we want to provide support for ex-port-oriented Swiss companies.

What was the response from the market, especially since many companies complain time and again that they hardly receive any more loans from banks for investment projects, and if they do, then in connection with more and more regulations?
Curiosity about a "new bank" certainly also played a role. As a bank focused purely on corporate clients, we have a unique selling proposition in Switzerland - we deliberately do not do any private client business. In this respect, our focus on companies, their concerns, needs and wishes is quite clear. However, we naturally focus on the business model of the companies, on the future viability of the business models. We combine this with our sector expertise. As an example: An automotive supplier in Switzerland benefits from our knowledge of this sector and also allows a sound understanding of the business model - the result, on the other hand, is also more in-depth questions.

In other words, there is more empathy for the customer - something that many banks seem to have lacked recently?
There we are on the path of transformation ... Money does not earn more money. It needs an additional service that the customer is willing to pay for. The key words are added value and quality. We are working on taking things off the customer's hands and providing quality where he is also willing to pay a premium for it - if a burden is lifted from him in return.

What role does digitalization play in this? Many banking processes can be excellently automated, leaving more time for the "interpersonal", i.e. also between banks and their customers.
That's absolutely right. The empathic factor is what makes humans superior to any machine. On the other hand, things like payment transactions, where in the past many processes had to be handled manually, are constantly being automated so that these services are available at lower cost.

On the other hand, there are still many voices on the customer side that complain about how inconvenient it sometimes is just to receive a bank statement - be it on paper or digitally. Have banks not yet done their homework properly?
We have our own Digital Campus in Frankfurt. Around a thousand employees are based there, who are digitising the key processes. For example, we have introduced a digital credit platform that SMEs can use to apply for an overdraft facility of up to €5 million completely digitally. Ideally, the customer receives the signed loan agreement within 24 hours. The challenge arises when a process no longer conforms to the norm. In the case of special features, individual solutions are still needed.

And these will increase?
They are becoming more expensive above all because they can no longer be handled at the same standard rates.

And that's where empathy for the customer comes to an end ... Unless you increasingly rely on such individual solutions?
The added value is quite clear: if you want to expand your business or acquire another one, you need strategic support - ideally from a financial partner who can handle the project with the best available options from a single source. This can be capital market financing or a classic loan, but it can also be the injection of private funds. This mediation and translation are things that are very much part of the empathetic environment.

Now, more and more young fintech companies are entering the market that offer bank-like services. I am thinking in particular of platforms for peer-to-peer financing, for example. What position does a bank like Commerzbank take with regard to these new developments?
A very active one. If you don't take these things into account and don't recognise them, then developments pass you by. That's why we founded the Main Incubator, Commerzbank's research and development department. As an early-stage investor, it offers young technology-driven, early-stage companies money, expertise and access to Commerzbank and its

customers and thus strengthens them in their growth. Recently, we did a challenge at the University of St. Gallen like "Die Höhle der Löwen". We evaluated six great start-ups and business ideas. A jury selected two winners. They will fly to Frankfurt in March. There, they will have the opportunity to pitch to investors at the leading fintech event "Between the Towers". They will also get to know Frankfurt's vibrant fintech ecosystem and have the opportunity to implement a new fintech solution directly from their studies.

In other words, they are jumping right on the "disruption bandwagon" instead of fighting it.
Absolutely. We even actively accompany disruption. We would rather do this ourselves than have someone else do it.

The financial sector is not exactly known for being particularly innovative. On the other hand, Swiss SMEs: they are considered "innovation champions". The only problem is that innovations cost money, and there is still talk of a credit crunch - due to ever stricter regulatory requirements. How do you assess this situation?

Regarding the first part of your question: It is of course difficult to implement a culture of error in a regulatory environment that is characterized by "zero tolerance". That paralyzes. Other industries are more impartial in this respect. On the other hand, there is only one way to pursue these things, and that is to look at what needs to be done innovatively in order to create added value for a high level of customer experience. We are actively working on this. And this is precisely one of the success factors in Switzerland: facing up to these quality features. On the second question: I don't see a credit crunch. On the contrary. There is much more liquidity in the market. But people are taking a much closer look at where they are lending money. If ideas already exist, a company can show initial successes and I as a bank can actively accompany the innovation process, I see no obstacles to financing. A pure start-up, on the other hand, needs other means; the financing must have more of an equity character.

Finally, a statement on the topic of cryptocurrencies? What is the view of a classic financial institution like Commerzbank?
We are watching the development of cryptocurrencies like Bitcoins very closely. However, they are also speculation-driven. The really exciting topic is the underlying technology, such as the blockchain. And we are taking a close look at that.