Niko von Tippelskirch has worked in the finance industry for more than two decades. During this time, he held several top-level management positions at high-profile businesses, like Deutsche Bank and DWS.

Before his most recent position as a member of the board of directors at DWS, von Tippelskirch worked as Group COO Europe at Deutsche Bank. In this interview, the finance expert talks about his career, climate responsibility, his recent switch to the fintech startup bullfinch, and more.

You worked at Deutsche Bank for almost 20 years and, most recently, spent two and a half years on the board of directors at DWS. Why did someone like you, who had such a long and successful career working for such established players, decide to join a fintech startup like bullfinch?

Niko von Tippelskirch: Well, first of all, I enjoyed working at Deutsche Bank for 20 years because Deutsche Bank always allowed me to drive issues forward. We were able to implement and develop a whole range of positive topics by initiating the most sensible solutions, getting people on board, and convincing the Management Board to budget for it.

That’s something that I always enjoyed doing in my career. I never waited for someone to tell me “do this or do that,” instead, I was always thinking: “Where can I add value? How can I make myself useful?” For example, long before the financial crisis, I saw that prior big acquisitions made by Deutsche Bank in the late 80s and 90s were never really integrated in the sense of a post-merger, and I took that as an opportunity to clean up the entire legal entity structure in Europe.

During the financial crisis, I used what competitors only did after the financial crisis to turn European subsidiaries into branches of Deutsche Bank AG via cross-border mergers. This enables much more efficient capital management, reduces costs, and enhances efficiencies. 

When I left Deutsche Bank, I was looking for something that would enable me to move things, to build something constructive. In recent years, the main theme in major banks were many cost-cutting projects and regulatory issues impacting the entire finance industry. This made me feel the need to become active as an entrepreneur, so I looked around.

During this process, I came across bullfinch. After that, I had some very productive discussions with the board of directors, the supervisory board, and the investors, and I saw a very high level of commitment across the board. Also, we have three daughters, who are 15, 14, and ten and a half respectively, and they now understand what their father is doing to finance and contribute to the energy transition. And that feels very good.

bullfinch describes itself as “the catalyst for local clean energy.” What does that mean? What exactly does bullfinch do?

Niko von Tippelskirch: I am happy to explain that, but I’ll try to keep it simple for now, seeing as you can lay this out in a relatively complex way. So, bullfinch offers two solutions that make us sit in a kind of a sweet spot with a new product. You can, of course, go and get a solar system installed by the business of your choice. However, then you will have to pay for that system in cash.

If you take into account that the average German homeowner, for whom this is a relevant topic, has about €55,000 worth of investable assets, then a solar system that is between €12,000 and €15,000, if you add a battery or a wall box for charging an electric car, it can be even more, is a massive investment.

Currently, there are companies in the market, like EIGENSONNE, a partner of ours, that offer rental products. As a homeowner, this means that you can make your roof available, rent it out, get the photovoltaic system and other needed components installed for free or, rather, without any investment, and then enter into a 20-year rental agreement at a fixed rate.

This has the advantage that you won’t bear the asset risk. So, while it is not yours, if the system breaks down for any reason, you are entitled to a replacement. And, because of the contract, all the maintenance and insurance are included. However, the most interesting aspect is that the monthly rental earnings are about the same as your current electricity bill.

In other words, you can convert your current electricity bill into a rental payment that will be paid off by the solar system. This allows you to generate green energy on your own without bearing the risks or having to pay for maintenance. Additionally, because the rental price stays the same over the 20-year contract period, you are hedged against rising energy costs.

Just take a look at what happened to gasoline and diesel prices due to CO2 taxation. They have increased massively. So, this is another risk that you won’t have. That’s one aspect of what we do.

Furthermore, as a fintech with a fully digital solution, we cooperate with providers and take over the refinancing of these assets from traditional banks. Usually, this is a long process and requires some bundling. However, we are able to help solar installers or companies like EIGENSONNE get their systems refinanced much faster. Consequently, they are able to install large volumes faster because they would, otherwise, have to take on interim financing until a bank finances a project.

The second step is that we take the assets, bundle them, and create a new, innovative asset class for institutional investors. These institutional investors currently can only invest in solar parks or wind farms, but not in decentralized systems. And that is the key difference between our model and existing ones. With bullfinch, you will, by design, achieve great risk diversification. So, if a natural disaster, such as the unfortunate floods that we recently saw, occurs, your investment will not just be gone.

Usually, if a natural disaster were to break your solar park, you would need to repair it. However, if the plants are spread all over Germany or all over Europe, you won’t have the same concentration risk, which means your risk profile will be much more attractive.

Another aspect is the fact that wind and solar energy can have a big impact on the electrical grid infrastructure during times when there is a lot of wind or sun because the needed capacity does not yet exist. One of the benefits of the decentralized approach that we provide and finance is that a lot of the energy is being consumed locally, which eliminates the issue of overburdening the electrical grid infrastructure.

And there is still another aspect to it. Personally, I am a big advocate of a stable but lean state. We are offering a new diversified, long-term, low-risk asset class to institutional investors, mainly pension funds and life insurance companies. This means that we are bringing the decentral energy transition to long-term-oriented investors and are making it investable for the first time. So, we are offering a solution that relieves the public sector, the state, and the taxpayers.

In your opinion, what responsibility does the finance industry have in regard to climate change?

Niko von Tippelskirch: I think this goes beyond the finance industry. From my perspective we all have a responsibility to do our part and address climate change in some way. And I am talking about small things here.

If you would have asked if I was going to take a recyclable bag to the supermarket ten years ago, I would have told you that I am going to get a bag there anyway. Today, I would say “I don’t want a bag, I will just carry it with my hands because I would just throw away the bag right away anyway.”

I think this is due to a change in thought processes, hopefully for many. At least, it’s like that for me. So, I think private individuals also have a responsibility to carry.

That being said, the finance sector has a very special responsibility because it distributes and deploys significant capital. We have to ask ourselves how banks and asset managers can best manage this responsibility. And I believe that it is of utmost importance that banks develop transparent processes and decision-making criteria to show how they plan to finance climate change.

In the EU, government frameworks and regulations in this regard are not particularly well-developed, and — in addition — local perceptions are very inhomogeneous. For example, nuclear energy has a completely different status and acceptance in France than it has in Germany. This has to be reconciled.

Another example would be the ESG topic in the banking sector. Five years ago, as an investor, as a bank, you could have decided to no longer invest in large car manufacturers that were involved in the diesel emissions scandal or corporate governance issues.

However, would that be the right thing to do economically? Is that the right analysis and result for your investors? I think the answer is no. If you look at big German car manufacturers, at least one of them has now sold more electric cars than Tesla. So, there is a whole other dimension that you have to evaluate. It’s not just about how the company currently works as a financing bank, an investment bank, or an asset manager, but there’s also the question of what the management is doing to contribute and move the company forward in the right direction.

So, I think that finding conclusive and transparent answers to such questions is the core responsibility that the finance industry has to take on here. Assessing management agendas to support change and distributing capital accordingly needs to be prioritized!

This steering effect that banks and asset managers have needs to be used properly. Capital should not simply be invested in existing products that are then labeled as green assets, green products, or ESG products. It should be invested in new asset classes, and that’s why bullfinch fascinates me so much.

We are looking at an enormous market. In Europe alone, we’re talking about a multi-billion market. And, besides us, there is no one with a solution.

We are offering a way for average homeowners to help finance green energy and the energy transition with the price of their current electricity bill. Further, we are creating a highly attractive asset class for institutional investors without needing a single cent of taxpayer money. I think this is one of the key aspects the finance industry needs to improve. Just putting an ESG-label on something is not enough to drive change. It’s about innovation, and that’s what interests me about bullfinch.

There’s a quote from Alfred Herrhausen that I really like: “We have to do what we say. And we have to be what we do.” That quote is from the 1980s, well before the banking crisis, but I think that it is still true today. And, in the end, that is the core of bullfinch’s DNA, we want to develop and offer sustainable solutions.

What can the finance sector do better or differently to be more climate-conscious and to ensure a sustainable future?

Niko von Tippelskirch: We already talked about the impact of directing financing capital, but, of course, large asset managers also have a very special responsibility. After all, they are the ones who have all the voting rights for general meetings in the equity funds that they manage for investors.

In addition to proxy voting rights advisers, I believe that asset managers have a big responsibility, seeing as they are acting as a trustee for the actual investors, being responsible for the investor‘s interests and their voting rights. Therefore, asset managers assume significant responsibility, and I believe that this is where asset managers can drive real change and transformation.

What positively surprises me is the incredible interest of investors regarding this topic, especially because bullfinch offers the direct exposure to invest in actual green assets. Unlike with other products that are currently available and have an ESG label on them, bullfinch provides a unique, completely green product without any greenwashing.

To facilitate investments in this new asset class, which you couldn’t invest in before because an asset manager can’t handle 1.5 to 2 million individual contracts, we developed a fintech solution that automates and digitizes this process.

The companies that are building the assets and installing the systems are interested in getting a fast, straightforward financing solution to build these systems. End customers are interested in making a contribution to the energy transition and getting good financing to get the system on their roofs. However, they don’t really care about what is happening on the investor side.

Investors, on the other hand, are super interested in investing in this new asset class. Of course, the service we provide is to ensure that good quality systems are installed at reasonable prices with good returns and a long-term horizon. So, we are bringing together the needs of different parties that wouldn’t have come together without somebody like us, which is extremely exciting and promising.