Verena Pausder and Melanie Kehr are sitting in front of their notebooks
Interview on the future

Interview on the future

"We need freedom and creativity"

A conversation with two women who represent the future: start-up founder and author, Verena Pausder, and Melanie Kehr, Member of the Executive Board of KfW Group responsible for Information Technology and Transaction Management, discuss how innovation is being promoted in Germany, the power of crises – and the qualities people will need to have in a digital future.

Verena Pausder stands on a street corner smiling friendly

Verena Pausder, start-up founder and author

Ms Pausder, we find ourselves in a type of collective depression due to coronavirus and lockdown. You have written a book in which you challenge us all to work on a “new country”. What was your thinking behind it?

Verena Pausder: We are all already outside of our comfort zones, so it is the perfect time to affect change. Once this crisis has passed, we cannot allow ourselves to slip into thinking, “let's put all our energy into re-establishing the pre-COVID state of affairs and carry on as before.” It is well-known that digital change, digital education, entrepreneurship, New Work and climate action are all part of a sustainable Germany. In the future, I do not want to have to explain to my children why we achieved so little. I want to tell them how courageous we were and what we accomplished – and while coming out of a crisis, no less!

Ms Kehr, has KfW been pushed out of its comfort zone as well?

Melanie Kehr: Yes, indeed! Though we are not unaccustomed to crises. The economy was hit by a decline of 9.7 per cent in the spring of 2020, the biggest drop since World War II. The German Federal Government put together the greatest aid package in its history. The role of KfW was to provide companies with liquidity. There was massive demand and enormous pressure. And within just one month, we managed to set up a Special Coronavirus Aid Programme together with the German Federal Government, the authorities, associations and our financing partners – we do not have any branches – and to automatically approve the initial applications and disburse funds. Even today, one entrepreneur told me that KfW paid his coronavirus aid loan so quickly it gave him goosebumps.

And why did it work so well?

Kehr: One key to this success was surely the funding infrastructure that has been established over many years, combined with the digital connection to financing partners. Another factor was that we had already put cloud technology to the test, even before the crisis. So we were able to quickly develop a digital funding assistant which proved particularly helpful in lockdown as not all customers could visit their bank. But the main reason was that our collaboration was very agile. We weren’t looking for problems or scapegoats – we just made the decisions and carried on. I couldn’t even tell who in the team was from IT, who was from the specialist division. Everyone simply pulled together. The power this unleashed has left an impression on me to this day.

Ms Pausder, does this align with your concept of New Work?

Pausder: Absolutely. Working together in the digital era is based on trust, leadership is predicated on intentional loss of control. We must also promote “error culture”: in order for employees to be courageous, companies must let them know that this is a desirable quality. If anything, people in the digital era are not some kind of robot, but are even more empathetic, social and vulnerable than ever before. I do not think that tomorrow’s solutions are obvious enough at this point for us to be able to say now what needs to be done to achieve them. This is why we need to give people a great deal of freedom and creativity to develop the solutions themselves. We need to specify the goal and let them choose the way to implement it themselves.

KfW board member Melanie Kehr in front of her tablet

Melanie Kehr, Member of the Executive Board of KfW Group

Ms Kehr, what challenges are we facing to make Germany sustainable?

Kehr: We must drive innovation forward to maintain growth and prosperity. As a high-tech nation, we are in a good position in many areas, for example in production or automotive technology. We level off somewhat in medical technology, although Germany did demonstrate what it is capable of, particularly during the coronavirus crisis. The real problem child is IT technology. And that really is a problem, as it is increasingly becoming foundational for other technologies of the future. But I am convinced that we should build on our strengths: expand upon what is already available and what we are good at.

Ms Pausder, has Germany made the most of its strengths?

Pausder: In Germany, we successfully rode the first wave of digitalisation, which was e-commerce and B2C, spawning large companies such as Zalando as well. But that does not mean that we will automatically be part of the next wave, which is very data-based. We must work on our legislation and, most of all, on our mindset for this to happen. Germans love to protect their data and forget that their personal information is not the only data being protected, but also transaction, meteorological and mobility data. However, this data is fantastic when used for autonomous driving or health tech innovations. We are experiencing a turning point in history. Only three of the 500 largest family businesses in the country with more than one thousand employees and turnovers exceeding one billion were started in the last 30 years. At the same time, a new start-up culture has been evolving in Berlin, Hamburg, Cologne, Munich for years now...

... which the German Federal Government has also identified as the hope for the future.

Kehr: Yes, especially the development of Deep Tech, or groundbreaking technologies, is ascribed to the start-ups. There are so many examples of young technology companies attracting brilliant scientists who then develop solutions for the challenges of the future from these start-ups – energy, sustainability, nutrition, health, mobility and education. We must support the start-ups and accompany them on their journey: at some point funds are needed to have a real impact, otherwise we lose innovation potential. For this reason, the German Federal Government initiated the equity fund for technologies of the future and commissioned our subsidiary KfW Capital with its implementation. It also invests in venture capital funds at the same time, which in turn finance start-ups.

About the person
Verena Pausder sits in front of her notebook with a smile


42, start-up founder and author of the bestseller "Das neue Land" ("The New Country"). For her, digital education is a civil right. In 2020, she initiated as well as the hackathon #wirfürschule and was voted "Thought Leader of the Year".

Ms Pausder, can the government handle venture capital?

Pausder: The government cannot become the sole investor without support from the private sector because the government is risk-averse by nature. But the High-Tech Start-up Fund (High-Tech Gründerfonds, HTGF) in which KfW is also invested or the European Investment Fund (EIF), for example, show how well it works when business and government cooperate and invest together: the market decides what is viable, and then the state matches this investment to increase it. I believe this is a very good mechanism.

What could the state do to improve the situation?

Pausder: We have the worst tax model in Germany for share-based employee participation in start-ups and companies. This is a big problem for rapidly growing and young enterprises who want to attract talent. Often, they cannot pay an appropriate wage during the initial period. But they could provide motivation with company shares. There is an excellent suggestion on this from the Bundesverband Deutscher Startups (an association of the German start-up industry): #ESOPasap. The politicians just need to implement it.

About the person
KfW board member Melanie Kehr in front of her tablet

46, is one of the few female IT directors in Germany. Because of the KfW Coronavirus aid loans, her department became systemically relevant overnight. She sees the success, among other things, in the agile working methods.

Ms Kehr, where can KfW be an example for others as an institution?

Kehr: We believe that, as a bank, we are leading the way in the area of sustainability. In the past year, KfW developed the “SDG mapping” procedure itself and aligned all of its business according to the United Nations’ 17 Sustainable Development Goals. Education, combating poverty, a functioning economy, which is the basis of our prosperity: all this is mirrored within it. We are prioritising these goals together with the Federal Government. We will measure the impact of our business more intensively and will then be able to provide impetus – and start programmes, for example, which will enable us to achieve the maximum possible impact while using minimum resources.

What exactly does that mean?

Kehr: In 2020, for example, we achieved a record in financing energy efficiency in buildings, more than 26 billion euros. This is very good news for business. But if we say we want to work meaningfully, we have to translate this: how much carbon have our efforts actually saved? We now want to increase our efforts here. Furthermore, we have set ourselves the target of a greenhouse gas-neutral portfolio by 2050. Put simply, this means that, when in doubt, we will forego a business deal that contravenes our target even if it is economically attractive.

Ms Pausder, not everyone agrees with this perspective. How will we manage to take everyone with us into the “new country”?

Pausder: Life has taught me that education is the best response to uncertainty, risk or danger. That is why we cannot just think of education in terms of schooling. We need to embed it as a lifelong learning process so that it is also accepted by the people who might fear they are not needed in the same way in a new, digital world. And I always imagined: what would it be like to have a digital education centre in Germany? Foundation courses in digitalisation would be a civil right. After completing the foundation course, you could then decide where you would like to develop your knowledge, and the government would give you the appropriate vouchers.

Ms Kehr, would that be a new promotional programme for KfW?

Kehr: Education is the correct approach, one that we are also pursuing. We have created a very inspirational place for students with the TUMO learning centre in Berlin. After leaving school, students can continue their education there digitally and free of cost. We would really like to do this in other municipalities too. You need expertise in IT technology to drive progress forward.

Ms Pausder, how can we re-emerge from our collective depression?

Pausder: Whenever I have the feeling there are a lot of problems to deal with and no-one is tackling them, my first impulse is to create something to solve them. Or I start a new initiative. It gives you a feeling of self-sufficiency to see that something is happening now. I think that is the best way to get out of the crisis. If you then combine this with the pride you feel in really bringing something to life that did not even exist before, that is the greatest motivation for starting your own company. And it is a little bit addictive. Maybe I will try it again soon.

Published on KfW Stories on 17 May 2021