The New DORA Regulation Starts January 17
The new framework for cybersecurity risks will come into effect in early 2025 and has been a major topic of discussion. BaFin will begin inspections based on the new regulations as early as next year. Currently, projects for the finalization of DORA implementations in the banking sector are running at full speed. Our approach to DORA implementation can be found here and here.
Cloud-driven IT: A Competitive Differentiator in Customer-Centric Digitalisation
IT remains the central pillar of digitalisation for banks. The digitalisation strategy should therefore focus heavily on customer benefits; the IT strategy should not serve a purpose in itself but should directly derive from the overall digitalisation strategy. The (Hybrid) Cloud continues to be a key enabler of technological transformation, but it must be deployed efficiently with respect to cost/benefit. Together with our Digitalisation Competence Center, we assist you in shaping your Digitalisation Roadmap.
Human Factor as the Limiting Factor in Digital Transformation
Available capital and technology are increasingly no longer the limitations in banks' digital transformation. Due to rapid technology innovation cycles, it is essential to take people along on the transformation journey through appropriate change management measures and to foster their willingness to change. The concept of agile change management can be decisive in ensuring success. Additionally, banks are in a battle for scarce talent on the job market, particularly in cloud and security fields (the "War for Talent").
Artificial Intelligence: First Use Cases in Operation
Artificial intelligence remains on the agenda of every tech conference. Its targeted use is universally seen as a competitive advantage and an enabler of growth.
Current live use cases include chatbots, such as those at N26, as well as fraud detection and anti-money laundering measures, like those at Scalable Capital. However, other specific use cases are still in the experimental phase. Additional potential AI applications in the financial sector have been identified by Intero Consulting here.
In-house large language models (LLMs) are already widespread and help employees learn how to use and leverage the potential of this new technology. Ethical and moral considerations in the implementation of AI solutions are increasingly coming to the forefront and must be carefully addressed.
Cooperation in Embedded Finance and Open Banking as the New Standard
Embedded finance and open banking models are now firmly established in the market. This is demonstrated by the increasing cooperation between fintechs and banks in the open banking context. Overall, the concept of cooperation is central to the industry. After aggressive fintech growth and hype up to 2021, the market is now normalizing. Fintechs are building stable, long-term business models in cooperation with banks. One example is the partnership between Banxware and HypoVereinsbank to implement an API-driven lending platform.
The EU's announced FIDA regulation (more details in our post) is seen by both fintech and banking experts as a market enabler for open banking business models rather than as an obstacle.
Digital Euro (CBDC) and Instant Payments
The Digital Euro and the European payment initiative WERO continue to be subjects of debate. The retail sector, in particular, sees great potential in WERO, mainly due to rising fees from alternative payment services. Whether WERO can compete with major players like PayPal, Visa, or MasterCard will be revealed with the launch next year.
Blockchain and Tokenization – Not Yet Established in Germany
German industry players in the crypto space, such as Finoa, see significant potential for tokenized securities in the German market. However, blockchain and token-based trading innovations are currently mainly concentrated in Asia and the U.S. Germany and the EU still have ground to cover. More on this can be found here.
