International Understanding – Keynote: Technologies and humanity in the context of modern Vietnam

Video Stream of Jochen Werne’s keynote at the launch ceremony of the Vietnam Germany Innovation Network (VGI Network).

“It was a great inspiration to meet so many committed people in just one day, ambitious and authentically personally committed, striving for strong intercultural relations between Vietnam and Germany, with the aim of bringing visible benefits to the people of both nations”.

Jochen Werne

Experience more about the VGI Network at https://www.facebook.com/VGInetwork2019/

Panel discussion at Handelsblatt Bankengipfel 2019 – “AI in Banking”

Inspiring discussions with Michael Kaiser, Head of Department for Financial Institutions at the Office for Data Protection of the German State of Hesse & Ralf Heim, Co-Founder of Fincite.

Handelsblatt panel from left: Katharina Schneider, Ralf Heim, Michael Kaiser, Jochen Werne

Finance Journalist at Handelsblatt Katharina Schneider greatly moderated the panel: “Chances & Risks of #Technology – Can data protection and artificial intelligence be reconciled?”

Details HERE

New ways – Artificial Intelligence in Cyber Security

Defense against cyber attacks through new technologies

Author: Jochen Werne – published by Der Bank-Blog – 15 February 2019

Cyber crime has become a serious threat to business, politics and private individuals since a long time. New technologies based on the use of artificial intelligence might offer more security.

The fight against cyber threats has become significantly more complex for global government organisations, businesses, and individuals in recent years. Technical protection of IT systems and infrastructures and thus data security in the narrower sense are no longer the only issues. Companies, for example, need to address the much broader concept of information security.

Solutions based on artificial intelligence could prove helpful in the fight against cybercrime. According to a study by the IBM Institute for Business Value, the spread of intelligent, AI-based security solutions will increase significantly in the coming years.

Technical protective measures have long since been based on machine learning, for example, to identify spam or phishing e-mails or to record trends and anomalies in large amounts of data – both in data traffic within the corporate network and in its external connections.

Jochen Werne
Jochen Werne

AI systems for the identification of cyber attacks

In future, for example, systems might also be able to identify hidden channels in the corporate network through which cyber criminals attempt to acquire data. AI’s greatest strength, pattern recognition, enables automated detection of a wide range of anomalies and security incidents. For this purpose, however, AI-based systems must also learn to distinguish between common IT failures and cyber attacks. In addition, self-learning algorithms need to take internal corporate processes into account to come up with precise results.

In the near future, according to a forecast by Christian Nern, former Head of Security Software DACH at IBM Germany and today Partner at the Consulting firm KPMG, AI-based security analysis systems will be able to detect and fend off attacks proactively. Then, according to the former IBM security software chief, the confrontation between cyber criminals and security officers could possibly take place directly between the AI systems they use.

Germany as a pioneer country

Germany, which considers itself a pioneer country in the fields of learning systems and artificial intelligence, has already launched a platform for artificial intelligence on this topic initiated by the Federal Ministry of Education and Research (BMBF): “Learning Systems”. The platform with its 200 members brings together leading experts from science, business and society and deals with technological, economic and social issues relating to the development and introduction of learning systems on an interdisciplinary and cross-sector basis.

One of the seven working groups deals in particular with IT security, privacy, law and ethics. The composition of the topics in this group shows the interwoven culture-specific discussions that will later lead to scenarios, recommendations, guidelines and roadmaps.

Intelligent combination of available modules

As often in cyber security topics, there is no patent solution for the numerous questions and challenges. A company-wide risk management system, which establishes appropriate technical and organisational measures and also takes into account findings from psychology and cultural studies, seems to be a sensible way forward.

The right balance between security awareness and security, individual freedom paired with increased personal responsibility as well as support through technology and organisational structure is probably the most promising approach in the current state of research and technology to effectively meet the challenges for information and IT security.

You’re the captain, but with what ship and crew?

MANAGEMENT IN DISRUPTIVE TIMES

Author: Jochen Werne . Firstly published in the Academy for Leadership column in German. Translation supported by DeepL

“An analogy for business leaders in the financial industry that compares the challenging times of today’s technological enterprise transformation with the changes during the time of the industrial revolution when steam ships ended the centuries-long era of sailing ships.”

In 1971, the BBC began broadcasting a series on the history of James Onedin, who, as captain and later as shipowner, lived through the stormy times of industrialisation and the conversion of the entire industry from sailing to steam navigation. The series, which takes place in Victorian England in the second half of the 19th century, describes in a special way the subtleties of the interplay of a changing market. New technologies, new skills of market participants, increased conflict potential between entrepreneurs and managers and reorientation in an environment of shrinking margins – special challenges for those who tried to continue their business as before: with sailing ships.

The documentation shows impressively how highly hierarchical organisations like the Royal Navy react and often struggle in times of major technological changes

The captain is responsible for bringing his ship, crew and cargo safely and within a specified time and financial framework to the port of destination. But what if the ship is no longer able to do this and the competition suddenly moves across the blue oceans with completely different ships? What if the shipowner does not have the capacity to trust the new technologies or simply does not have the financial resources to re-equip his fleet? And what about the crew? Does the crew has the necessary skills to sail on the new ships?

Many captains of banks and financial institutions seem to have this scenario all too present. E.g. due to declining customer traffic in bank branches, the high costs for a broad branch network are hardly to be paid today. Germany as a financial centre is “overbanked”, interest rates in the basement – the conditions in Germany for successful banking have never been as challenging as they are now. To this end, customers are continuing to drive change in the industry with their changing demands on digital tools.

Outwaiting a problem or tackling it

The complexity of economic changes has been enormous in every epoch, the difference to current upheavals lies in the temporal component. If companies do not react immediate to market changes today, they might loose their customers faster than ever before. In such disruptive times, all those involved want an “efficient” change process. The only problem is that the term “change” is so omnipresent that it is often perceived as stress and overload. As a result, many levels of management fall into one of the following situations: either they try to sit out the situation and leave change to their successors, or they push many, often less effective measures in an attack of blind actionism. Active, thoughtful and vital change management is often neglected.

More entrepreneurial thinking

Processes of change require both superiors and employees. If the existing situation cannot be improved or adapted at any vertical level, it must be questioned. Concluding, this means for all those involved that situations must always be reflected and corrective measures initiated at an early stage.

Understanding the corporate culture is vital for a successful transformation

In many companies, however, this need for action, which has a high potential for conflict, is often insufficiently communicated. In some places there is a lack of interest for employee issues, a lack of error and conflict culture and a minimal willingness to change. If banks neglect these issues, change processes threaten to fail on a broad basis. This means that managers in a disruptive environment have a natural need for action. The implementation of new strategies, systems and structures and early adaptation to changing market situations are vital factors for survival. A well-known quote by former US President Wodrow Wilson (1913-1921) is particularly valid for today’s highly competitive financial sector: “If you want to make enemies, try to change something.”

Those companies that create the change will share the large financial services market with the new market players and use instruments that did not exist in the classic banking of the past.

Just like James Onedin, who for the longest time was an advocate of classic sailing ships, finally added a modern steamship to his fleet. And to facilitate the change for himself personally, he named the ship after someone he loved.

„It’s not information overload. It’s filter failure.“

Author Jochen Werne – Original in German at Bank-Blog – Translation by DeepL

Banks have to become guides for investors

Financial blogs, online communities & Co.: The ubiquitous flood of information can be both a curse and a blessing for bank customers and investors. Today more than ever, banks and savings banks must be “guides” for their customers.

Anyone who wants to invest money today gets a flood of information about the net. Dedicated private investors worldwide can be almost as well informed as professionals, in case of interest and sufficient know-how and time. Never before in the history of mankind have so many people worldwide had so much information at their disposal. Whether prices in real time, the latest assessments by analysts or experts, key figures on a security in an industry comparison, the diversity of opinion in a community – all this is available around the clock.

How intensively and purposefully this offer is used is another question. It can be assumed that only a minority is so urgently concerned with their investment or can be so concerned at all. In addition, the situation of the decision-maker is adversely affected by two factors: the excessive amount of unfiltered information and the classic behavioral finance problem.

Coping with the abundance of data and big data

Alvin Toffler, who brought the term “information overload” to prominence in his bestseller “Future Shock” in 1970, described the phenomenon and its consequences as follows:

“Information overload occurs when the input quantity of a system exceeds its processing capacity. Decision makers have a fairly limited cognitive processing capacity. Therefore, if information overload occurs, it is likely that a decrease in decision quality will occur.”

Consequently, it can be concluded that the wealth of information that accumulates every day can hardly be processed by a classic investor alone, let alone placed in the right context. In addition, there is an almost unmanageable and constantly growing mass of financial products for private customers. In short, a large proportion of investment decisions are therefore not made analytically correct, but spontaneously subjectively and emotionally, as the studies by Nobel Prize winners Kahneman and Tversky show.

Banks as a guide only for wealthy clients?

Clay Shirky, writer and consultant for Social and Economic Effects of Internet technologies and well-known in New Media circles, presented an interesting reflection on the problem of information overload:

„It’s not information overload. It’s filter failure.“

This provides a great opportunity for traditional banks to position themselves as problem solvers for the investor. The alternative – at least for wealthy private clients – apart from filtering their own information mass, is dialogue with a competent expert. A person they trust – and trust to not only filter out from the wealth of data what is relevant to their needs, but also to protect them from the classic emotional mistakes of financial decisions in volatile markets.

Development of a new, adequate support concept for all bank customers

All those who do not belong to this clientele, and this is mostly the classic retail customer, have little more than to accept the zero interest rate on their accounts and short-term securities. According to Bundesbank statistics, the majority of Germans have invested their assets in these forms of investment. This makes the Federal Republic a leading nation in financial matters when it comes to missed opportunities, as can be read again and again in the Sunday editions of the major national daily newspapers.

Today more than ever, the function of bank and financial advisors must be to act as filters and guides for customers in the jungle, providing them with a flood of information. Because no algorithm, no digital advisory service can protect the investor from an ill-considered, intuitive and possibly wrong decision. For modern bank management, this means setting up a completely different support concept with cost-efficient consulting structures, a powerful and highly flexible team and the appropriate digital and mobile equipment.