History lessons for a digital future: Why are our times comparable to the 1450’s?

On Tuesday, November 5, 2019, Managing Director Dr. Stefan Hirschmann and his team from VÖB-Services organised an inspiring BANKENNETZWERK networking event “Digitisation and digital competence in banks” with an auditorium of 70 banking professionals.

Bankennetzwerk am 5.10.2019 im Holiday in Düsseldorf Digitalisierung und Digitalkompetenz Foto und Copyright Bernd Schaller Kiefernstr. 18 40233 Düsseldorf www.schallerfoto.de info@schallerfoto.de 00491776769111

Learning from history is crucial to understand the current societal changes triggered by technological progress. It‘s the basis to be able to make smart strategic decisions in a fundamentally changing business environment.

Some examples in the keynote referring to Professor Niall Ferguson‘s inspiring book „The Square and the Tower“. Enjoy some of his insights here

Bankennetzwerk am 5.10.2019 im Holiday in Düsseldorf Digitalisierung und Digitalkompetenz Foto und Copyright Bernd Schaller Kiefernstr. 18 40233 Düsseldorf www.schallerfoto.de info@schallerfoto.de 00491776769111

See more impressions HERE

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

AI-WHITEPAPER: Work, Qualification and Human-Machine Interaction

The Working Group 2 “Future of Work and Human-Machine Interaction” of the German Platform for Artificial Intelligence “Platform Learning Systems” recently published its Whitepaper.

The working group focuses on human-centred design of the future working world and on human-machine interaction issues (HMI). At the same time the working group serves as the interface between HMI and the area of Manufacturing and Industrie 4.0.

It’s an inspiring honour being member of this body of experts.

Download the Whitepaper here

AI-supported scenarios will be found in almost every industry in future. However, their degree of benefit varies greatly depending on the current state of technology, the scenario and the customer’s acceptance. In addition to valid B2B industry applications, AI-based chatbot solutions are for example currently reaching market maturity. A project using AI-technology must therefore take into account the respective use-case context and framework conditions.

Jochen Werne, Bankhaus August Lenz & Co. AG

About this Whitepaper

This paper was prepared by the Working Group Work/Qualification, Human-Machine Interaction of the Learning Systems Platform. As one of a total of seven working groups, it investigates the potentials and challenges arising from the use of artificial intelligence in the world of work and life. The focus is on questions of transformation and the development of humane working conditions. It also examines the requirements and options for qualification and lifelong learning, as well as starting points for shaping human-machine interaction and the division of labour between humans and technology.

The Working Group is lead by:

Prof. Dr. Elisabeth André, Universität Augsburg
Prof. Dr.-Ing. Prof. e. h. Wilhelm Bauer, Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO und Universität Stuttgart

Members of the Working Group are:

Prof. Dr. Lars Adolph, Bundesanstalt für Arbeitsschutz und Arbeitsmedizin (BAuA)Prof. Dr.-Ing. Jan C. Aurich, TU Kaiserslautern
Vanessa Barth, IG Metall
Klaus Bauer, TRUMPF Werkzeugmaschinen GmbH + Co. KGNadine Bender, KUKA Deutschland GmbH
Prof. Dr. Angelika Bullinger-Hoffmann, TU Chemnitz
Prof. Dr.-Ing. Barbara Deml, Karlsruher Institut für Technologie (KIT)
Prof. Dr. Prof. h.c. Andreas Dengel, TU Kaiserslautern und
Deutsches Forschungszentrum für Künstliche Intelligenz (DFKI) GmbH
Dr. Jan-Henning Fabian, ABB AG
Prof. Dr.-Ing. Sami Haddadin, Munich School of Robotics and Machine Intelligence,
TU München
Prof. Dr. Michael Heister, Bundesinstitut für Berufsbildung (BIBB)
Dr. Norbert Huchler, Institut für Sozialwissenschaftliche Forschung e.V. (ISF-München)Dr. Nadine Müller, Vereinte Dienstleistungsgewerkschaft (ver.di)
Dr. Rahild Neuburger, Ludwig-Maximilians-Universität München
Prof. Dr.-Ing. Annika Raatz, Leibniz Universität Hannover
Prof. Dr.-Ing. Jürgen Roßmann, Rheinisch-Westfälische Technische Hochschule AachenProf. Dr. Christoph M. Schmidt, RWI – Leibniz-Institut für Wirtschaftsforschung und Ruhr-Universität Bochum
Prof. Dr. Jochen Steil, TU Braunschweig
Andrea Stich, Infineon Technologies AG
Oliver Suchy, Deutscher Gewerkschaftsbund (DGB)
Prof. Dr.-Ing. Sascha Stowasser, Institut für angewandte Arbeitswissenschaft (ifaa)
Dr. Hans-Jörg Vögel, BMW Group
Dr. Bernd Welz, SAP SE
Jochen Werne, Bankhaus August Lenz & Co. AG

The Working Group is supported by:

Dr. Chi-Tai Dang, Universität Augsburg
Dr. Andreas Heindl, Geschäftsstelle der Plattform Lernende Systeme
Dr.-Ing. Matthias Peissner, Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAODr. Anke Soemer, Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V.

Hot of the press in “bank und markt 06/19”: Opportunities and risks of AI for the financial sector

Artificial intelligence is the new buzz word of the financial industry, says Jochen Werne. In view of the rapid pace of technological development it is becoming a source of hope for the banks – and rightly so, writes the author. After all, banks have an enormous amount of data at their disposal. Despite all the digitalisation and areas of application of AI, Werne sees the chance for a renaissance of consulting as a link between people and the technical world. Red. Bank und Markt

Read the full article in the new June 2019 edition of BANK und MARKT here

Chancen und Risiken von KI für die Finanzbranche

German: Künstliche Intelligenz ist das neue Buzz-Wort der Finanzbranche, sagt Jochen Werne. Angesichts der rasanten technologischen Entwicklung wird sie zum Hoffnungsträger für die Banken – zu Recht, meint der Autor. Schließlich verfügen Banken über einen enormen Datenschatz. Trotz aller Digitalisierung und Einsatzbereiche von KI sieht Werne jedoch die Chance auf eine Renaissance der Beratung als Bindeglied zwischen Mensch und technisierter Welt. Red.

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.

Human. Digital. Culture. Our life in times of exponential technologies

16 January 2019 – Author: Jochen Werne

Almost every day, experts in the media try to create a historical analogy for us in order to explain the dynamics and speed with which changes are taking place today at all levels of our lives – from private consumption and our working world to international politics. Often analogies are drawn to different decades of the 20th century. The prominent British historian and Harvard professor Niall Ferguson contradicts these comparisons and sees an analogy rather in the effects that the invention of the printing press in the 15th century had on our lives and on our society. Only that today the changes due to exponential technologies and the Internet take place much faster.

For us as the HUMAN Factor, these comparisons are incredibly important. In times of uncertainty, they help us to better assess the changes and thus at least maintain a certain reassuring feeling of security and explainability. However, if we do not succeed in setting the right filters in times of social media and “information overload”, we run the risk that this feeling of understanding does not materialize and that we all too easily become victims of supposedly simple explanations and “fake news”. Ferguson uses a striking example to illustrate that this is not a new phenomenon and that serious technological changes have also brought major and often turbulent changes to society. In times of the invention of book printing, knowledge was spread more cheaply and a broad part of the population gained access to higher education. One of the first books to be printed in large numbers was the Bible. But also other writings, like “Malleus Maleficarum” or in English the “Hammer of Witches” became famous. The “Fake News” book served to justify the persecution of witches, appeared in 29 editions and has been second place on the book bestseller list for 200 years.

At the latest since the end of the 1990s, since the mass “democratization” of the Internet, our lives have been shaped by the exponential progress of modern technologies. The associated digitalization – the DIGITAL Factor – is not only a technical and economic challenge, but also a societal one. However, the enlightened man began, not to accept everything that a “Beautiful New World”, sometimes reminiscent of Aldous Huxley’s novel, promises. This is shown by citizen projects such as the so-called “Charter of Digital Fundamental Rights” of the European Union.

The word “exponential” automatically hides the logical conclusion that change will take place even faster in the future. These changes affect almost every industry and what is seen today as a billion-dollar future market can quickly become a basic business with significantly lower costs and thus significantly lower profit margins tomorrow. The camera chip of our smartphones costs today only about two to three Euros, a Spotify subscription, and thus the access to an incredible amount of music, only a few Euros a month.

The conclusion for companies in the 21st century is simple: Those who do not understand these exponential dynamics of technical development or do not take them sufficiently into account in their business model can quickly lose touch – not only with customers but also with potential business partners. But why is it so difficult for us to correctly assess the development potential of the technologies? The answer: People think linearly. This is why technologies are usually overestimated at the beginning of their development, but tend to be underestimated in the long run. This was first described in 1965 by the Intel engineer Gordon Moore – later known as Moore´s Law, one of the essential theoretical foundations of the “digital revolution”. In times of exponential technologies, our society risks a split between the group of people with an affinity for digital and digital natives and a group of people who have growing difficulties with the speed of change of our time. The latter have not learnt to keep pace with fast-moving digital innovations due to their low affinity, age or lack of points of contact in everyday life.

Throughout history, new technological possibilities have always come with threatening concepts that have been published and discussed on all media channels available during this period. Today it is: “total transparency”, “transparent consumer”, “constant availability” or even job loss due to ongoing automation and artificial intelligence. At the social and state level, attempts are being made to counteract such fears, to increase competitiveness and to involve the population in the process of change. Two of the many good examples referring to Germany are the strategy on artificial intelligence put in place by the Federal Government and the Platform for Learning Systems initiated by the Federal Ministry of Education and Research.

It is important never to forget, that every change – even if the trigger is a rapidly developing technology – requires a certain time horizon to be implemented and to create broad acceptance. Here the “CULTURE Factor” often comes into play. One example is cash. While the Scandinavian countries, above all Sweden, are about to digitalize their payment systems to a large extent, in Germany currently about 80 percent of all transactions are carried out with cash.

In every business model, global trends need to be identified, changes need to be driven, and local conditions need to be taken into account in order to be successful in this market. The same formula applies to societal change. Especially when it comes to creating an agenda for the use of new technologies for the benefit of our society.

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Photo from Niall Ferguson and Peter Robinson discuss networks and hierarchies throughout history in this episode of Uncommon Knowledge. Quote from the New York Times article “‘The Internet Is Broken’: @ev Is Trying to Salvage It” by David Streitfeld

„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.