FinanzBusiness: THE SIX TOP CHALLENGES FOR BANKS THIS YEAR

It was a great pleasure speaking with Torben Schröder of FinanzBusiness about “THE SIX TOP CHALLENGES FOR BANKS THIS YEAR”.

He writes in his article: In an increasingly regulated market environment, providers who use their data intelligently will be the most successful, says Jochen Werne from Experian in an interview with FinanzBusiness.

Data is the new oil, they say: “The quality of data will become the kingmaker in the credit risk market of the future and open the way to new market opportunities,” says Jochen Werne, CEO of data service provider Experian DACH. In an increasingly regulated market environment, providers who use their data intelligently and master the balance between data protection and customer experience will be the most successful.

Werne names six “top challenges” for this year. These arise from regulations from the European Banking Authority (EBA) – and from technological developments. On the one hand, risk management is to be significantly improved and sustainability criteria verified at the behest of the European Central Bank and the EBA supervisory authority. On the other hand, artificial intelligence (AI) is opening up completely new opportunities in an increasingly complex market environment.

Read the full article in original at FinanzBusiness

Efficient use of AI determines the competitiveness and thus the future of German companies

Artificial Intelligence: The German Economy on the Cusp of Transformation

By Jochen Werne


1st October 2023, Düsseldorf

The “Experian 2023 Business Insights” report, released in September 2023, provides a revealing insight into the priorities of the global business community in the coming year. Particularly of interest to us in Germany is the insight into the transformative influence of Artificial Intelligence (AI) on areas such as analytics, risk assessment, and customer experience in the EMEA/APAC region.

Our German decision-makers are well aware of the pivotal role of AI in innovations. An encouraging finding: 60 percent of businesses in our country have already taken active steps to integrate AI into their processes.

However, the report also shows that not all executives in Germany are fully convinced of the benefits of using AI. The efficiency of AI in companies will determine how Germany stands as an economic location in an increasingly digital age. The transformation of raw data into meaningful insights and analyses will become a crucial competitive advantage for us.

It’s heartening to see that many of our international counterparts already recognise the benefits of AI. For more than half of the global companies, the productivity gains from AI already outweigh the initial costs.

One thing is clear: Our data infrastructure and the amount of data available will play a key role in the successful implementation of AI. Here, we as German businesses have some hurdles to overcome, especially regarding the availability of relevant data for critical business decisions.

In conclusion, I want to stress that, even with all the technology and data, we must never forget our ethical responsibility. AI must be employed in a transparent and responsible manner. The fact that already 61 percent of businesses in the EMEA/APAC region have a comprehensive AI risk management programme in place is promising.

The future is clear: businesses that properly harness AI will lead the competition. They’ll be able to leverage process efficiency and automation to unlock new growth opportunities.

For those who wish to read the full “Experian 2023 Business Insights Report”, you can find it here.

https://experianacademy.com/Forrester-Research-Report-2023

Harnessing Data for Good

After my first week as CEO for Experian in the DACH region (Germany, Austria, and Switzerland), I find myself profoundly thankful for the warm welcome and the many highly inspiring encounters with some of the best data and technology professionals on our planet. Experian is not only a data insights industry titan, one that operates in 32 countries, employs over 20,000 outstanding personalities worldwide but would also rank with its more than USD 30 billion market capitalisation compared to Germany’s leading stock index as the 19th largest DAX company in Germany. Experian serves as a global leader millions of consumers and businesses, leveraging data to make a transformative difference in people’s lives.

Yet, with tremendous reach and influence comes immense responsibility.

Reflections

Just as the Age of Enlightenment in the 18th century reshaped society through the dissemination of knowledge, we find ourselves at the precipice of a new era, one marked by the power and potential of data. The 21st century, in my view, must herald a fresh Age of Enlightenment, one underpinned by data literacy.

The Age of Enlightenment, Literacy and the Dawn of Data Literacy

The Age of Enlightenment, a period dating from the late 17th to the late 18th century, marked a profound shift in the course of human history. This era, also known as the Age of Reason, encouraged critical thinking, decoupling minds from the shackles of superstition and unquestioned authority. The spotlight was placed firmly on rational thought, scientific inquiry, and individual rights – underpinnings of the modern world as we know it.

Several factors catalyzed this significant shift, not least of which was the advent and proliferation of printing technology. As philosopher Immanuel Kant noted, “Dare to know! Have the courage to use your own understanding,” a statement that encapsulates the Enlightenment’s spirit. This courage was largely fostered through increasing literacy rates.

The advent of the printing press revolutionized the dissemination of information. Books were no longer a luxury exclusive to the elite; knowledge became democratized. This sparked an increased demand for literacy. As more people learned to read, ideas were more freely exchanged, fueling a critical examination of existing societal structures.

For example, “The Encyclopédie,” a massive reference work edited by Denis Diderot and Jean le Rond d’Alembert, exemplified the spread of Enlightenment thinking. Its contributors, including leading intellectuals like Voltaire and Rousseau, aimed to collate all the world’s knowledge into a single work, accessible to the common man. This unprecedented venture into free access to knowledge set the stage for many of the democratic, scientific, and industrial revolutions that followed.

Fast forward to the present day, we see parallels in the advent of the internet, a digital revolution that democratizes information at a scale unimaginable to the Enlightenment thinkers. However, this superabundance of information has led to a paradoxical effect. As stated by Nobel Laureate Herbert A. Simon, “a wealth of information creates a poverty of attention.”

In an age characterised by short attention spans and reactionary behaviour, the challenge lies not in accessing information but in sifting through its vastness to discern truth from falsehood. A study conducted by Microsoft, 2015, found that the average human attention span has dropped to eight seconds, primarily due to the digitalised lifestyle.

Like the literacy of the Enlightenment Age, the 21st century calls for a new form of literacy: data literacy.

In a world where data is hailed as the new oil, our ability to critically interpret, analyse, and question data is of paramount importance. This skill set empowers individuals and corporations to make informed decisions, a process integral to our society.

In a report by The Data Literacy Project of which also Experian is a partner, only 21% of the global working population was confident in their data literacy skills. This gap highlights the pressing need for an educational shift towards fostering data literacy, much like the push for literacy during the Enlightenment era.

In conclusion, as we navigate the information deluge, a new Age of Enlightenment beckons, one centered around data literacy. With this new ‘Enlightenment,’ we can harness the true potential of information abundance, steering our societies towards more informed, rational, and democratic spaces. As the Enlightenment thinker Voltaire wisely said, “Judge a man by his questions rather than by his answers.” This insight seems more pertinent now than ever.

Such a renewed Age of Enlightenment also draws inspiration from one of the original Enlightenment’s most influential thinkers, Immanuel Kant. As he famously stated, “Enlightenment is man’s emergence from his self-imposed immaturity.” To transpose his wisdom to our context, data literacy and the effective application of data might be seen as emergence from a state of technological immaturity.

Furthermore, in our modern context, the Enlightenment’s emphasis on reason and logic has a fascinating analogue in the field of artificial intelligence (AI). AI, a critical tool in making sense of complex data, is designed to mimic human reasoning, albeit on a scale and at speeds we could never achieve unaided. As such, it holds a pivotal role in our future, helping us glean insights from the vast sea of data.

However, while AI’s potential is significant, it further underlines the importance of data literacy. The algorithms that power AI are only as good as the data that feeds them. Poor understanding of data and its nuances can lead to skewed AI outputs, with far-reaching implications.

Leaders in data need to focus on responsible use of AI by promoting data literacy and improving understanding of the interplay between data and AI.

New Enlightenment, then, is a journey towards a mature, informed society that harnesses the power of data and AI for good. In this era, knowledge isn’t just power; it’s the key to creating a world where data and technology act as catalysts for positive change.

In this new age, data is not merely a collection of numbers, facts, or figures; it is a powerful tool for understanding and addressing the most pressing societal issues.

However, just as literacy was not universal during the initial Enlightenment, data literacy is not yet a universal skill. As a society, we need to foster an understanding of data, how it’s collected, how it’s used, and most importantly, how it can be used ethically and responsibly.

Harnessing Data for Good – The Experian way

Experian, as a data powerhouse, has a crucial role to play in this journey. Experian has been a pioneer in harnessing data for good, from helping individuals gain access to credit, to assisting businesses flourish, to aiding governments in delivering crucial services.

For the DACH region specifically, the path to growth is intertwined with our mission to empower individuals and corporations with data and to protect from risks. In our regional market in the heart of Europe, we see significant potential to enhance consumer and corporate credit, improve business services, and support governmental programs.

Trust, innovation and reliability go hand in hand

To achieve this goal, we need to aim high and develop state-of-the-art products like AiDRIAN, which, by intelligently combining and using the latest AI technologies and data, are able to protect customers from fraud with more than 99.9% accuracy. Developing trustworthy solutions is of paramount importance. Trust comes from long-term reliability and independent audits. For AiDRIAN, for example, Fraunhofer IPA audited the heart of the solution, the Transaction Miner. The machine learning model compares several hundred customer characteristics and then assesses the risk of a transaction. Millions of data records are evaluated in a matter of seconds. Fraunhofer therefore came to the test result that the Miner’s predictive power is comprehensible even to experts and leads to better decisions.

Such results are only achievable by having an exemplary team.

The Experian DACH team, which I had the pleasure of meeting during my first week, is made up of dedicated, forward-thinking people who understand that work is not just about data, but about using data as a tool for progress and prosperity. A team that is eager to innovate, build trust, and act as responsible stewards of the data – every single day. As we delve deeper into a new era, we should aim to be instrumental in fostering a society that uses data ethically, responsibly, and for the greater good.

The Enlightenment brought knowledge to the masses, revolutionizing societies, and shaping the modern world. It is my belief, a new Age of Enlightenment will bring data literacy to all, empowering societies in ways we are just beginning to imagine.

I am excited and honoured to be a part of this transformative journey.

Jochen Werne - New Joiner CEO DACH Experian

METAVERSE. Hype or Disruptive Technology?

It is my great pleasure to join some of Europe’s leading B2B marketing and e-commerce experts at this year’s PROJECT NETWORKS STRATEGY SUMMIT to discuss the potential that arises from technological advances and initiatives such as the Metaverse. In the introductory keynote on the topic, I will explore the following topics in more depth:

Keynote: METAVERSE. Hype or all-changing?

The History of the Metaverse: From Snow Crash to Google Maps and Mark Zuckerberg’s $10 billion visions of a digital world.
Is the Metaverse becoming a reality?
Data: Be prepared – The Metaverse will increase the demand for for data engineers and AI developers
Marketing in the Metaverse

For everyone who‘s already interested to prepare for the disussion, a quick introduction by OpenAI‘s ChatGPT to the topic: METAVERSE. Hype or Disruptive Technology

The metaverse is a term that has gained popularity in recent years. It refers to a virtual world where people can interact with each other through avatars and digital goods. Some consider the metaverse to be hype, others see it as a breakthrough technology that will change various aspects of our lives. This paper will explore the concept of the metaverse and evaluate whether it is hype or a disruptive technology.

First of all, it is important to understand what the metaverse is and how it works. The metaverse is a collective, virtual, shared space created through the convergence of various technologies, including augmented reality (AR), virtual reality (VR), blockchain and the Internet of Things (IoT).^1 The metaverse provides a multidimensional experience that allows users to interact in real time with each other, digital assets and real objects. The idea of the metaverse is not new and has already been taken up in various media such as films, video games and books. However, recent technological advances have made it possible to create a metaverse that is closer to reality.

One of the main arguments for the metaverse being hype is that it is still at an early stage of development and there is much speculation about its possible uses. Currently, the best-known example of the metaverse is the popular online game Second Life, which was launched in 2003.^2 Second Life has successfully created a virtual world in which users can interact with each other, but it has not had a significant impact on the real world. Moreover, current applications of the metaverse are limited to games, social networking and digital art. This has led some to believe that the metaverse is hype and will not have a significant impact on society.

On the other hand, the metaverse has the potential to be a disruptive technology that will change various aspects of our lives. One of the most important areas where the metaverse could have an impact is the economy. The metaverse enables the creation and exchange of digital goods that can have real value. This has led to the emergence of non-fungible tokens (NFTs), which are unique digital assets that can be bought and sold on the blockchain. By 2021, the market for NFTs reached $2.5 billion, and is expected to continue growing in the coming years.^3 The metaverse has also opened up new opportunities for businesses, including virtual real estate, advertising and e-commerce.

Another area where the metaverse could have an impact is education. The metaverse offers a new way of learning that is immersive and interactive. For example, students could use the metaverse to research historical events, visit different countries or even explore space. This would allow for a more engaging and memorable learning experience that could lead to better academic outcomes.

In conclusion, although considered hype by some, the metaverse has the potential to be a disruptive technology that will change various aspects of our lives. The metaverse offers a new way of interacting with each other, with digital goods and with the real world. It has the potential to revolutionise business, education and other areas of our lives. Although the metaverse is still at an early stage of development, it is clear that it will continue to be of interest to researchers, entrepreneurs and investors in the years to come.

Sources:

Al-Rikabi, A. (2020). Metaverse: A virtual shared space. Advanced Science News, 7(9), 1903421.
Wagner, J. (2021). The story of the metaverse. VentureBeat.
Statista. (2021). Market capitalisation of non-fungible tokens

POINT OF NO RETURN – entire publication

It was indeed a great pleasure contributing in co-authorship Dr. Johannes Winter & Jochen Werne to the Henry Stewart Publications and we are pleased to not only the present the article, but also give everyone the opportunity to download and read the full chapter here:

POINT OF NO RETURN:
TURNING DATA INTO VALUE 

The Cambridge Dictionary defines the point of no return as the stage at which it is no longer possible to stop what you are doing, and when its effects cannot now be avoided or prevented. Exponential advances in technology have led to a global race for dominance in politically, militarily and economically strategic technologies such as 5G, artificial intelligence (AI) and digital platforms.

A reversal of this status quo is hardly conceivable. Based on this assumption, this paper looks to the future, adding the lessons of recent years — the years when the point of no return was passed. In addition, the paper uses practical examples from different industries to show how digital transformation can be successfully undergone and provides six key questions that every company should ask itself in the digital age.

The article includes key learnings and/or best practise examples from e.g.
acatech – Deutsche Akademie der Technikwissenschaften
Plattform Lernende Systeme – Germany’s AI Platform
Prosegur
Tesla
Waymo
Google
Amazon
relayr
Ada Health
Fiege Logistik
Westphalia DataLab
Satya Nadella
Microsoft
TikTok
Facebook

EVENT – The way out of the crisis: creating added value through digital transformation

An event organised by acatech – the National Academy of Science and Engineering which is the voice of the technological sciences at home and abroad. acatech provides advice on strategic engineering and technology policy issues to policymakers and the public. The National Academy of Science and Engineering fulfils the mandate to provide independent, evidence-based advice that is in the public interest under the patronage of the Federal President.

Start: 05 March 2021 – 10:00 a.m.
End: 05 March 2021 – 11:30 a.m
Location: Virtual event – Language: German

Especially in the Corona pandemic, digital technologies proved their usefulness: through them, companies were more adaptable in the crisis. What role do digital technologies now play on the way out of the crisis – especially for medium-sized companies? How do they manage the digital transformation and develop new value creation models?

A debate organized by acatech

The host is discussing these and other questions with guests from business and research on 5 March.

PROGRAM

Welcome:

Dr. Johannes Winter, acatech Secretariat

Moderation:

Prof. Dr. Michael Dowling, University of Regensburg/acatech

Impulse/Podium:
DATA, VALUES, VALUE CREATION – WHERE IS THE JOURNEY GOING?

Dr. Wolfgang Faisst, CEO ValueWorks.ai / Platform Learning Systems
BEST PRACTICE INDUSTRY 4.0

LESER GmbH & Co. KG: Digital transformation in medium-sized companies
Kai-Uwe Weiß, Head of Global Industrial Engineering
FORCAM GmbH: Value creation through integrative IIoT platform solution
Franz Gruber, Founder and Advisory Board


EXPERT DISCUSSION: DIGITAL SOLUTIONS FOR A RESILIENT COMPANY

Olga Mordvinova, CEO incontext.technology GmbH / Learning Systems Platform
Jochen Werne, Prosegur Cash Services Germany GmbH / Learning Systems Platform
Franz Gruber, FORCAM GmbH
Kai-Uwe Weiß, LESER GmbH & Co. KG

Registration:
Admission free; registration required. Please register under the following link, all registered will receive the access link before the event.

Link to the registration

Competence NOW: The DATA LITERACY CHARTA

It is an honour to be able to support this forward-looking Data Literacy Charter, initiated by the Stifterverband, as a first signatory together with the most competent representatives from politics, education, business and science.

Jochen Werne

DATA LITERACY CHARTA

Find all original information in German > HERE / please find below a translation for English speaking audience – created with DeepL.com

The Data Literacy Charter, initiated by the Stifterverband in January 2021 and supported by numerous professional societies, formulates a common understanding of data literacy and its importance for educational processes. The charter is in line with the Federal Government’s data strategy and with the Berlin Declaration on the Digital Society.

Author and authors:
Katharina Schüller, Henning Koch, Florian Rampelt


SUMMARY
Data literacy encompasses the data skills that are important for all people in a world shaped by digitalisation. It is an indispensable part of general education.

With the Data Literacy Charter, the signatories express the common understanding of data literacy in the sense of comprehensive data literacy and its importance in educational processes. This understanding is in line with the Federal Government’s data strategy and with the Berlin Declaration on the Digital Society.

Data literacy includes the skills to collect, manage, evaluate and apply data in a critical way. If data is to support decision-making processes, it needs competent answers to four fundamental questions:

What do I want to do with data? Data and data analysis are not an end in themselves, but serve a concrete application in the real world.
What can I do with data? Data sources and their quality as well as the state of technical and methodological developments open up possibilities and set limits.
What am I allowed to do with data? All legal rules of data use (e.g. data protection, copyrights and licensing issues) must always be considered.
What should I do with data? Because data is a valuable resource, a normative claim derives from it to use it for the benefit of individuals and society.
The supporters of the Charter see data literacy as a central competence of all people in the 21st century. It is the key to systematically transforming data into knowledge.

Data literacy enables people, businesses and scientific institutions, as well as governmental or civil society organisations,

to actively participate in the opportunities offered by data use;
deal confidently and responsibly with their own and other people’s data;
to use new drivers and technologies such as Big Data, Artificial Intelligence or Internet of Things to meet individual needs, address societal challenges and solve global problems.
Data literacy strengthens judgement, self-determination and a sense of responsibility and promotes the social and economic participation of all of us in a world shaped by digitalisation.

GUIDING PRINCIPLES
Five principles characterise the importance and role of data literacy as a key competence of the 21st century.

Data literacy must be accessible to all.
Data literacy serves to promote maturity in a modern digitalised world and is therefore important for all people – not only for specialists. The aim of teaching data literacy is to ensure that each individual and our society as a whole deal with data in a conscious and ethically sound manner. Data literacy enables successful and sustainable action that is based on evidence and that takes appropriate account of uncertainty and change in our living environment. We are therefore committed to ensuring that data literacy is taught broadly and can be acquired by all people.

Data literacy must be taught throughout life in all areas of education.
Data literacy must be anchored in all formal and non-formal education sectors and thus established as part of general education. To do this, we must continuously teach learners how data relates to their respective lifeworlds: Data are digital images of real phenomena, objects and processes – this applies to all fields of application. How to collect or procure, evaluate, apply and interpret data appropriately for the respective application must be systematically learned and practised. The basic concept of data literacy and its sub-areas therefore applies across the board, even if the level of competence imparted varies depending on the educational sector and level.
In concrete terms, this requires the inclusion of data literacy in the curricula and educational standards of schools, in the curricula of degree programmes and in teacher training programmes. Learners should not only be addressed as passive consumers of data. Rather, we want to enable them to actively shape data-related knowledge and decision-making. In order to make lifelong learning of data literacy possible, data literacy programmes for extracurricular and vocational training are also needed. We advocate developing and promoting these, for example, together with adult education centres or public libraries.

Data literacy must be taught as a transdisciplinary competence from three perspectives.
Data literacy involves three perspectives: the application-related (“What is to be done?”), the technical-methodical (“How is it to be done?”) and the social-cultural (“What is it to be done for?”). We therefore want to ensure that data literacy is taught from a trans- and interdisciplinary approach. This includes
● the application-oriented perspective (for example, applications from the natural and engineering sciences, economics, medicine, psychology, sociology, linguistics, media studies and many more),
the technical-methodological perspective (for example, from the perspective of statistics, mathematics, computer science and information science),
the socio-cultural perspective (for example, reflection on legal, ethnological, ethical, philosophical as well as inequality aspects)
● as well as the perspective of teaching (for example on the part of subject didactics and educational science).

Data literacy must systematically cover the entire process of knowledge and decision-making with data.
Data literacy ensures that answers to real problems are found with the help of data in a structured and qualitative way. Data literacy therefore includes the following areas of competence:
● Using and protecting data (ability and motivation to responsibly acquire, analyse, share and obtain appropriate data and information in the context of the task at hand).
Classify data and information derived from it (ability and motivation to contextualise and interpret data and information and to critically question learning systems, such as AI applications).
● Act in a data-supported manner (open-minded attitude towards data in the sense of a data culture including insight into the role of data for evidence-based action, ability to handle data with confidence including effective communication of data-based decisions).

Data literacy must comprise knowledge, skills and values for a conscious and ethically sound handling of data.
Data literacy comprises three competence dimensions that must be mapped in all three competence areas. Each competence area is characterised by
● specific knowledge (dimension “Knowledge”),
● the skills and abilities to apply this knowledge (dimension “Skills”) and
● by the willingness to do so, i.e. the corresponding value attitude (dimension “Values”).
Data ethics is a central component of a key competence and is reflected in all sub-areas of data literacy. This means that when data is collected, managed, evaluated and used in a critical way, ethical aspects play an important role throughout. Data ethics and values contribute significantly to ensuring that not only the right means are used to solve problems with the help of data, but above all that the right goals are pursued: Data should make a sustainable positive contribution to society and therefore be used responsibly, context-sensitively and with a view to possible future consequences.

The signatories of the Data Literacy Charter will take measures to disseminate this understanding of data literacy and to further strengthen the associated competences. They call on other actors to do the same in their sphere of influence.

The initial signatories
Institutions & Initiatives (in alphabetical order)

  • Bund Katholischer Unternehmer e.V. (BKU)
  • Deutsche Arbeitsgemeinschaft Statistik (DAGStat) mit ihren 14 Mitgliedsgesellschaften und dem Statistischen Bundesamt Destatis
  • Deutscher Volkshochschul-Verband (DVV)
  • Deutsche Statistische Gesellschaft (DStatG)
  • Digitalrat der Bundesregierung
  • Europäisches Wirtschaftsforum e.V. – EWiF Deutschland
  • Federation of European National Statistical Societies (FENStatS) mit ihren 27 Mitgliedsgesellschaften und der Europäischen Zentralbank
  • FernUniversität in Hagen
  • FOM Hochschule für Oekonomie & Management
  • Hochschulforum Digitalisierung
  • Initiative for Applied Artificial Intelligence by UnternehmerTUM
  • Institute of Electrical and Electronics Engineers (IEEE), European Office
  • International Association for Statistical Education (IASE)
  • KI Bundesverband e.V.
  • KI-Campus – Die Lernplattform für Künstliche Intelligenz
  • Partnership in Statistics for the Development in the 21st Century (PARIS21) / OECD
  • RWI – Leibniz-Institut für Wirtschaftsforschung
  • Stifterverband
  • Technische Universität Dortmund
  • Weltethos-Institut | An-Institut der Universität Tübingen
     

Individuals (in alphabetical order)

Regina Ammicht Quinn, Dorothee Bär, Thomas K. Bauer, Manfred Bayer, Jörg Bienert, Felicitas Birkner, Vanessa Cann, Thomas M. Deserno, Roman Dumitrescu, Johanna Ebeling, Florian Ertz, Andrea Frank, Gerd Gigerenzer, Jessica Heesen, Ulrich Hemel, Norbert Henze, Burghard Hermeier, Wolfgang Heubisch, Oliver Janoschka, Johannes Jütting, Claudia Kirch, Volker Knittel, Henning Koch, Ralf Klinkenberg, Annegret Kramp-Karrenbauer, Alexander Knoth, Beate M. Kreiner, Sebastian Kuhn, Monique Lehky Hagen, Andreas Lenz, Andreas Liebl, Anna Masser, Volker Meyer-Guckel, Antje Michel, Ralf Münnich, Dominic Orr, Ada Pellert, Martin Rabanus, Walter J. Radermacher, Philipp Ramin, Florian Rampelt, Richard K. Frhr. v. Rheinbaben, Peter Rost, Philipp Schlunder, Harald Schöning, Katharina Schüller, Rainer Schwabe, Andrea Stich, Sascha Stowasser, Renata Suter, Georges-Simon Ulrich, Daniel Vorgrimler, Jochen Werne, Johannes Winter

The hallmark of an open society is that it promotes the unleashing of people’s critical faculties, and the Data Literacy Charter, in this best sense, promotes the much-needed creation of data literacy for all areas of our digital society

Jochen Werne

PANEL: Can we drive revenue whilst creating a positive social impact?

Those who put the customer at the heart of their data strategy, will be those who come out on top. With the increasing focus on customer experience, engagement and targeting, how can we continue to commercialise data and drive revenue with the customer in mind? And if we take a step back, are we truly making a positive social impact with our data?

Looking forward discussing about the question, if we can drive revenue whilst creating positive social impact at the Big Data & AI World in London

Tradition meets modernity: Why more and more banks are relying on artificial intelligence

Artificial intelligence is finding its way into the highly regulated world of banking. And not only GAFA Silicon Valley high-tech companies see it as the technology of the future, but also FinTechs and established banks. How it came to this, what possibilities and limits there are at the moment and why humans will remain irreplaceable not only when it comes to money – the commentary

by Jochen Werne, innovation and transformation expert
Munich private bank Bankhaus August Lenz

Original published in German in the IT-Finanzmagazin (31 July 2018). Translation by DeepL

After “FinTech”, “Blockchain” and “Crypto”, “AI” is the new buzzword in the banking world. Whether chatbots in the digital customer center or self-learning algorithms for highly complex investment strategies are being discussed – the omnipresence of the term suggests that the integration of artificial intelligence into one’s own business model seems to be virtually vital.

Artificial intelligence and big data are currently the strongest and most vibrant innovation trends in the financial sector …

… was also one of the guiding principles of Prof. Joachim Wuermeling, board member of the Deutsche Bundesbank, in his speech on “Artificial Intelligence” at the second annual FinTech and Digital Innovation Conference in February 2018 in Brussels.

The choice of the conference venue, which like rarely any other city combines both a belief in progress and a deeply rooted European tradition, can hardly be more symbolic of the forthcoming change. In fact, the topic is by no means new: the development towards an increased use of so-called non-human intelligence is based on approaches from the 1940s – with the invention of the first computers

Artificial intelligence: revolution as a reaction to mountains of data?

But what is now possible in times of exponential technologies is in fact nothing less than a revolution. The financial industry is sitting on a valuable mountain of data, the extent of which is currently difficult to estimate. The maturing AI systems would not only make the preparation and processing of this data easier, but also much more cost-effective, faster and more targeted. Data already collected could become the most valuable raw material and a resource due to the technological leaps in the field of AI, which, in combination with the enrichment of external, non-structured data, must be “usable” in a meaningful way.

The industry is asked to use private data in a sensitive way for the benefit of the customer, – a goal that should certainly apply to all AI-based approaches.

To find meaningful regulations for the handling and the effects of the use of AI on society, economy and thus on our life and the work of tomorrow is the task of politics. The fact that this topic is taken very seriously is evident not only in national initiatives such as the German Platform for Artificial Intelligence “Learning Systems”, but also in the European Artifical Intelligence shoulder-to-shoulder approach, which is being pushed forward by France and Germany.

“Digital hand holding” in the event of a financial crash is not enough

At present, it is still too early to say which operational areas of the financial world will sooner or later be supported – in part or even entirely – by the use of AI systems. However, the financial crises of the past have shown this time and again:

Trust is crucial when it comes to money. Trust in the markets, the banking system and the human contact as an intermediary in a complex issue”.

However, the banking industry knows very well from its own experience how easy it is to loose customer’s trust. An experience that Mark Zuckerberg and Facebook recently also had to make in connection with the Cambridge-Analytica scandal. As with every new technology and every new approach, the same applies to the topic of “intelligent” systems: a lot of trust, coupled with half-knowledge and a big dash of emotionality results in a popular trend cocktail, which, however, bears a certain risk of headaches on the following day.

Jochen Werne

Jochen Werne is the authorized signatory responsible for Marketing, Business Development, Product Management, Treasury and Payment Services at Bankhaus August Lenz & Co. After two years as navigator of the sailing training ship ‘Gorch Fock’, the international marketing and banking specialist completed his studies as client coverage analyst at Bankers Trust Alex. Brown International and in Global Investment Banking at Deutsche Bank AG, he has worked on numerous projects in other European and American countries. In 2001, he joined Accenture as a Customer Relationship Management Expert in the Financial Services Division before joining Bankhaus August Lenz & Co. AG in Munich, where he has since been responsible for various areas of the institute. As part of the Innovation Leadership Team of the Mediolanum Banking Group, a member of the expert council of Management Circle and the IBM Banking Innovation Council, Jochen Werne is a keynote speaker at numerous banking and innovation conferences.

„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.