Digital economies: banks as tech companies

Jörg Hessenmüller, head of group digital transformation at Commerzbank, tells Club@Sibos that banks should take a key role in the development of digital economies.

By Heather McKenzie


Governments around the world are launching or investigating digital economy strategies. What do you believe are the main benefits of a digital economy?

Technology can make life easier. Of course, this is already happening, for example in many instances emails replace paper-written letters and movies are streamed from the internet instead of being sold or rented on DVD. If you want to open an account at Commerzbank, you can do so in one of our branches or online in just a few minutes. For companies, digital business models and digital processes provide high efficiency, however this is only one aspect. A key outcome of digital economies lies in the benefits for our customers.

What role do you think banks can, or should, play in the development of digital economies?

As experts for trade and finance transactions, banks should take a key role in the development of digital economies. At Commerzbank, we are involved in the financing of 30% of the German foreign trade, meaning trade finance is an area which we are keen to develop and support our clients. Traditionally this has been a paper-driven business with many manual steps and stages. In the growing digital economy, processes are digitalised and we explore processing these transactions using blockchain. Customers profit from increased transaction speed, high security levels and complete transparency.

What barriers exist in creating digital economies? How do you think these can be overcome?

In the long run, there are no barriers. Economies become more digital each day, driven by people and companies with good ideas and the determination to pursue them. For companies though, the question is whether they are a part of this shift or will they fall behind? Successful companies know their customers’ needs and they deliver on them. In terms of financial services, such as banking, today customers expect an errorless service, anywhere and in real-time. This can no longer be done with paper-driven, manual processes. At Commerzbank we aim to digitalise 80% of our relevant processes, making banking easier and faster for our customers.

What steps should banks take to prepare for a digital economy?

It is crucial for banks to embrace innovation. We have to identify which emerging technologies will become relevant in the future and to foster these technologies for our business. In the past, few changes were made to a bank’s business model; however, this has now fundamentally changed and there is a strong focus on digital across our industry, catalysing the emergence of new technologies. As a result, at Commerzbank we believe that banks need to transform into tech companies. This is why Commerzbank, like a car manufacturer for example, has a research and development unit of its own, where new technologies are being explored and prototypes are being tested. We have built a diverse cross-industry network with partners from the sciences as well as from other companies and among our customer-base. Merely keeping pace with tech development is not sufficient. Agility and speed are needed for banks to be leading this innovation curve.

Which technologies do you think are the most promising for the future role of banks in a digital economy? What is your bank’s experience of such technologies?

We mainly focus on four technologies: blockchain, cloud, big data and artificial intelligence. Blockchain will revolutionise the trade finance business and will become the “operating system” of tomorrow’s economy. We are continually testing new applications and their possible benefits for our clients.

Cloud technology enables companies to safely store and process the increasing amounts of data. We believe that cloud technology is one of the foundations of digital economies. Big data is another technology which lies at the heart of the digital economy. As a bank, the collection and analysis of internal and external data allows us to provide our clients with a tailored offering.

Artificial intelligence will help us to make use of the huge amount of data. Already today machine learning plays an important part in our business. At fraud detection we use self-learning algorithms. The success ratio of 99% for the prevention of CEO-fraud, we stopped illegal transactions for our customers with a volume of more than €100 million.

What qualities do you think bank CEOs will need in a digital economy?

In my opinion, above all, the ability to constantly adapt to change and to be the Chief Role Model for employees.

How do you think digitisation will transform the way bank employees will work?

What can be digitalised, will be digitalised. This means there will be fewer manual standard tasks in banking, as machines will increasingly perform these tasks. However, banking remains a people business in which the personal contact between the customer and the relationship manager is an important asset.

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