 So, thank you very much. Welcome back to the last panel here of the day, which is the panel on banking in a digitalized world. How is modern technology driving actually the way banking is going to be shaped in the future? And if you look at it a little bit in a broader terms, if we talk about digitalization, a lot of industries have been disrupted already. Think about video rental companies, for example, they just vanished. And other industry do face a lot of change as well. But it was quite late that this came also to banking. And that is one reason, of course, that the banking industry is a lot more regulated. And that banks are much more vital to our system as such. We know that from the financial crisis what happens to the world when a bank is actually going down just to remember Lehman. So that is one reason. But still, I mean, change is coming. We know that big tech is coming. FinTechs are coming. We have a lot of alternative banking services on offer. And the big question is what comes next and where do we stand now? And that will be the topic of our panel here. And I'm very happy to be joined by a very excellent group of panelists or co-panelists here on stage. Let me first introduce perhaps from the far right, Gorkham Koesiglu, chief analytic officer at ING. ING is one of the banks who is probably most advanced when it comes to digitalization in Europe. Next to him sits Helena Forst, head of branch optimization and expansion at Deutsche Bank. So she's an expert more on what AI and also digitalization means for the product and the business side of things. In the middle is Joachim Wurmeling, member of the executive board of Bundesbank and also responsible for banking regulation, IT and risk, but also for the digitalization of the Bundesbank itself. So it will be interesting to hear what digitalization actually means for the Bundesbank or a central bank and how processes are going to change. Then, of course, Hauke Starrs, member of the executive board at Deutsche Börse, so an expert on technology and blockchain, for example. Perhaps we can talk about which technologies actually perhaps the new thing for 2020 and going forward. And, of course, last but not least, Pente Hackeinen, sorry, the ECB representative to the supervisory board here, the SSM. And we are going to talk, of course, like what's the latest in terms of technology and what you are doing as well to stay ahead of the curve with all the technology changes for the banking industry. Let me start off with a question, though, or jump directly into the myths where we stand in terms of digitalization technology with Joachim. What do you think what's like the latest hottest topic in terms of digitalization of the banking scene? We are living in the WUKA world, so if I comment on the latest development tomorrow, it's already the day before yesterday. So, well, what we observe are in the last one, two years, three major shifts in the trends of digitalization. And one is the shift from Fintech to Fintech as companies to financial technology in traditional banks. So the previous suggestions that the whole banking sector will be disrupted by Fintech, so that has not materialized. It's rather the other way around that banks are catching up with there and boosting their technological development, their cooperating with Fintech companies. So the center of gravity of the innovation has shifted to the classical banking sector. The second item here I wanted to mention is that there's a shift from front-end digitalization to back-end digitalization. So from the, let's say, fancy apps for the consumers to really changing processes in the heart of the banking business, which is for us the supervisor is much more difficult because it's not so easy to find out. And the third trend, I would say, is from processes to analytics. So with application of artificial intelligence, machine learning, algorithms and so on, the analytical element of digitalization gives much more importance in banks. And here, of course, supervisors come into play because these applications also concern risk-sensitive elements. What's with you here, Panty? Perhaps you're also looking at the broader European picture. What is the topic you're especially interested in currently as a regulator? Well, it is very much like Joachim took up the issue. It is so that modern technology has become increasingly important. And when it comes to Fintech, it is not only that it is important in terms of our current banking, but it is contributing a lot to so-called financial inclusion. Meaning that in developing countries, there are people, wider and wider population, which is having access to financial services. And there is a big, big benefit. When it comes to more advanced banking industries, there we see different ways of using this. And when it comes to us as supervisors, it was so that FSI, Financial Stability Institute under BIS, made a very recent study surveyed 37 national supervisors how they make use of sub-tech, supervisory technology. And the conclusion is that it is rather elementary phase, so that the exploration phase, so that we start to use it. And in our case, in the ECB, it is in three areas very important. First is improving our own work processes. There it is not only costs, it is also improving quality of supervision. And that is a very, very important part. And second is that there are in financing very complex issues, incomprehensible information, which with modern technology. We can even create some good conclusions from entirely un-structured information, which is submitted to us. And then the third is not only for us, but it is also to banks. And that is data reporting. And there with modern technology, we can have a common data warehouses and make it more streamlined. And sort of administrative burden will be reduced. Austrian authorities are well-advanced in this front. And in all these areas, I can give you examples. But we try to keep abreast what happens there. And banks are so dynamic and just when hearing from Gherkin what they are doing, there is a lot of work to be done. Let us see from Gherkin where we stand in terms of technology and what is the latest hot topic you are working on and where you see the future. When I was reflecting on basically what is the hot topics in technology, when you go back to 15, 20 years, there has always been topics hot for banks around technology. And we talked about moving from mainframes to client server architectures. We saw the internet banking early 2000s. Then we said mobile banking now in some kind of 90% of our customers are mobile banking users. So I think banking is always impacted by technology. And that is what makes it dynamic and fun for us. And I like that Bill Gates said back in 1993 or 1994, banking is necessary, banks are not necessary. That basically shows that for me, there needs to be constant renewal by using technology but also in terms of customer experience that we create and user experience and so on in how we do banking. The hot topics these days are obviously AI, machine learning related areas and things like the distributed ledger technologies, blockchain technologies, like I think and also open banking which is driven by PSD2 but also fintechs and so on. A bit more open banking related technologies are hot topics. I think within these, AI is probably the most impactful one. And it's simply because if you compare it with earlier technological changes, internet banking, mobile banking, etc., they were mostly on the customer facing the channel, the interface part of the world. AI is more pervasive in the sense that virtually any part of the bank that you do customer service or take a decision today or do some operational activities will be impacted by AI. It not only brings efficiencies in how you do operations but I think more importantly in decision making power by processing huge amounts of data in an objective unbiased way is a huge potential impact for banks. How well are we prepared in Europe for AI? Because if I talk to CEOs who are also very interested in AI, many of them are saying that China will just overtake us by, I don't know, 100 kilometer an hour because of they have so much data. Yeah, so I mean indeed I think the main difference there is our attitude or perception around data and data privacy has huge differences among the US, China and how we do it in Europe. And that has an implication in terms of the amount of data that you can use to train your algorithms and data is the fuel for your algorithms. So indeed especially when it comes to areas like vision technologies, face recognition, image recognition, in those areas we see a gap. But I think not only in data in terms of attitude of the government and also investment society in towards AI is very different in China compared to US and even to the US and definitely to Europe. If you look at 25 billion euros or dollars of investment have went into AI last year, it's a 100-fold increase compared to 10 years ago and China has the highest share in that investment. So that is I think it's not only about data attitude but also the importance given as a national priority to AI is it creates some difference. Helen, you are an expert on AI as well but also on like the business what it does to the business side of things at a bank. So how are you using that like in practical terms? What are you working on? I guess from the business perspective technology isn't an abler. So from the business perspective we're not looking at what is the next nice technology that we want just to implement for the sake of implementing. Your mic is not working. Your mic is not on I guess. Is that working? Shall I just repeat myself? I was just stating that from the business perspective technology isn't an abler so we're not looking just to implement new fancy technology just for the sake of implementing it. It has to serve a purpose and it has to serve a purpose for us as a business. And what is the most important part for us as a business is of course to satisfy our customers. So from that perspective any type of use cases when it comes to AI machine learning RPA are always identified and prioritized based on strategic decisions with regards to our client strategy. I was actually quite surprised a couple of years ago when we initially started introducing RPA to the business how easily and how comfortable people felt accepting that technology and potentially have digital workers aside either supporting staff or working for particular managers. Now after a couple of years experimenting with RPA we are also now using machine learning and more advanced technologies for that purpose as well. So I guess it is a journey. It requires definitely commitments and yeah internal employees to embrace that technology in order to really scale up and to be able to deliver the benefits that we would like to deliver to our customers and to the individual businesses. So yeah. But do you think that like the banking scene I mean you are a representative of Deutsche Bank has waken up to the fact that this is like the future and digitalization is the future and do they allocate enough funds in order to really create a digitalized bank. Absolutely and I don't think Deutsche Bank is any different to any of the other European banks where digital transformation has been on top of our strategic agenda for a number of years and will continue to be. It is a journey. It is a complex journey as most incumbent banks we have legacy infrastructure that we have accumulated over the last couple of decades layers up and layers of systems code that requires replacements upgrades. But the key focus for us is to I guess remove the complexity that we have accumulated over the decades to make the architecture a lot leaner more flexible moving a lot more towards microservices rather than monolithic platforms that are quite complex and expensive to manage and to maintain and then of course introduce things such as machine learning AI blockchain and some of the newer technology into that mix. And I guess it's always going to be a balance between being able to upgrade maintain your business as usual infrastructure versus new investments into innovative products into new technologies that you might want to experiment with that might open up new business models and revenue streams. So it's it's managing that balance is I guess the trick to the success. Let's talk a bit about blockchain because I think most people think about blockchain in connection with cryptocurrencies but it also has other use or potential use perhaps how could you can yeah perhaps explain it to us where we stand here. Around blockchain where we're standing here I think a blockchain has been a subject in the discussions for for quite some time two years at least and there was a huge hype and a huge expectation about this technology and for people that have been working in technology we know the so-called gardener hype cycle and you often see these with new technologies they are hyped a lot and then you see a deep frustration. In between I must admit I had the feeling that blockchain is going the same way into a deep depression and frustration. I would say we see a more rational view on on blockchain and the the opportunities this technology is providing at this moment but there is also some some frustration about what what can be achieved with the technology. The technology we as Deutsche Börse thought in the beginning it could be a technology that in the end will will serve us as for completely changing the technology under the the CSD in the future. Looking at our current view on that I must say this is far out on on the opportunities the technology is not stable enough it's not mature enough to be applied in in companies like ours for such large-scale applications. Company in Australia ASX our counterpart in in Australia they are bringing their whole infrastructure on blockchain and struggling a lot with this. This doesn't mean that this technology has no potential there is potential and that there are applications that will help or will can be used for to to bring reliable or reliable infrastructure into the system in the financial system. We're using it for securities landing infrastructure. High-liquid assets will be in the future managed via such a technology but we need to say here we could have done it also with traditional technologies. We are using the technology currently because we believe there is a potential we need to stay close to this technology to understand where we can use it in the future and that's the current situation about we can talk about the risk aspect of that technology as well because clearly when we talk about artificial intelligence applying new technologies there's also a big risk of like failure as you were saying with the Australian stock market operator. I think you have a view on where the risks are as well associated to like new technology and where regulators have to have a look at. Well of course there are risks associated with digitalization but first of all I would like to say that Bundesbank is very positive about digitalization also from the economic point of view. It's innovation it fosters productivity it brings benefits to the consumers but also to to the banks but to the to the economy as a whole so we as supervisors see that digitalization of the financial sector is also a positive thing and you mentioned already the benefits of algorithms which are not biased and these kind of things they don't make mistakes and so on so this is the approach but of course it's our task to care about the risks and the challenge for the supervisors is twofold. One is that it is not only the technology in itself but it is that the business models are completely changing of banks operating models are changing processes are changing there's an unbundling of the value chain and so on so the animal we are supervising changes completely and this is of course could also bring about changes for the way we supervise these these entities and the second issue and the second challenge is of course that our focus usually is the financial soundness and safety of an institution and not the technological so our examiners they are experts in finance and computation of ratios and all these kind of things they are no IT expert they are no not nerds but the new risks which appear they are technological so here is also a change for us and when I look to risks sense risk sensitive tasks which are carried out by a by an algorithm yeah who of my examiners can look into the code and say well that's okay that's not okay yeah if blockchain is applied with all the inefficiencies you mentioned somebody has to make sure that processes are reliable and and sustainable so here I would say that maybe it's a bit exaggerated but that's the digitalization of the banks is the most the most challenging the biggest challenge since the financial crisis for banking supervisors because it's changing so fast so fundamentally and and it breaks up the structures and the fundamentals in which our traditional supervision is based have you also changed the way how to hire people at the ECB or at the supervisory body of the ECB because of all the new tasks which they have to do because clearly someone who's an expert on macroeconomic assessment can't be an expert on which technology is perhaps risky I would approach this slightly differently and perhaps a bit more positively than Joachim there are risks there are risks I would make a comparison with a car there's an engine we don't fully know how all that engine every piece of that is functioning but we use it going from place A to place B banks are using have been using that in trading a long time market supervisors in the market conduct side have been using it for a long time we here in the ECB we have some some pilots and we have a natural language processing through which we can automatically check fit and proper templates and find a red flags it is something what the machine is doing for us and of course we need a human human brains to check that that is that is correct then there's some areas where we use network analysis like we did in checking what are private equity companies holdings in banks because they are cross holdings and there were more than 150 000 interconnecting ownerships and the machines made it the visual presentation on on that know how our clever experts could supervisors would have been able to do it at least during their working time here before retiring or so but the machines did it quickly and as said it is something where we can work together with banks especially in data reporting side and reduce the burden and it is there are a lot of areas where we have a common interest and would you also say that and then relating to your main question sorry I didn't answer that yes we need to take into account when recruiting people yeah would you also say that perhaps question to Gorkin that like the new bank in the future will have a lot less people I know at ING you have a very different cost income ratio than other banks so and a lot lower I would say European average no but honestly a joking aside I mean the banking in the future given like what you can all optimize or digitalize you think like banking in general will have lot less staff I mean I think if you look at the number of transactions and complexity of the transactions that we are doing as banks today compared to 10 years ago and and if you rationalize that number with regards to employees probably you know there is a huge difference which means that there has been huge efficiency in the system already so I think you know when it comes to activities which are more repetitive like the RPA you know back office activities in most cases on areas where you can use natural language processing for automatically processing documents in areas like the contact centers where you know will be more and more VC being replaced by chat and chatbot kind of capabilities I think there will be changes indeed but we also see new jobs coming in we also have what we call customer journey experts now in the organizations which are basically mapping the whole process end to end having a customer view on how it should work we have a lot of UX designers we have you know customer experience experts coming into play so jobs are a bit changing I think the the the role of human in bringing the expertise decision making together with the algorithms as just explained and also managing the exceptions when it comes to customer service will be there but I also believe a lot of the repetitive activities indeed will be replaced and we also see you know if you look at the so-called NEO banks and they are operating models they of course outsource a lot of the activities as well but with a you know fraction of the amount of FTs that we have currently in ING they are able to operate in certain segments so yeah I think the industry when it comes to especially the the type of jobs and the roles that we have in in the banks we will see changes in these so I think by the way it's not only banking of course industry 4.0 is a broader discussion around around the society and impact on jobs but I think banking is not you know cannot be immune to that yeah I think you might have a view on that as well because you were nodding and yeah no I think you have many technologies that help with the efficiency internally of course one technology or area that was not mentioned is subject cloud and I think that's also something where the regulators need to look into the it's of course a way to to save money to be more efficient but it's also using the cloud is changing the way you develop software you deploy software and and work with customers and there we have by the way a disadvantage in Europe that we rely or have to rely on the American providers we at Deutsche Börse using this significantly because there is no other alternative we would like to see some European initiative on that but this will will definitely change the way you work and you you improve efficiency but also the other side is and that was mostly talked about how you work with with customers and I think what we when we look maybe not only into 2023-25 so if you look into 2020-30 or behind or more in the future I think banks need to think about how the interaction with the customer will completely change the the the banking system I mean for me personally and I think everybody agrees Amazon Google are companies that are every day available and yeah you act with these companies daily either we're buying something and if they provide banking services and there's the the Mr. Microsoft Bill Gates banking is necessary banks not there might be other players coming up fintechs that take over these these roles and technologies help them yeah so called big tech they are clearly under yeah a lot of scrutiny also from the regulators or from the European level for other reasons but I guess them moving more and more into the payment sphere we have seen that in China with Alibaba for example which is like the Amazon Chinese Amazon equivalent for China which is already providing the fully fledged banking services so we most likely will get something like that as well here so what would be the response from regulators for example on on that specific topic when we talk about big tech moving into that market well this the the issue is for fintech companies and big techs a little bit the same well the usual approach of supervisor is we have a definition of banks and this well if you take deposits and give loans you're a bank and in the traditional understanding these two functions can only be carried out with the complete value chain yeah and we sit into the bank and what we now see is the kind of unbundling of this value chain and this unbundling means that parts of of the classical banking operations are carried out by third party providers which are not a bank and of course is not supervised as as a bank and we can only by the figure of outsourcing requirements capture this phenomenon but this may not be the future because it is maybe even a little bit of illusion if I tell the Volksbank Würzburg when they shift their core banking system into the cloud please make sure that you control Amazon because that's an outsourced task so here we might also change our our approach this unbundling is a real a big change and maybe we could we should consider of changing from the identity based supervision rather to activity based supervision so if you provide a service for a bank which is bank related and risk sensitive it should be supervised as if it was done by a bank itself but this is this would be of course completely new world for supervision but these are the ideas we have to consider Helena how much pressure do you feel like as a traditional bank coming from those big tech companies who obviously move very fast into the sphere of providing financial services not necessarily in Europe yet but in other jurisdiction where perhaps less regulation is on them well I guess there are disrupting some traditional thinking setting a new pace in terms of development I would see them as a sparing partner like in boxing right they keep you on your toes they offer a different perspective and you then have to evaluate which parts may be relevant to your business to your strategy with regards to your clients and which might be just you know an interesting idea to revisit but they are more threatening than like little fintechs who are evolving somehow like mushrooms all over the place right I would agree but but I think it goes back also to your company's strategy right what is the unique value proposition that you have where do you want to maintain your IP and keep investing into which are the areas where you're maybe quite happy actually to collaborate to partner with the big and the smalls and which parts are maybe complete utility and where you're quite happy to completely outsource and create maybe like a SaaS model or anything else where you just get things on demand when you need them and you don't necessarily care where it's actually going to get produced so I think it really goes back to a clear strategy and agreements within the company in terms of what they aspire to become or to be what's the European level thinking on what to do with big tech in that area of financial services well I don't know whether I can answer on behalf of the entire Europe but the issue there is like Joachim said in in finance industry many sort of long change have been unfundled and and like Helena took up it is also in the interest of banks depending on their strategies give up renounce some parts of their activities and then when you get a new player there are some companies in Europe already just focusing on payments and their return on equity in that business is quite good double digit numbers and that is something what banks were not able to do as efficiently perhaps there are ways to follow the same system but technology allows those new firms to take from the very beginning to the end straight through processing without any human errors in between and in a very efficient way so all in all innovation in this industry is favorable and increases competition and then lowers entry barriers and I think that that is that is good for also for the European banking industry I would like to add two principles and recall two principles of supervision first is market neutrality so we are not in favor of traditional banks in comparison to others that's also what you mentioned as well as well and be also technologically neutral yeah so don't address the supervisors to to shelter traditional banks from big techs and fin techs but the other side of the coin is of course that we have an responsibility for the financial entire financial stability so we have to make sure that certain entities do not escape our grasp and here it is very crucial to emphasize at the firms which are entering into into business which requires authorization then it is the same as what is required from banks it is not more like let's let's talk about that that approach I think it's called sandbox approach and innovation hubs which is like the European way of I think enabling fin techs to actually grow and test their products a little bit before actually applying for real licenses because licensing is clearly a huge entry barrier into the financial service sector perhaps you could briefly bring us up to speed what is like behind that and what's the thinking of yeah or how that is actually going yes it is it is so that innovation hub which is for new sort of services and products we can there communicate with banks and firms and tell what is the regulatory treatment on those services sandbox is already where you test these services and you can have a test environment but again what is crucial is that the governance is in place IT systems and operative operational risks are taken care of and so that it is fulfilling those main criteria of the license needed for that whether that is payments or whether that is then a full banking or something else it is it is there so it is a sort of way to tell to new entrants what is required in the market but that is not an alternate route to get a license yeah I mean fin techs are thriving especially in Britain and now with brexit there's probably a lot of change coming well obviously nobody knows how that is going to work out in the end but perhaps how good what are you hearing because you have close connection to the FinTech scene as well what are you hearing from them is that something they they I mean is there a lot of movement coming to the continent now and which countries do they prefer if I can say like they yeah I mean if the FinTech or general the startup sector in Europe is generally behind what we see in the US and now also in Asia we see over the past two three years that the the capital that's available for startups is increasing here there was in Silicon Valley there is a network there's the capital for for startups in general easier available than in in Europe a number of initiatives were taken in Europe among them also Deutsche Börse started their venture network to support startup companies so there are a lot of initiatives going on KFV and others are driving initiatives to provide network management skills and capital for startups so there is a lot of that's done in Europe one area and you said it with the with UK the FCA has very early two years ago already started the sandbox approach and were leading in Europe with this approach providing this sandbox for FinTech companies to to test their services and and learn and see if they can in the end reach a certain size critical size to apply then for license and and have the critical mass for that we are behind that in Europe then your question on will the Brexit change the situation my view on that is that it will not probably not change the situation we don't see startups moving we see a number of banks setting up their branches here in continental Europe but FinTech's don't see it as important for them to be in a certain location they work from where they have their talent they are focused on their talent on their teams and they mainly stay in the location despite Brexit and we regret that the British people will probably leave but it's fine perhaps Gorkham you have a view on that as well how FinTech is doing in Europe because I know that your CEOs one of was one of the first going into Silicon Valley to actually have an idea of what digitalization will mean for the future of the world so are you more or less looking at FinTech's as also means to like getting ahead of the curve and incorporate their ideas and IE just take them over or is it like a constant dialogue with them we partner most cases so it is I mean we also spend off more than 10 companies out of our own innovation funds and venture funds those are some of the things that came after the Silicon Valley visit indeed that we have a venture fund of up to 700 million euros where we invest in in companies but also our own initiatives coming from our own innovation initiatives in the organization so I think yes the FinTechs have the ideas they have the I think the advantage of zero base design in a way you know you will design things differently if you are designing from scratch they have the agility also by using things like cloud and and different approaches they like to scale they like to scale the data in some cases also the experience and that is something we can offer we have you know 40 million customers we have the data we have banking know how and we see a lot of opportunities for for partnerships in different areas with FinTechs I think you know the second part of the question also when it comes to Europe in in FinTechs we are also looking at as part of the initiative what we have in the Netherlands for Kickstart AI to basically put the Netherlands a bit ahead in AI and one of the areas we are looking is the ecosystem of startups and I think we see the challenge that we don't have a lot of the startups coming up in FinTech but also in other areas in in Europe and especially when they come to a level where they scale up they tend to go to the to the Silicon Valley and US when we talk to the entrepreneurs the money is not the only issue because capital is also available a lot nowadays in in Europe as well it is the the network is a big aspect having access to strategic boards advisors and know how when it comes to scaling up a company is a big aspect but I think also in general the attitude that we have in the US with regards in in Europe with regards to failing and then you know learning from failing is seems to be a barrier in you know companies coming up and scaling up here we we don't like failing that much we're not as proud as as as Americans when you try some things and fail and also as I think we need to look out as our own organizations we look every investment as a business case we try to see what will be the benefit for me you know what is strategic fit and so on where in the US it is a bit of a different attitude when you look at coming to investing into companies it might be a bit more more relaxed to create more you know and talent ecosystem etc trying trying and learning things so I think money is part of it the capital but I think changing our attitude in a way and building this incubation capabilities where we do projects with startups where they try and fail and we give data and know how in a secure way of course using sandbox and so on and and we build things together that is something that we need to do more and more and that's what we are trying to do in in ing you're reminded me one one issue we require from from firms in in in the sandbox sandbox and it is of course we do not want them to fail and we want them to succeed but one issue is that we require them to submit us an exit plan so that we know what happens if they are failing and that is also crucial so you perhaps raise a bar a bit but then you you're confident that you have a that kind of startups which are seriously in in thinking in in entering the business Helena you were nodding and perhaps you can expand a little bit on that what Gorkin was saying how you are doing that like cooperation with fintechs inside Deutsche Bank sure we encourage quite a lot of internal innovation as well so we do have innovation labs in all of our main hubs really encouraging employees also take a time off if they have any particular idea that they would like to pursue a bit further and create like a sandbox solution that they would like to present to the senior at the regional or global management so that is really heavily encouraged and then of course strategic partnerships where from the business perspective we can again connect with those teams who are very close to the fintech market locally and we can come to them with some specific propositions or pain points that we have identified in the current offering changing expectations from our clients and use them as an additional kind of external place where we can brainstorm and potentially come up with slightly different ideas less restricted both in terms of technology but also internal processes that then could be developed and explored further and reaching a certain level of maturity could be brought back into the business so it's a combination of encouraging your all internal employees and ultimately boosting their digital IQ which is quite rewarding especially for the newer generation that is coming into the bank but then of course staying connected with the fintechs and also the bigger tech companies that are strategic partners of ours for these type of specific use cases ideas and scenarios where we use them to further develop and mature those ideas but how how important would you say our fintechs to drive the innovation process because you were saying a lot of that already happens inside the bank but like if you had a ratio like say 50 50 or 30 70 just like good guess I guess maybe just to clarify the internal innovation piece is also set up in a way like a fintech it's away from the standard processes so that specific employees with ideas can actually step out for a month or two into those innovation labs and actually develop their ideas using different technology that might be appropriate or approved within the bank to develop those ideas and mature them further before presenting that yes as a business case as well to then hopefully get more funding more resources to bring it back into the business and integrate it with the existing infrastructure so we're encouraging that innovation culture outside the existing in some cases maybe limiting environments that the banks are operating in to ensure that at least at the initial stage we're not inhibiting those developments by internal processes yeah well time is moving fast I would say perhaps you start to think about some questions and we have the final round here on on stage I was initially thinking about asking you about what needs to what do we need to have to that fintechs can prosper but I think it might be more interesting to hear from you what actually the biggest development in terms of digitalization and in your area of regulation will be for the next couple of years so which topics are you looking at and thinking well that's hot perhaps next year and in 2021 let's we start with you Gorka now I think as I mentioned in the beginning it's more in the area of of machine learning analytics in coming up with ways that you can scale models in a fast way that is going to be the key going forward I think that would be a big differentiator between successful and less successful companies in this area in general everybody's trying to do things I think moving from a bit of an experimentation phase to really industrializing it and virtually across every part of the bank right so starting from of course customer interactions and marketing but also customer dialogue when it comes to chatbots voice assistance new ways of interacting with intelligence but also risk current acceptance models early warning models pricing KYC AML every part of the bank virtually is impacted by that and we are working on those but you know what is your your capability in doing being able to do it in in quickly in scale putting things fast into production with real impact I think there's going to be a key differentiator I believe you know we passed the stage that's the idea great idea on AI was was key it's now really execution phase and obviously together with that comes the you know the important aspect of the fairness the transparency and robustness of everything that you build in this field and also building those capabilities also as much as in automated fashion will be will be very critical going forward would you go as far as saying that those banks were not embracing digital change won't probably not be around in say 10 years I mean digital change the broad concept I will even yes I will definitely say that I can easily say that I think but we have seen that also in in you know in the adoption I think the the importance to of being able to be adapted the exponential change is becoming more and more critical and we also see it already in you know if you look at the price book ratio of of winners and losers in different industries the gap is growing so so really I think few winners will emerge and I don't know if scale or is it the adoption speed to technology I think probably is a combination of that we'll determine the the winners in this industry and I mean my field is AI so I believe it is really the next big thing in in banking so so that's why I'm trying to keep investing in that Helena what's your view what's the next big thing without wanting to repeat what you said because my team focuses a lot on AI as well for me it's data because data is the key enabler for AI or real-time contextual insights that the clients want that's the next big thing whoever you know figures out how to get that in the most commercially efficient way and not just the data that you hold but everything that the customer finds is relevant and contextually beneficial that's for me the next big thing what are you looking at from the regulatory side of things or what do you think will kind of keeps you busy next year and the years after that we are the risk sensitive areas of course for us the most important one that's of course IT security resilience reliability of block change changes risk relevant function of AI and so on but I like to mention another element which can really move the sector very fundamentally and that's the tokenization of various forms of assets it's not only money and securities everything and the tokenization would mean that means in a sense that value at this stage state you can convey information in the internet but with the tokenization you can also send value by the internet and this of course can break up the whole system of banking because you don't need an intermediary in between and we see already in some places experience but also prototypes of tokenization of certain types of assets you are working on that your colleagues in Stuttgart and wherever so this can really make a big difference and another area I would like to mention is that the the digitization which has to a certain extent been an issue of for the first movers they are big tax fintechs but also innovative banks like ING but also various other banks it now really goes to the mainstream and the cloud technology is one important issue here because cloud technology allows every small and medium-sized banks to make full use of the whole range of new technologies which are there so it will move from some top people to to the mainstream of banks and this is of course a big issue for the supervisors because then we have it in all the banks and in a big variety so we are encouraging banks to digitize more that's also an issue of competitiveness we want to be an enabler of digitization but we have to make sure that the risk under control okay I think many technologies were already mentioned analytics big data cloud cyber security something that was not that much discussed today is a big subject so I think there are many technologies and I think we all agree that there are many things coming up in the future so I think the the big thing in in the future is more the way the the business model of banks or the financial system is changing and this is something the regulator the ECB they need to look at this how it will also change the way companies need to be supervised or which companies need to be supervised this the banks the traditional banks you said it in the beginning or is it also the google's amazons of this world that need to be included in this because they are taking over parts of the the value chain so I think this is what what will will impact the the future of the financial system more than the individual technologies there's many many things that that will come so plenty what are you working on for next year I think that this was taken up there are several issues which are important it is a moving target and as supervisors we need to evolve in parallel with the tech technology and and they are artificial intelligence machine learning those issues are which we need to follow two issues I would like to implement so that next time when we have this kind of conference we can tell about having implemented first reduction of reporting data reporting in in in like like a administrative work and this morning our chair also made a point on on on that the second is that we make use of modern technology in our work processes so that our staff can free up time from repetitive work into more value added supervisory work that is very very crucial and the final point is that as the SSM is consisting of our national supervisors and the ECB we have the benefit of working together and and making use of best practices whether that is in here in Joachim's bank or whether that is in Margaritas bank or others and already today we see that quite many of our our national supervisors are pretty well advanced in in these areas and we need to share that information and make use of international collaboration also a bit outside and that we have started with monetary authority of Singapore and the Feders and Francisco making sure that we keep abreast of what happens in this field thank you very much and now it's time to open up to questions from the audience so who has a question don't be shy no drinks up yeah here in the second row please thank you Dominic Laborix from a single resolution board it's not about resolution by the way but I think we have not discussed the question of data protection and the interrelationship between these new technologies and the limits we have to respect concerning individual data protection how do you address in particular in banks this particular question because to develop intelligence about customers activities it's fine but it is related obviously to individual data and so how do you manage that this contradiction between protecting data coming from individuals and these new technologies yeah so it is obviously one of the important areas and as I mentioned when it comes to fairness transparency and robustness of the models part of that is also about the type of data that you use to train and test those models and also the production data to use against that obviously we have the regulations around GDPR and the and and privacy regulations but also on top of that we have a set of data ethics rules in the organization that's basically this of seven rules around in which you know how we treat data in this organization beyond GDPR let's say and also we have certain checkpoints in the development process where the data that's being used is checked against bias but also against the source and the lineage and privacy related things and for people when there is in doubt we also have data ethics councils in the organization in the countries but also we have global data ethics council where I'm also sitting as a member and there we really discuss the dilemma specific dilemmas that can come which doesn't really you know are not clearly the gray areas I think was mentioned today so that there are cases where gray areas where we need to also address as as an organization but on top of that I think it's important to also build the checks and controls risk-based first second and third line systems when regards to models as well so we have a separate organization for model validation it's not only for regulatory models but every model that we build is subject to validation by a second line for us and we also apply a risk-based approach there they're also building their own challenger models to validate the models that has been developed in different parts of the organization so I think all of these things needs to be in place to not only for data protection for regulatory perspective but also you know everything against the bias in your data and it can be you know primary or secondary bias basically bias that you don't immediately see the bias that you can have inherently in your model and also how you use that model for what purpose when it comes to ethical dilemmas those those structures need to be really in place to to feel safe around this and I think the challenge is again if you want to scale up and automate things how much of this you can embed in your pipeline to say in automatically detecting bias while you also building models in an earlier phase and so on and there are a lot of technical developments also coming up there Joachim you well I just wanted to add a brief consideration first of all of course supervisors make sure under the compliance regime that all these regulations are respected but I wanted to point to a dilemma which banks face but also institutions like ours face and that is that the underlying ideas for GDPR but also PSD2 were elaborated or set up in a period far before big data and big tax and on the one hand GDPR is also an example where others in the world follow on the other hand it's a big obstacle to use big to use big data of course and when I see people giving their data enormous amount of data as to whatever companies in the world with stores in each in under in the ocean or whatever yeah and so the sensitivity of of the consumer has say shifted a little bit from this approach oh this is my data nobody should look have a look at it on the other hand is this also the consumer benefits yeah when organizations use their data to make better products and more well-designed product so here I think could also be a point where reconsideration of these ideas should start because if we if we stick to that very restrictive approach it is clear that we will have an everlasting disadvantage in competitiveness to to other jurisdictions where these restrictions don't exist yeah that's very much true I have to think about Facebook when you say that because you really get very good advertisements if they use your data properly another question here in the front row is it still yeah thank you and thank you for an interesting discussion but at the end here someone mentioned the cyber security and I think that is something that we can also see that the cyber risks are also increasing a lot and if it seems like technology now can I mean provide us with an enormous amount of new services to customers so my question is a little bit are we doing enough preparations or do we have enough contingency plans also for if electricity goes away if we don't have internet I think one of the larger stock exchanges in the northern europe had a stop of several hours last week so I mean there is a risk always with new techniques that you are running away but you are not making sure that you have enough contingency for also being able to serve your customers in bad times perhaps how can you as an infrastructure provider yeah perhaps you can take that I mean I I can say from from a view of Deutsche Börse that we spend a huge amount of time and efforts on cyber security on business continuity management we we do regular tests of our systems of our people out there can move and prepare in case of emergency and there is always a residual risk that that will never go away but I think coming from a technology world before I joined Deutsche Börse I was in technology world I would say the the whole financial industry is doing really a lot on preparing themselves for for any emergencies and also always staying on top of the latest technology on top of that the regulator in this case for us Bundesbank Buffin they are checking us regularly and checking our preparedness in a in a really tough and and consistent way Helena perhaps you have a view on cyber security as well yeah it's definitely an area that is heavily invested into right as a bank you just can't afford to have your systems down when we're in the number one euro clear it's a top priority but we're also investing actually in new technologies to strengthen that area for example around fraud prevention or generally cyber security you know everything that you've kind of said in terms of using a lot of datasets to train your new algorithms to ensure that you know we can sustain any type of attacks and can detect them early enough before they cause any major damage but it is certainly an area of huge investment where we saw in the last years that banks are really stepping up their efforts in IT security and where they are two level one level is let's say the the basic the basic requirements for IT security which are very very easy yeah like making the batches do not circumvent the the pin codes and these kind of things and well but there we have seen very big lacks in the in the system and that they have been closed but the the worry some point is that the vulnerabilities are rising quicker than the tools for shields any more questions yeah and you get a microphone thank you maybe a follow-up to the cyber risk in particular on the cost-benefit analysis because of course just like in AI I think you alluded to that investment in cyber security can be as you know as as long as a piece of string so what considerations go into the cost-benefit analysis of cyber security in particular versus outsourcing it because this is also very conveniently outsourceable activity it depends on the risk that you know is assigned to a particular area of business particular piece of technology as well right so it will vary there isn't like one rule that you would apply but I would generally say from the business case perspective investment in this area is probably not going through the same scrutiny as investing into a new product because the bank just understands that this is an area that we cannot get wrong how much does regulation look into what can you like sort of outsource when it comes to looking into cyber security risk because because clearly I mean it's clearly a very sensitive area but you it is it is something what appeared already that that supervisors are following it that it is a continuous work it is part of our work to check what are contingency plans of banks and so that they are sufficient Justin made a question whether that is sufficient well the outcome will show the case should be looked to the end nobody knows whether that is really sufficient but again here is is the fact that we have a common interest all parties have a common interest here so that it is not something where supervisors and then supervised entities would think differently and that helps there's even cooperation in in in those areas and that relates to know your customer of terrorist financing and all those areas and more perhaps could be done in in in that my interpretation my observation is that banks don't want to outsource their responsibility for IT security and by the way they are not allowed to either okay any more questions well if that's not the case thank you very much and thank you to yeah for that very interesting panel