This speech by Dr Andreas Dombret of Bundesbank is for German banking sector but actually applies to any country’s banking sector.
He says simply sitting and watching will not help banks. They have to figure out ways to get more and more digital in quick time at that:
Ladies and gentlemen, my speech has dived briefly into the wave of digitalisation that has only recently gathered pace and that will inevitably carry the financial sector to new shores.
Everyone involved can benefit from digitalisation, but none more so than private customers in the short term. New technology and stronger competition mean businesses that are even better tailored to their personal needs. Ladies and gentlemen, you must all work towards ensuring that Germany’s banking sector does not remain a blank spot on the digital world map.
From my point of view, this requires four things.
- First, every bank needs a “digital agenda” and a flexible strategy.
- Second, every bank must find a balance between existing strengths and new types of banking business.
- Third, every bank must be aware of the problem of IT security and must also pass this awareness on to its customers.
- Fourth, every bank must modernise its IT infrastructure as necessary and ensure that the systems are secure.
Both we, as supervisors, and you, as representatives of Germany’s banks and savings banks, have an interest in a banking system that is stable and profitable in the long term. Learning to play by the new rules and actively shaping the process of change is essential if we are to stay on top of the wave of digitalisation. This applies not only to you, but also to the supervisors, because it is not just about detecting and taking advantage of new opportunities, it is also about recognising and limiting new risks. If we can achieve this, we will all successfully ride the wave of digitalisation.
Just a couple of days back, this blog pointed to articles on how two of India’s leading banks – SBI and HDFC Bank are chalking their digital strategy.
One might not be surprised to see a techie heading a bank in few years. This is already happening actually as mobile and other firms offer banking services. But so far most traditional banks run by people with banking background. This could change in coming years such is the impact and complexity of using technology in banking.