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We asked 22 digital top shots: What will the banks do in 2023?

We asked 22 digital top shots: What will the banks do in 2023?

Churchill’s view that no crisis should go untapped is widespread among the Digitalos in particular. The corona pandemic back then? The closed branches? Everything had its good points somewhere. After that, even the sleepiest customer knew that you don’t need a bank building to make a transfer – something like that also works online!!! And now? It’s 2023. And another crisis. But while digital pros have burst into great form during the pandemic, it feels like they’ve been marginalized a bit right now. Motto: «The right bankers have to fix that now.”

It remains to be seen whether this feeling correctly describes reality. In any case, we thought to ourselves: Why don’t we let the digital bankers have their say? We have a task for 22 digital top shots at banks, fintech, payment, and IT service providers. The task was “Please write us in a maximum of 2,023 characters, what will move (and possibly even surprise) the banking industry in 2023.” Without wanting to anticipate too much:

  1. That at least 20 of the 22 have touched the keys that make us very happy! 
  2. We take the fact that three have kindly canceled because of too much workload as an indication that the digitalos are still needed!!!; 
  3. None of the digital experts quoted Churchill. But a Rainer Maria Rilke. You have to get it right first.

Voila:

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Reliability trumps innovation!

“No, banks will not make any quantum leaps in 2023 either. That is still not their job. The fact that offers are explored in the innovative Metaverse makes perfect sense – but please, not only in the retail segment. Because the special tension lies in applications for corporate customers, and on closer inspection, there are quite a few. But commercial in 2023? Open banking is also (after almost a decade) still in the starting blocks. The topic is still far too technology-driven and requires a real business model review. Added value is not the technical usability of various third-party providers or fintech but an extended, more flexible, and faster product or service experience! But even that will not take off in 2023, albeit gaining importance with the consolidation of the fintech scene and its need for more cooperation. I am convinced that in 2023 the regulations, which are sometimes seen as strenuous, will receive a significant positive boost and that banks will put the regulatory security of their offers in their shop windows with full conviction and with a full sales focus. After the FTX crash or the withdrawal of billions of euros from crypto exchanges – not to mention falling valuations in (little regulated) crypto assets – innovative banks will close exactly this security leak in the digital assets complex with their own offers. Despite all the passion for technical innovations, reliability is a compelling argument in the end! There are still far too many “trial offers” in the digital assets segment. – Stephan Paxmann, LBBW, Head of Digitization & Innovation

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Banking products will become even more niche!

“The past year was a tough turning point for all of us, including the fintech industry. It can be assumed that market turbulence will also accompany us in 2023. The resulting uncertainties and effects will lead to many tactical and/or strategic direction changes in the German and European financial industry. However, the long-term trends should hardly be affected. The essence of this is: Even if the European market is more or less ‘over-banked,’ that does not mean that customers will get high-quality solutions everywhere. To use an analogy, just because we can have plenty of meat doesn’t mean we can get good meat everywhere. Ergo: Banks and fintech must continue to change the way in which we enable customers to solve financial issues. To be sure, so that we don’t misunderstand each other: We don’t have to think about how we sell products but how we design these products and make them accessible to customers. A big part of the answer is embedded finance. Just as we have developed into an app economy in the 15 years since the introduction of the iPhone, in which there is an app for every individual problem, so will we develop in banking over the next ten years: further increasing diversity of offers, also for ‘niche’ topics. New and specific approaches are positioned extremely close to the individual customer problem. In 2023 we will see further steps on this path, and the trend will become a fact. Anyone who has not yet had an answer to this development should take the time to find it today rather than tomorrow.”  Jörg Howein, Chief Product Officer, Solarisbank.

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The new year brings the pain that some banks need!

“2023 starts like 2021: An unexpected crisis hit us hard. Our everyday life was put to the test. We’re slowly coming to terms with it. Instead of Covid and lockdown, we now have the Ukraine war and energy crisis. Despite all the human and social challenges, Covid has made it clear to us that when the going gets tough, a lot of what was previously considered impossible is suddenly possible. On the plus side, a massive forced push for digitization. On the negative side, an encroachment on self-evident fundamental rights. And now? The tragedy in Ukraine is indescribable. With us, it could be similar to Covid: On the one hand, society’s forced but long-needed transformation towards more sustainable action. On the other hand, a situation like we haven’t seen in decades: power outages, energy shortages, people and businesses facing difficult options. Means for the financial world? We are confronted with challenges that the younger generation of post-Lehman bankers is unfamiliar with and fintech is not at all familiar with them: loan defaults. Falling asset prices. Even interest! Fintech that have built on the cycle of ever-increasing valuations and higher marketing spending must now actually deliver value to customers – and make money! Banks that have earned a lot from the asset boom in recent years must now ask themselves a fundamental business model question while at the same time suffering losses in the loan portfolio and custody account A. The rising interest rates offer us banks a breather – if we don’t use them as an excuse to push the necessary transformation again. Because: It still doesn’t hurt us enough to be an incentive for real change. In the words of Tony Robbins: ‘Change happens when the pain of staying the same is greater than the pain of change.’ Is the pain big enough? If not: still coming!” – Pranjal Kothari, Chief Digital Officer, Sparkasse Bremen.

Read also: A secure password is a random password – how to take care of your data

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The app is becoming more important than online banking! 

“The trend towards smartphone use will have a lasting effect on banking in 2023: At Commerzbank, for example, the number of customers who only use the banking app is now around 35 percent. The “banking app-only customers” have thus overtaken the “online-only customers” and are at the top. The increasing use of Apple and Google Pay also shows the popularity of smartphones. Increasingly complex applications are therefore finding their way into banking apps. A simple implementation is decisive for acceptance. Digital or digitally supported advice will play an increasingly important role in the future and will make a difference in the customer experience. The importance of precisely fitting information tailored to individual customer needs using big data analysis will continue to increase. In this context, data protection and transparency in data use also play a decisive role. In addition to all these developments, personal contact will remain an important and integral part of customer care and multi-channel strategy – be it on site in the branch or by telephone and video in the advice center. Here, too, digital solutions such as authenticated calls and intelligent chatbots play an important role in creating a convincing customer experience.” Gerald Ertl, Head of Digital Banking Solutions, Commerzbank

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The competition between banks & fintech is over!

“Daily interaction with customers is and will remain a key issue. Banks need to remain relevant to their customers, which is not trivial given declining branch usage and the diminishing importance of cash. The account remains an anchor product but will evolve. The topic of payments will continue to gain importance, thereby creating customer contacts and relevance. The development will continue here – not only in the B2C but, above all, in the B2B area. Banks versus fintech will finally be history next year. “Fintech” is no longer a collection of start-ups that want to take something away from someone but a strategic market approach: nobody in the industry will survive without well-founded tech competence and appropriate “time to market.” Fintech have made this clear to the established banks, and this will also act as an accelerator in 2023. Banks have learned to think differently and evolve in terms of content, and they have learned to enter into partnerships with fintech that are mutually beneficial. The topic of ESG will likely play an increasingly important role in the coming year as a fundamental component of almost all banking products. At the same time, the industry will no longer emphasize the topic as much as part of a strategy or organization. The conclusion will be: we talk less about sustainability but do more about it. ESG must and will be a matter of course, and this also applies to the financial sector. Internationalization and, above all, Europeanization is moving even further into the strategic foreground. Again, growth outside the home market will (again) become a core issue for banks, particularly in the retail and payments sectors. Customers want their bank to accompany them across borders. By doing this, the bank will automatically strengthen customer loyalty and will be able to take advantage of growth opportunities. At the same time, this pays off positively for the banks’ brands.” Kilian Thalhammer, Head of Merchant Solutions, Deutsche Bank

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Customer proximity is only possible with automation!

“Even today, customers expect their bank to offer an omnichannel experience without media discontinuity. Understandable and simple processes, cross-channel data transfer, and digital case closures are just some of the cornerstones needed to create a consistent service experience. A prerequisite for this is a fundamental change in the underlying IT architecture. A seamless transition from digital self-advice to personal advice in the branch only works if the process foundation and database are the same for both customers and bank employees. Process standardization, automation, and data consolidation have, therefore, advanced to become key competitive factors in the financial sector. However, these factors have not only had an effect on the customer interface for a long time but also on the banks themselves. Consistent automated processes from sales to the back office increase efficiency and ensure shorter processing times and sustainable cost reductions. The clear expectations of banks on this transformation path: Effects in efficiency must be transparent and specifically measurable. This is the only way to make tailor-made deductions for optimizing one’s own overall bank organization, which are made possible through efficiency gains. There is no doubt that the coming year will bring significant progress in this direction. Then it will be even clearer that more digital-personal customer proximity and greater efficiency are two sides of the same coin.” ensure shorter processing times and sustainable cost reductions. The clear expectations of banks on this transformation path: Effects in efficiency must be transparent and specifically measurable. This is the only way to make tailor-made deductions for optimizing one’s own overall bank organization, which are made possible through efficiency gains. There is no doubt that the coming year will bring significant progress in this direction. Then it will be even clearer that more digital-personal customer proximity and greater efficiency are two sides of the same coin.” ensure shorter processing times and sustainable cost reductions. The clear expectations of banks on this transformation path: Effects in efficiency must be transparent and specifically measurable. This is the only way to make tailor-made deductions for optimizing one’s own overall bank organization, which are made possible through efficiency gains. There is no doubt that the coming year will bring significant progress in this direction. Then it will be clearer that more digital-personal customer proximity and greater efficiency are two sides of the same coin.” This is the only way to make tailor-made deductions for optimizing one’s own overall bank organization, which are made possible through efficiency gains. There is no doubt that the coming year will bring significant progress in this direction. Then it will be even clearer that more digital-personal customer proximity and greater efficiency are two sides of the same coin.” This is the only way to make tailor-made deductions for optimizing one’s own overall bank organization, which are made possible through efficiency gains. There is no doubt that the coming year will bring significant progress in this direction. Then it will be even clearer that more digital-personal customer proximity and greater efficiency are two sides of the same coin.” – Daniela Bücker, Board Member for Banking Solutions, Atruvia.

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SME financiers have to adapt to changing demand!

“Whether restructuring supply chains, energy, and capital costs or changing consumer demand: Hardly anything is currently really easy for small and medium-sized enterprises (SMEs), regardless of the sector. However, three topics can potentially provide positive surprises in the corporate customer business. 1.)The digital affinity of SMEs is growing, and embedded finance is still on the rise. Digital financing options are already being increasingly used. The willingness of SMEs to share relevant data digitally will continue to grow in 2023; also because the companies themselves are developing ever stronger digital skills and digital presence. 2.) The turnaround in interest rates means that rising borrowing costs are again offset by interest on deposits. That raises expectations. We will see new product offerings in 2023 that leverage working capital efficiencies through interest as SMBs explore and compare more offerings in the future. 3.) For banks, sustainability is currently still subject to some uncertainties. When are companies and financing considered sustainable? On the SME side, however, the topic is already causing movement. Accordingly, more and more SMEs are aligning their supply chains and their offerings accordingly. However, the conversion also requires investments, for example, in implementing the CSR directive. Even if the current challenges continue to be very present next year, many SMEs show high resilience, adaptability, and innovation pace to cope with them. It is therefore crucial that financing and banking partners actually use the digital possibilities of our time in their processes and products for SMEs. “ – Nadine Methner, Head of Business Banking, ING Germany

Read also: What Are Random Numbers Generators

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Mobile payment determines the payment market!

“Digitization will continue to drive the payment market forward. The number and complexity of payment frontends are constantly increasing. In the future, people will be able to make cashless payments wherever, whenever, and however they want – with the classic plastic card, smartphone, or so-called wearables (e.g., fitness bracelets or smartwatches). A new front is currently being created with the Metaverse. It will be necessary to monitor whether and when concrete payment applications will emerge. Cars are becoming “shopping devices.” More and more manufacturers are integrating in-car payment services into their vehicles – paying for coffee on the go, filling up the tank, paying tolls, or charging electric current from the car – everything is possible. Trends such as “Embedded Finance” or “Contextual Commerce” mean that almost every medium, every communication channel, and every type of device becomes a “point of sale.” Banks and savings banks will have to expand their concepts for mobile wallets in order to meet customer requirements. The Girocard will play a much more important role in e-commerce next year. But BNPL payment options in online shops are also an interesting market for the credit industry. Retail is on the way to “invisible payment”: the number of self-checkout and self-scanning systems in retail is increasing. Autonomous shops and supermarkets without staff and cash registers are on the rise. Cameras, sensors, and AI register which products the customers pack. Payment is then made via the provider app. NFC-enabled smartphones are becoming acceptance terminals and also enable smaller retailers and tradespeople to check out without cash.– Erik Meierhoff, Managing Director of S-Payment

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Metaverse? First of all, elementary digitization!

“The year 2023 will be largely shaped by macroeconomic issues and the geopolitical environment. Irrespective of this, banks will continue to work consistently on digitizing their business models. The focus is on elementary topics: smart and big data analyses, omnichannel business models, platforms and ecosystems, as well as efficient operating models. Internal transformation processes are running parallel to this – from a technical, organizational and cultural point of view. Sustainability remains a dominant issue, both from a political-regulatory and a consumer perspective. Above all, the question of how new technologies and innovations can support a sustainable transformation of the real and financial economy will come to the fore. Another future topic is the blockchain or ‘Distributed ledger’ technologies: Banks are working intensively on building the appropriate infrastructure and services for the safekeeping and trading of crypto assets, tokenization, and smart contracts. However, the hype surrounding the topic of Metaverse will subside somewhat after the first tentative steps that one or the other institute has dared to take. The topic promises potential in the long term but shows various shortcomings in the status quo. The developments towards Web 3.0 will also be interesting to observe: will a decentralized Internet prevail, or will the network – as postulated at Money 2020 – develop towards Web 2.5? That would be more decentralized than today, but still regulated and still with a few central players.” Banks are working intensively on building the appropriate infrastructure and services for the safekeeping and trading of crypto assets, tokenization, and smart contracts. However, the hype surrounding the topic of Metaverse will subside somewhat after the first tentative steps that one or the other institute has dared to take. The topic promises potential in the long term but shows various shortcomings in the status quo. The developments towards Web 3.0 will also be interesting to observe: will a decentralized Internet prevail, or will the network – as postulated at Money 2020 – develop towards Web 2.5? That would be more decentralized than today, but still regulated and still with a few central players.” Banks are working intensively on building the appropriate infrastructure and services for safekeeping and trading crypto assets, tokenization, and smart contracts. However, the hype surrounding the topic of Metaverse will subside somewhat after the first tentative steps that one or the other institute has dared to take. The topic promises potential in the long term but shows various shortcomings in the status quo. The developments towards Web 3.0 will also be interesting to observe: will a decentralized Internet prevail, or will the network – as postulated at Money 2020 – develop towards Web 2.5? That would be more decentralized than today, but still regulated and with a few central players.” However, the hype surrounding the topic of Metaverse will subside somewhat after the first tentative steps that one or the other institute has dared to take. The topic promises potential in the long term but shows various shortcomings in the status quo. The developments towards Web 3.0 will also be interesting to observe: will a decentralized Internet prevail, or will the network – as postulated at Money 2020 – develop towards Web 2.5? That would be more decentralized than today, but still regulated and with a few central players.” However, the hype surrounding the topic of Metaverse will subside somewhat after the first tentative steps that one or the other institute has dared to take. The topic promises potential in the long term but shows various shortcomings in the status quo. The developments towards Web 3.0 will also be interesting to observe: will a decentralized Internet prevail, or will the network – as postulated at Money 2020 – develop towards Web 2.5? That would be more decentralized than today, but still regulated and with a few central players.” The developments towards Web 3.0 will also be interesting to observe: will a decentralized Internet prevail, or will the network – as postulated at Money 2020 – develop towards Web 2.5? That would be more decentralized than today, but still regulated and with a few central players.” The developments towards Web 3.0 will also be interesting to observe: will a decentralized Internet prevail, or will the network – as postulated at Money 2020 – develop towards Web 2.5? That would be more decentralized than today, but still regulated and with a few central players.” – Franz Welter, Department Head Innovation & Digitalization, DZ Bank.

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Impact data will decide on financing in the future!

“In 2023, the German banking industry is facing a paradigm shift: “impact management” will strengthen the control and transparency of sustainable financing. So far, data-supported impact measurement for sustainable finance has hardly been used – a missed opportunity because the impact of a financing measure, for example, in CO2 reduction, area of ​​protected ecosystems, or created educational infrastructure, is more meaningful than its financing amount. This data creates transparency. In addition, measurable goals clarify where we are on the transformation path and where corrections may be necessary. Although there are already many approaches to the CO2 footprint, other areas of sustainability, such as biodiversity, have been almost blind spots. This is mainly due to the complex data acquisition because it has so far been difficult to obtain impact data from customers in competitive financing.

A positive example is the bundled information query on fund portfolio companies via fund management. External companies, such as electricity suppliers and heating engineers, have valuable data, but there is no legal framework for sharing this data. In 2023, setting the course for the industry-wide use of impact management models is essential. Sharing best practices will accelerate implementation. We must rely on networking between businesses, society, and the financial industry in order to exchange and interpret data. Because we need precise data that is not yet covered by the sustainability reporting required by regulations. Melanie Kehr, CIO and COO, KfW

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Refinancing will be the big topic!

“2023 will be a year that should bring us back to normal. At least, if you can still remember what was ‘normal’ more than ten years ago. This applies, in particular, to monetary policy conditions. ECB interest rates have risen 2.5% since the first rate hike in July and will continue to rise. The prime interest rate in the UK is 3.5%, and in the USA, it is even over 4%. Why shouldn’t the ECB land in these regions too? The markets have already priced in 3%. Banks will be faced with the question of how to refinance themselves much more than in the past decade. During the reduction in the deposit overhang used to cause headaches, it is now the interest rate environment. Liquidity is no longer on the street. And this headache gets bigger: TLTRO will mature in the middle of next year, and central banks will continue to use interest rates as a steering tool. The pill that will help with this pain is a tried and true home remedy: retail insoles. Inevitably, not only small banks or institutes from the periphery of Europe but also large German banks will rediscover the advantages of retail deposits. We can already see that in part, but the development hasn’t even come close to being widespread. Even large houses will have to offer interest again. Refinancing is no longer available for free: Market-leading call money rates rose from 0.5% to 1.6% today after the second rate hike on September 14. The intensified competition will inevitably increase interest rate pass-through. This will be a boon for savers. Not least, because the alternatives – stock markets, real estate, or crypto – will remain rather volatile, at least in 2023 and probably beyond. Liquidity costs will remain a dominant issue in 2023. This is not an anomaly. The last almost ten years were the anomaly. We’re just going back to normal.” – Frank Freund, Chief Financial Officer, Raisin.

Read also: 6 things you can do now to keep your website secure

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The time has come for the ChatGPT3 revolution!

“The hyped, artificially intelligent chatbot ChatGPT-3 alone will not revolutionize the financial industry. However, the new thinking and discussion about artificial intelligence (AI) are triggering, and the intelligence infrastructure behind it will condense into a defining moment for the financial industry in 2023. Technically, there are so-called “Foundation Models” behind ChatGPT-3 and similar applications. These are “pre-trained” intelligence that use parallelized self-learning processes to automatically absorb knowledge in previously unthinkable quantities. They are not trained for specific tasks but represent raw intelligence that is specialized through “fine-tuning.” ChatGPT-3 is designed to communicate with humans. Other GPT3 applications are geared toward programming, graphics generation, or science tasks.GPT3 can be used via APIs and thus offers “AI as a Service.” This makes Foundation Models a general-purpose technology with innovative power similar to that of the printing press, steam engine, electricity, cellular communications, or cloud computing of the past. «KI as a Service” creates the opportunity for fintech to develop AI-based business models with comparatively little effort. All you have to do is develop lean models that make the API-used raw intelligence fit for specific tasks. With ChatGPT-3, many people are experiencing for the first time in a literal sense what AI is capable of – the chatbot, like the iPhone for mobile technology, acts as a catalyst for creative thinking about corporate AI use. That is why we will see the first AI-first fintech business models in 2023 – such as real robo advising, AI-first neo banks, or self-service loans. It could be even more exciting if the future technologies AI and blockchain intersect, for example, to develop smart contracts that use foundation models as input for the granting of DeFi loans.” – Hartmut Giesen, Business Development, Sutor Bank.

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The hunt for insoles will slow down digitization! 

“The almost spectacular – but at least very surprising – turnaround in interest rates will promote and slow down digitization at the same time. As the? The accelerating factors: The volume of newly granted credit is lower than before, and it will stay that way for a while in the housing sector. However, so that possible interest on deposits can be paid at all, the banks will compete even harder for the remaining “residual volume.” The fact that many institutes may (have to) act more cautiously when it comes to risks means that the focus on other areas becomes even stronger. All sales channels must certainly be used here if a bank wants or needs to grow. The margins in classic construction financing are already declining! However, since there are already new processes and new instruments here, numerous cooperative banks will take advantage of this opportunity. The change has already caused pressure on the platforms. It is hard to imagine that they are not trying to make up for the loss in volume. The braking factors: After a (painful) transitional period, the higher interest rates will again allow banks to make margins in the deposit business. This again earns money on both sides of the balance sheet. AND deposit business is still largely branch business. The branches are the “vacuum cleaners” for customer deposits – still! The institutes will therefore turn to them again. At the same time, this shifts the focus away from the topics of digitization of sales in the entire value chain – online sales are relatively losing their importance. The focus on costs and digitization will decrease as income increases. The “pressure” decreases, and the challenge will be to do the right thing when it’s not necessary. The past has shown that this often does not work.” – Ralf Magerkurth, CEO, United Volksbank Raiffeisenbank (Reinheim)

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Unregulated “buy now pay later” is on the verge of extinction!

“The enormous increase in energy and gas prices over the past year will have a huge impact on households. The rate of inflation, as measured by the harmonized consumer price index, will level off at around four percent. Depending on the development of the geopolitical situation, additional burdens cannot be ruled out. In this situation, the banking industry will be asked to provide its customers with the most flexible payment and financing solutions possible – in a simple and unbureaucratic way, clearly and transparently. We can already see that the demand for short-term, comparatively small financing is steadily increasing. People want to bridge temporary liquidity bottlenecks and fulfill their financial wishes and obligations without sacrificing their quality of life. The need for payment and financing that is as flexible as possible is likely to increase further in the coming year. At the beginning of December, the EU Council and Parliament were able to agree on improving consumer protection when applying for loans. The adoption of the revised EU consumer credit directive, which will in the future also include loans for amounts below EUR 200, is likely to herald the end of the unregulated “buy now pay later” market in 2023 – good news for consumer protection. A lot of work would then be required for banks and financial service providers that have not yet designed their BNPL functionalities as regulated consumer loans. You will have to catch up with those institutes – Tobias Griess, CEO, Barclays Consumer Bank Europe.

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“Click to Pay” will change the payment behavior!

“Consumers expect fast, smooth, and secure payment methods. Retail companies want to maximize their sales in the digital ecosystem. Against this background, banks and savings banks increasingly realize that their customers expect payment cards that work anytime and anywhere – in e-commerce, in m-commerce, at home, and abroad. More and more financial institutions are relying on debit cards or are developing so-called co-badge solutions with additional functionalities in order to meet their customers’ requests for a means of payment that is connected to their current accounts and debited directly. ForMerchants will also depend on the industry standard “Click to Pay.” This is a wallet-like solution in which the debit or credit card moves from the physical to the digital wallet, but without an app. This allows cardholders to identify themselves quickly at checkout or be recognized automatically – without having to set up a new account with the respective shop. The tedious task of entering long card numbers or passwords in online trading is no longer necessary in such a process, and the delivery and billing address are already stored in the digital wallet. At the same time, all regulatory requirements of PSD2 and strong customer authentication are met. «– Hedi Krüger, Digital Solutions Lead Germany, Mastercard.

Read also: What is inflation? What are its effects?

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The crypto market is professionalizing for institutional investors!

“‘If you don’t have a house now, you won’t build one anymore.’ This is how Rainer Maria Rilke describes autumn. But it’s 2023, and the crypto market isn’t even in autumn anymore. It’s in the depths of winter. 2022 was very turbulent again with the bankruptcy of Terra, Celsius, and, last but not least, FTX. Also, in the new year, it is possible that unexpectedly large players will disappear from the market. We will only see the entry of institutional investors, which has been expected for years when there are sufficiently professionalized offers. You will and should take a closer look when choosing a partner. This year will continue to be dominated by regulations. With the MiCA regulation, the crypto counterpart to MiFID is just around the corner: a groundbreaking framework for a harmonized European crypto market. At the same time, stricter scrutiny of business models by regulators is to be expected. This is where newcomers can get down to business, and maybe we will see not only permits but also the withdrawal of a license. On the product side, the market continues to diversify. Digital assets are divided into new values ​​(crypto assets, e.g., Bitcoin or NFTs) and existing instruments based on the new technology (distributed financial instruments, e.g., crypto securities). The latter means nothing less for financial institutions than converting their core business to blockchain. These are substantial changes. However, it also means that the desired gains in efficiency cannot be achieved without uniform processing (including the money side) on the blockchain. From my point of view, the issue of a digital euro does not require a central bank. A commercial bank can do that too. Just looking to 2023 is not enough. Decisions must be made now with a view to 2028 to 2033. We are in a set-up phase in which stable solutions can be built without massive pressure from the market.” – Simon Seiter, Head of Digital Assets, Hauck Aufhäuser Lamp

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The most valuable data will be for risk analysis!

“The buzzwords for 2023 are, above all, open banking and embedded finance. Open banking – i.e., the development of an open ecosystem for financial services – has already become a standard as an “enabling technology” in banks and fintech. Banks are becoming even more data-driven companies that continue to invest significantly in internal APIs but are also developing previously small business models into revenue drivers through greater customer acceptance. Embedded finance complements this development with non-financial companies that also offer financial products and services through embedded solutions. This can be the e-commerce retailer that offers shipping insurance or a department store with its own customer credit card. In this increasingly complex system, banks are noticing that they cannot derive the greatest added value from their data on their own and need support in data-driven use cases and data analytics. It is also becoming increasingly clear that data within banks require collaboration in order to provide a good customer experience across different product offerings. Data-driven business models will require companies, including banks, to reposition themselves around absolute customer centricity. The risk area will be an important growth area. Risk management is increasing in both retail and SME markets. Data that enables risk scoring or risk reduction (e.g., income verification or decision fields for lending or mortgages) is becoming increasingly valuable. We will see new applications which support more and more non-banks with financial services for their customers. Many will grow from being a niche topic for early adopters to becoming a market standard. And it is possible that banks will one day be “disintermediated” by the large digital platforms, which means they will be forced to limit themselves to simply offering products.” – Nicola Breyer, CEO, Finleap Connect.

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The broker with the best IT wins!

“For 2023 and beyond, it is to be expected that the structural growth in the securities market will be supported in the medium to long term by, among other things, increasing securities holdings in savings plans. This development is also reflected in an increasing number of securities accounts held by private investors. After two very successful trading years in 2020 and 2021, the market for services in securities trading will be reorganized in the coming months. Additional digital offers from neo-brokers or robo-advisors promote competition and create prospects for consolidation – even across national borders within Europe. In Germany, in particular, companies with brokerage offers are increasingly opening up to European customers. For neo-brokers, online wealth managers, Trading places, and banks are particularly focused on digitization, and in this context, the IT infrastructure is a competitive advantage. In the face of increasing competition, both established providers and new market participants must constantly review the technical processes as well as the market and product-related demands on the systems and adapt them to emerging requirements. To do this, they need a flawless IT infrastructure that can also withstand extraordinary stock market phases. Those market participants who are able to serve new markets and product requirements and also act technically flawlessly can help shape competition and internationalization in the securities business.” in the face of increasing competition, they constantly have to review the technical processes and the market and product-related demands on the systems and adapt them to emerging requirements. To do this, they need a flawless IT infrastructure that can also withstand extraordinary stock market phases. Those market participants who are able to serve new markets and product requirements and also act technically flawlessly can help shape competition and internationalization in the securities business.” in the face of increasing competition, they constantly have to review the technical processes and the market and product-related demands on the systems and adapt them to emerging requirements. To do this, they need a flawless IT infrastructure that can also withstand extraordinary stock market phases. Those market participants who are able to serve new markets and product requirements and also act technically flawlessly can help shape competition and internationalization in the securities business.” – Dietmar von Blucher, CFO, Baader Bank.

Read also: Limitations of GDP as an Indicator of Welfare

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It will be a year of mergers and collaborations!

“The new year starts in “risk-off” mode, with the financial sector actually playing a key role in Germany with a view to the future topics of entrepreneurship, inventiveness, and new beginnings. The banks must continue to provide customers with competent support in an adverse environment – despite increasing risks, be it defaults or interest rate changes. At the same time, the regulation is pushing for the adjustment of the capital buffers and thus does not make it easier for institutions to direct additional energy into the companies in the doldrums. At the same time, the enormous need for innovation for transformation requires a strong capital side. Added to this is the effort involved in climate risk assessments and the implementation of the EU taxonomy. For the banks, it remains a balancing act of investing in their own innovation on the one hand and cost savings on the other hand – with an increasing need for young people. Traditional houses are in competition with fintech, technology groups, and growth companies, which continue to be the driving force behind technological changes. Overall, mergers and collaborations between banks and technology companies in the European context, as well as mergers within the pillars of the banking industry, are likely to cause some surprises. Perspectively, innovation will be promoted by EU regulatory advances on crypto markets, electronic securities, and stock annuities to facilitate access to the capital market. If there are no “black swans,” 2023 will be a year of transition to calmer waters. If structural problems are postponed further into the future, this will maintain the uncertainty in the system, but the innovation dynamics of start-ups and especially fintech will remain gratifyingly robust.”– Achim Oelgarth, Board Member, East German Banking Association & Managing Director, Berlin Finance Initiative.