The first part of this two-part blog post outlined challenges for a bank launching a digital asset offering. As a starting point, a financial institution was outlined which, in a first step, would like to enable wealthy private clients to trade selected digital assets (e.g. Bitcoin and Ethereum) in cooperation with an external partner. In the second part, selected measures are presented, success factors are described and key takeaways for the launch of such an offering are highlighted. The contents are based on experiences from projects and discussions with experts.Continue reading »
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Selected Challenges & Success Factors for Banks in the Context of Launching a Digital Assets Offering
Various banks have opened up more to the topic of digital assets in recent months and are actively driving forward concept and implementation projects for a digital asset offering or are already offering one. For a successful launch, various fields of action need to be addressed. The basis for the conception, operational implementation and launch of a digital asset offering is to ensure the relevant expertise in the appropriate depth and breadth both in the project team and in the specialist departments involved during the conception and implementation phase, the leap from a project-oriented way of working (Change the Bank, CtB) to operation (Run the Bank, RtB), and anchoring in the corporate culture.
This blog post will outline selected challenges in these three areas of action, present exemplary measures, describe success factors, and highlight key takeaways.
Cryptocurrencies are once again on everyone’s lips after one of the largest trading platforms for cryptocurrencies, FTX.com, with a market valuation of $32 billion, filed for bankruptcy on November 11, 2022. The cause was a liquidity shortage at the Bahamas-based crypto exchange founded by Sam Bankman-Fried as a result of a bank run. In this blog post, we have a deeper look at the developments leading up to the crypto exchange’s insolvency.Continue reading »
Part II: Need for Change – Transformational Needs and Best Practices for Enterprises Using Distributed Ledger Technologies
Distributed ledger technology (DLT) makes it possible to guarantee the integrity of transactions without a central authority. This innovation is therefore seen as having the potential to revolutionize existing financial market infrastructures in the long term . However, the adoption and use of DLT-based platforms has multiple implications for businesses. The technology brings not only technical but also organizational challenges that require new competencies in various business functions. In this article, we explain which challenges affect which corporate functions and which best practices a company can follow when implementing change.Continue reading »
Digital products and services are not only changing the everyday life of individuals or society. The new technologies on which they are based can also lead to changes in operational IT in a wide range of business areas, especially in service companies. The distributed ledger technology, a new form of a distributed database, which ensures the integrity of all types of transactions without a central authority, is one such technology. Besides the question, in which areas it can be used, companies therefore also have to ask what internal impact can be expected when using this technology.Continue reading »
It’s the aim of this blog post to put the theory of disruptive innovation in its proper context and to use it to explore the extent to which blockchain is a disruptive innovation that threatens the continued existence of financial services firms.Continue reading »
“Financial Industry Meets BigTech”: On the 25th of August 2022, the third Open Banking Summit opened its doors in the Google event rooms in Zurich. The OpenBankingProject.ch organized this event for the third time and once again provided a stimulating get-together on the topic of open banking. The event featured national and international success stories, and the subsequent panel discussion reflected on and discussed selected topics and questions posed by the audience. Once again this year, around 120 decision-makers from the Swiss financial sector gathered to learn about current developments and to network over the subsequent aperitif.Continue reading »
Core Banking Radar – “Neo Core Banking Systems and their importance for the IT Architecture of the future”
Various trends, such as an increased focus on customer interaction and embedded banking, will shape the bank of the future. To provide services along the entire “customer journey”, banks are increasingly dependent on networking with other industries. The expansion of partnerships in the ecosystem goes hand in hand with the promotion of integration capabilities via APIs and steady investment in the banking architecture. The latest Core Banking Radar article examines the system architecture of the bank of the future and, in this context, compares the four neo-core banking systems examined in earlier publications of this series.Continue reading »
Since DeFi Summer 2020, DeFi applications have become a significant trend in the blockchain industry. However, vulnerabilities of DeFi applications have also been identified over the past 24 months. The third and final part of our series “Decentralized Finance – a Hype, a Threat or an Opportunity for Regulated Financial Institutions?” takes a closer look at recent developments in the DeFi sector (DeFi 2.0) and how they address well-known challenges in the context of DeFi, such as the potential for errors when setting up smart contracts, the lack of incentive structures for investors, or the requirements for investors’ technical and professional knowledge, without compromising the strengths of DeFi applications.Continue reading »
Beyond Banking: How Continuous Integration & Continuous Deployment (CI/CD) Accelerates Customer Value Creation in the Financial Services Industry
Software is eating the world. The production of high-quality software solutions is increasingly becoming a decisive competitive factor for companies that operate in the environment of digital technologies. Particularly in a highly regulated market, such as the financial market, very special challenges apply to the companies involved in software development. One financial services provider that has been successfully using this approach for three years now is Commerzbank, and as part of a project, we had the opportunity to explore the topic of CI/CD with them in general and their experiences and learnings in particular. The result is the “CI/CD White Paper”.Continue reading »
Everyone is familiar with the following situation from everyday life: financial service providers or service providers (e.g., mobile network operators) offer services only for registered and verified users. The consequence: In order to be able to prove one’s own identity online, a new account must first be created using an e-mail address and a selected password. The process of creating and verifying different accounts results in a single user having many online identities and involves almost as many identity providers. Above all, the protection of one’s own data falls by the wayside in many cases. The advancement of blockchain/distributed ledger technology in recent years has given rise to a new approach to online identity processing and verification, Decentralized Identity. This post explores the concept as well as the underlying technology and highlights advantages over the traditional use of identity providers and user accounts.Continue reading »
In the media, Meta (formerly Facebook) is positioning itself very strongly as the future metaverse, and it seems as if Meta is building the “one” metaverse. This impression is deceptive. In this article, we will talk about what a metaverse is, which competitors are currently building metaverses, and what opportunities they open up for banks.Continue reading »
The term decentralized finance (DeFi) refers to a decentralized, blockchain-based architecture for processing financial transactions without intermediaries. we will show in this article why offering access to digital assets and DeFi business models is worthwhile for financial institutions and what challenges they have to overcome in order to provide such an offering to their customers. Based on practical examples, positioning possibilities for regulated institutions will be presented as well as concrete opportunities and challenges.Continue reading »
The amount of data about real products, processes, and services has increased dramatically in recent years. This opens up new possibilities for planning, simulation and analysis. For this purpose, more and more companies use the concept of a digital twin. But what are digital twins and what potentials do they offer at the enterprise level, especially in the financial industry?Continue reading »
In the financial industry, customers expect high standards with regard to data protection and the integrity of their own data. Nevertheless, from the perspective of value creation, it is essential for banks to evaluate customer data using statistical methods and algorithms. Banks are thus caught in a conflict between maintaining data privacy and enforcing their own business model. To address this problem, the concept of “federated learning” has become established on the market in recent years, in which the data used for model training is always stored decentrally and the models are trained decentrally.Continue reading »
The traditional approach to AI focuses on the process of training the model. The underlying data is often a secondary concern. This approach works particularly well for Internet corporations, as they have vast amounts of data and the capabilities to analyze it. In contrast, there is little potential for using AI in small businesses with this approach due to a lack of data. Therefore, it is worth taking a look at the data – moving away from model-centric to data-centric AI.Continue reading »
Decentralized Finance (DeFi) has been one of the dominant trends in digital assets at least since the DeFi summer 2020. Since the summer of 2020, the digital assets community’s gaze has turned towards the possibilities of a decentralized financial ecosystem, DeFi applications have become highly popular and the prices of corresponding tokens have multiplied. Why is DeFi seen as having such great potential and what does this mean for regulated financial institutions? In the next three blogposts, I will outline these and other questions, show different perspectives and provide an outlook on the opportunities for regulated financial institutions in the context of DeFi. To get started, this blog post will outline the functionalities of DeFi applications, present selected use cases, and highlight opportunities and risks in this context.Continue reading »
What is money anyway? Sure, it’s something we pay with, and according to the International Monetary Fund, something modern economies couldn’t function without. In today’s blog post, we’ll dig a little deeper into the meaning of money and get a broader picture of what it is. The question is, in my view, particularly relevant today, when new constructs such as cryptocurrencies, which diverge from what is generally considered money, such as the euro, Swiss franc or US dollar, are sometimes considered “money”.Continue reading »
In the era of Industry 4.0, the world has become progressively interconnected and digital. The trend is increasingly moving toward a decentralized information technology infrastructure, often using blockchain technology. In this blog post, you will learn about the three types of (de)centralization and the advantages of decentralization.Continue reading »
Both technical and associated organizational decentralization are taking on an ever-increasing role due to the disruptive technologies DLT and blockchain, and continue to advance as new use cases and application areas are established. A new and increasingly growing trend are decentralized autContinue reading »
One of the biggest challenges in this context is the handling of bank-specific and personal data and its processing by artificial intelligence (AI). The basis of data-driven services is a high-quality and up-to-date database. But not all companies have a large enough database to train an algorithm, and the sharing and basic use of some data is strictly limited – sometimes even within the company. To counteract these problems, the concept of synthetic data has become established.Continue reading »
The topic of digital assets has finally reached the mainstream. The potential for services that make it easier for customers to acquire digital assets is great, but so far only a few financial institutions offer such services. According to the banks, there are many reasons for the lack of a comprehensive offering, e.g. concerns about the value of digital assets, high scepticism regarding money laundering or a lack of know-how in the operational handling of the new asset class. This blog post addresses the last point and aims to show that there are various operational implementation options for a basic digital asset offering for regulated banks.Continue reading »
Since 2017, the Core Banking Radar has regularly analyzed the most common as well as emerging core banking systems in Switzerland using a comprehensive assessment model. The latest publication highlights the Estonian neo-system Tuum and shows success factors for its use. The Core Banking Radar is a joint project of Swisscom and the Business Engineering Institute St. Gallen.Continue reading »
Cloud solutions are faster, more flexible and less expensive than on-premise solutions. However, the best-known cloud infrastructures – Amazon Web Services (AWS), Google Cloud, Microsoft Azure and IBM’s Red Hat – all have one thing in common: they are headquartered in the USA and are therefore subject to the (decidedly lax) US data protection “law”. This makes using the services difficult from a data protection perspective, especially for financial institutions. The European Gaia-X project could be a real alternative.Continue reading »
When attempting to assess the potential of tokens for their business, decision makers face the challenge that while there are tons of technical literature on token design, there are no simple decision support tools to help identify suitable use cases for their own business.
Therefore, we conducted a study to derive archetypes that can be observed in a variety of existing token-based solutions. These archetypes provide companies with an initial starting point for addressing the benefits and potential applications of token-based solutions.