Everything about data, big data and their opportunities

What is Bitcoin’s next evolutionary step after the introduction of the Bitcoin ETF – and what do banks need to bear in mind?

Since the launch of Bitcoin spot ETFs in the US in January 2024, Bitcoin has become accessible as an asset to a broad institutional investor base. This marked a significant milestone on its journey as a monetary asset. The next major step in Bitcoin’s development as an investable asset is to unlock yield generation opportunities (similar to dividends on stocks or coupons on bonds). The first part of this two-part blog post introduces Bitcoin as a new type of monetary asset and the need for productive use of Bitcoin and analyses how initial approaches in this area led to the 2022 crypto credit crisis.

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The journey from open banking to embedded finance to contextual banking and the future role of banks

If you look at today’s bank customers, they are always digitally active in their respective living environments. McMakler provides an example of positioning in customers’ living environments. If people search for design ideas for self-built furniture on Pinterest, for example, McMakler displays real estate offers that match their known living preferences. This happens in the context of a cooperation between McMakler and over 400 banks. Under certain conditions, banks can therefore offer their services in the respective living environments of their customers. However, this option is only one alternative as to how banks or individual banking divisions can position themselves strategically. In Stefan Knaus’ blog post from October 24, 2023, we presented four different strategic role profiles in the context of open banking. Now we would like to take a look at current market developments and which use cases have driven banks forward. We will also classify the terms “embedded finance” and “contextual banking”, which are frequently used in this context.

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Overview: Data value creation in companies

For a long time, everyone was talking about data. “The world’s most valuable resource is no longer oil, but data” (The Economist, 2017) was the ubiquitous mantra. However, advances in the field of artificial intelligence (AI) are currently dominating the media, driven in particular by generative AI such as ChatGPT, DALL-E and the like, which can create new content such as text, images or speech. These generated data instances are in turn created with the help of technology on the basis of enormous data sets (Touati, 2024). Accordingly, it is becoming increasingly relevant for companies today and in the future to deal with the topic of “data” as the basis for value-adding activities. The Competence Center (CC) Ecosystems of the Business Engineering Institute St.Gallen develops solutions for relevant practical problems and addresses, among other things, the use of data as a key role for business success in dynamic environments. This blog post provides an introduction to the research in the field of data value creation for companies at the CC ecosystems.

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Study: Digitalization in Procurement Management

The digital revolution has reached the business world, and procurement management is no exception. The latest study by the Business Engineering Institute St. Gallen, “Digitalization in Procurement Management”, sheds light on how profoundly digitalization is changing this area. This blog post summarizes the key findings of the study to shed light on the opportunities and challenges that digital transformation brings for companies.

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Are our jobs at risk?

The first part of this blog series described different ways in which AI can affect individual professions. To analyze the impact of AI on the Swiss economic sector, a comprehensive qualitative and quantitative study on the exposure of individual professions to AI was conducted using a task-based view. The second part of this article series summarizes the results of this study and presents implications for policy and management.

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Research Area Business Ecosystems

As part of his research in the field of business ecosystems, Dennis Vetterling repeat-edly comes into contact with organizations that use the concept of ecosystems for their own purposes. In his work, two perspectives on ecosystems have emerged: a “company-centric” and a “customer-centric” perspective. In this article, Dennis Vetter-ling gives an insight into these two perspectives and an indication of how organiza-tions can use a combination of both in the context of a strategic analysis.

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Strategic Role Profiles in the Context of Open Banking for Swiss Banks

In the context of Open Banking, four different role profiles can be distinguished that banks can assume: Individualist, Producer, Distributor and Platform. The role profiles are differentiated with regard to the distribution and creation of services and allow banks to put together a tailored, new business model in the individual banking areas. In the second part of this three-part blog post series, the individual role profiles will be described in detail and their impact on a bank’s business model will be illustrated.

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Study results analyzing the needs of Swiss individuals for trusted data spaces 

To harness the potential of data to better target societal and economic needs and foster innovation, the Swiss federal administration is promoting the development and operation of trusted data spaces for its citizens. In order to identify the needs of the individuals of Switzerland in terms of data spaces and thus to involve the population in the process of developing trusted data spaces, the Business Engineering Institute St. Gallen has developed a study in collaboration with the University of Lausanne. The following is a brief summary of the results of the study.

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Implications of Open Banking for the Business Model of Banks 

In order to implement Open Banking, the European Union has been pursuing a regulatory-driven approach with PSD2 since 2018. In contrast, Switzerland is currently one of the few countries like the United States, Argentina, South Africa, and China to pursue a market-driven approach. However, last December, the Swiss Federal Council addressed Swiss financial institutions with a clear message and wants to accelerate developments around Open Banking. The first part of this three-part blog post series presents the impact of Open Banking on the business model of Swiss universal banks.

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This was the Open Banking Summit 2023

After the successful Summit 2022, the doors opened again on August 24th at Google in Zurich for this year’s Open Banking Summit 2023. With over 100 participants and top-class speakers, the OpenBankingProject once again proved to be one of the enterprise networks in the context of Open Banking. This blog post summarizes the content of the Open Banking Summit 2023.

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Research Area Distributed Ledger Technology

The Competence Center Ecosystems of the Business Engineering Institute St. Gallen develops solutions for relevant problems from practice. In the context of this blog post, the overall research goal of the re-search area Distributed Ledger Technology (DLT) is presented. This research goal is to develop a frame-work that demonstrates and supports the methodological approach of DLT implementations to enable companies to adequately address relevant requirements of the implementation process of a DLT.

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The potential and development of data spaces

Today, companies and individuals alike generate, process and use an immense amount of data, which, according to estimates, will continue to grow worldwide from 64.2 zettabytes in 2020 to an estimated 180 zettabytes in 2025. However, then as now, the global data economy is dominated by individual companies, the so-called BigTechs such as Alphabet, Meta, Amazon and Microsoft. One way to realize data exchange and use apart from the monopolistic BigTechs is based on the concept of trusted data spaces. But what exactly are data spaces and how do they work? This blog post addresses this question and shows a possible target picture for data spaces in Switzerland from the Business Engineering Institute St. Gallen.

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Tokenization – Potentials, Challenges and Use Cases in the Environment of the Financial Industry – Part 2

Tokens describe digital representations of rights and obligations associated with valuable assets. For financial institutions, tokenization of value offers promising use cases starting with direct investment in SMEs, access to emotional assets, and expanding their own service delivery to customers. These use cases demonstrate that the use of blockchain technology to map tokenized value can open up new investment opportunities for customers, increase customer loyalty, or jointly exploit additional opportunities.

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Leadership in Swiss Banks

How are leadership styles developing in Swiss banks – basically, Lewin’s traditional leadership styles such as authoritarian/patriarchal, cooperative, etc. are well known. Nowadays, a distinction can also be made between transactional and transformational leadership. This article explains how these leadership styles differ from each other and why the leadership styles in banks are changing towards agile organizational forms.

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Development of core banking systems in Switzerland  

In 2017/2018, the Core Banking Radar examined the eight most relevant core banking systems for Switzerland using a comprehensive methodology. In 2022/2023, the interviews with representatives of these established systems in Switzerland were repeated in order to find out how the systems have developed. This blog post highlights the four overarching activities that core banking systems have been engaged in over the past few years.

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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.

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Need for Change – Challenges for Companies in Using Distributed Ledger Technologies

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.

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Insights from the Open Banking Summit 2022

“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.

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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.

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Data Lineage: A Path to the Data-Driven Enterprise?

In recent years, the call for data-driven decisions and processes has grown rapidly in companies across every industry. Data-driven companies such as Apple, Alphabet, and Microsoft are now among the most valuable companies in the world. But in order to make data-driven decisions, different challenges concerning a company and its data (management) need to be solved. These include the challenge of keeping an overview of their own data stocks. An overview of one’s own data is playing an increasingly important role in the financial industry, too. Banks must be able to disclose their data to the regulator at any time, and regular reporting is becoming the norm. In this context, the principle of “data lineage” has become established. Based on the approach of metadata management, this concept enables the structuring and visualization of one’s data inventories and sources. The following article explains the most important basics of the topic “data lineage” and shows possible areas of application in the financial industry.

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DeFi 2.0

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.

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Opportunities & Challenges for Banks in the Context of Decentralized Finance

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.

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Digital Twins – The Merging of the Real and the Virtual World

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?

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Federated Learning – Efficient Machine Learning That Respects Privacy?

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.

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