Transforming the Core. Splendor and Misery of the Inevitable

Macroeconomic conditions, high regulatory pressure, and increasing customer requirements are driving impetus in operational IT management. Successful transformations require that technology management is understood as an integral part of a strategy and that strategic, organizational, and technological requirements are differentiated and taken into account in both the solution design and the control of measures. In addition, the pressure to change must be met promptly and more decisively than in the past.

Making it explicit - Comparison of prediction abilities for different AI-methods

To implement meaningful and high-quality data analyses, data preparation is of paramount importance. One step in data preparation is feature engineering - an optional process designed to make information implicit in the model explicitly accessible. Feature engineering requires the use of domain or expert knowledge to make the information explicitly available. Feature Engineering is investigated in this blog post against the background of different models using information extraction from temporal data. The consideration of domain knowledge for Feature Engineering seems to be useful and essential for the creation of more detailed analyses, also considering the effort involved.

Apple Identity Wallet - Disruption as a catalyst for digital transformation

Apple's strategy of enforcing an identity management system on local devices to store and reuse sensitive customer information is potentially disrupting the exponentially growing and highly profitable identity market. Possible cooperation and mitigation models are discussed in detail in our blog post "Apple Identity Wallet - Disruption as a catalyst for digital transformation".

Libra against the rest of the world

FINMA is specifying the regulation of stable coins, formulating high requirements and also taking a stand on Libra. The comments cast doubt on the short-term launch of Libra in the first half of 2020, especially as other national regulators (particularly Germany and France) are explicitly positioning themselves on Libra and first members of the Association are questioning their support.
At the same time, the Chinese stable coin developed in the state-initiated DC/EP (Digital Currency/Electronic Payments) project remains largely unnoticed by the media in Europe and the USA. Although the danger of the international central banking system being undermined by DC/EP is not perceived as acute, the "China-Coin" is still controversial due to its potential for political abuse.
The market, regulation and supervision in the USA and Europe, however, have yet to provide their own answer to the gap in supply for efficient, scalable digital currencies addressed by Libra and DC/EP.

Quo vadis PSD2?

On 14th September 2019, the obligations for strong customer authentication of the PSD2 will take effect. As a reaction to the ongoing discussion since then and the continuing lack of clarity regarding the interpretation of the implementation requirements specified in the final "Regulatory Technical Standards (RTS)", the EBA published a further position paper on 21st June 2019 - less than three months before the RTS came into force - which, according to the EBA, was the final position paper. 

Global, digital currency - utopia, dystopia or liberation?

The Libra Association, an organization of currently 28 institutional members from various industries, has announced the launch of a crypto currency called "Libra" in 2020. Among the independent members is Facebook, which is currently the major driving force until the official launch and is planning with its subsidiary "Calibra" to release a wallet of the same name for Libra. The project is therefore often mistakenly referred to as "Facebook currency", but the actual scope and motivation, according to the recent white paper published by the Libra Association, goes far beyond that.

EBA PSD2 RTS Comment - Clarification of uncertainties raises new questions

On September 14th 2019, the PSD2 will become applicable national law. The obligations of strong customer authentication under Article 97 of the PSD2, which are specified in the "Regulatory Technical Standards (RTS) on strong customer authentication and secure communication in cashless payment transactions" drawn up by the EBA, will thus also take effect.

Security in card-based payment

On 14 September 2019, the PSD2 will become applicable national law. Along with it the obligations for strong customer authentication according to Art. 97, which are specified in the "Regulatory Technical Standards (RTS) for strong customer authentication and secure communication in cashless payment transactions", also become effective.

Eat or get eaten

The blogpost shows pitfalls and outlines a framework for successful mergers. The history of payment methods is almost as dynamic as human history itself. While a few hundred years ago goods were still commonly paid for in gold or silver, the introduction of checks in 1681 and card payments (first charge card in 1914, first credit card in 1958, first debit card in 1978) started an unbroken trend towards making non-cash payments an everyday occurrence and increasingly usual in everyday life. The payment market is changing significantly; Payment transaction providers are under strategic pressure as revenue per transaction is shrinking and a technologically-induced convergence between POS (Point of Sale/stationary) and CnP (Card not present - is considered equivalent to eCommerce transactions) transactions is increasingly manifesting itself. Two primary patterns of reaction can currently be observed: Market consolidation by way of merger between (acquiring) processors, to generate larger accumulated transaction volumes and technical synergies (economies of scale) – significantly accelerated by private equity companies. Expansion of processor’s service portfolios and deepening of value chain (partly also by strategic acquisitions) – whereas companies originating in the CnP sector have a relative advantage over POS providers to establish themselves successfully in both areas (CnP and POS). As technology is one of the main success factors in this changing market, technological aspects are a primary concern in any merger or acquisition activity. Portfolio expansion and mergers are not a success by default in this regard. Enabling and executing technical integration is key as a precondition to improving innovation capability and exploiting synergies. This must be ensured from the outset of a M&A deal, i.e. starting with the due diligence. A specific and significantly differing set of skills and frameworks is therefore required; deploying them right from the start is essential. Strategic fit and, above all, technological assessment should be in focus, rather than primarily financial figures. Moreover, on operative level, technical integration must be thoroughly planned and execution capacity secured.

National universal bank - establishment of subsidiary and cloud-based non-banking mobile-first platform​

For established universal banks, profitable business areas are disappearing due to persistently low interest rates. At the same time, competition from fintechs is increasing, especially in the core markets. The timely implementation of innovative business models is made difficult by the organisational structures and existing IT infrastructure. There is not enough expertise for cloud-based infrastructures and modern business forms. A modern, scalable IT platform is needed for the timely implementation of new product ideas.