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Deutsche Bank: Progressive regulation to be catalyst for banking transformation
19 October 2018 London
Reporter: Maddie Saghir

Image: Shutterstock
Forward-thinking regulation will be the catalyst for banking transformation, according to a new Deutsche Bank white paper.

The emergence of new technology solutions relating to open APIs, cloud, blockchain, and artificial intelligence, and their uptake on the banking industry, has driven increasing volumes of digital data.

It has also driven volumes of new market players, business models, and evolving client expectations, Deutsche Bank revealed.

According to the paper, the transformative impact of these technologies will only be realised with further global regulatory alignment and acceptance of the “new realities” created by them.

The paper noted that any regulatory approach must be: globally aligned, technology-neutral, digitally relevant, embracing of new solutions, and industry-led.

Meanwhile, the paper highlighted a number of areas where regulation may not yet completely account for the “new realities” of technology.

For instance, legislation relies on traditional means of ensuring data and information security, which requires access to premises where data is stored on cloud for the purpose of physical audits.

It was suggested that a re-think of this approach to focus on the advanced distributed platforms and cyber security tools employed by cloud service providers would accelerate the movement of core banking services to the cloud.

Thomas Nielsen, CDO, Global Transaction Banking (GTB), Deutsche Bank, commented: “Technology provides us with a huge opportunity to change our business models, releasing some control of the component value chain in order to better meet the new needs of clients.”

“Getting this right is something that can only be done through collaboration with regulators and a wide range of industry groups. We must be responsible—but we need to disrupt, or be disrupted.”

Polina Evstifeeva, head of regulatory strategy, GTB Chief Digital Office, Deutsche
Bank, said: “Further regulatory alignment on a global level would greatly support the
development of innovative technologies for global business.”

“This is particularly important in the context of data protection and security standards—as long as the rules vary across jurisdictions, technological solutions will be constrained by local boundaries, diluting their potential to transform the industry.”

Evstifeeva added: “This doesn’t mean we have to establish a single global standard for regulation, however. The realistic goal here is attaining a threshold level of alignment across jurisdictions in order to unleash the full benefits.”
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