3 Questions to udo milkau, chief digital officer, dz bank u s anti money laundering laws

Newsletter – EACB monthly interview – n.2 june 2017

Dr. Udo milkau is chief digital officer, transaction banking of DZ BANK, central bank of the co-operative banking sector in germany. The primary focus of his responsibility is the ‘digital transformation’ of DZ BANK’s transaction banking including payment services, card services, securities transaction services and derivative processing – with a strong P/L perspective. Mr. Milkau is also the chiarman of the EACB working group digitalisation and the use of data.

Dear mr. Milkau, what does the digitalisation trend in your view mean for co-operative banks?

Maybe the most important thing about digitalisation is the fact that digitalisation is not “technology”. Banks have been quite experienced about implementation of technologies for decades from the first mainframe computers to online banking.

Digitalisation changes two things: first, the relationship between client and banks and, second, the business model of banking.U s anti money laundering laws

Concerning the relationship, we see different forms of re-intermediation driven by digitalisation; and a general example can be amazon replacing traditional book shops and interfering in the business between producers (of books) and consumers. Amazon does not “produce” books, but is the global platform for the book market with purchasing power to the one side of the market and “recommendation engines” and “prescriptive analytics” to the other side. Additionally, devices such as amazon’s echo and personal assistant alexa go a step beyond pure business platforms and could be the primary customer to business interface of the future.

Of course, this trend concerns any type of industry and any bank. However, co-operative banks are built on the model of membership, which was – and still is – more than client relationship. Therefore, we have to re-define “membership” in the new normal of digitalisation.U s anti money laundering laws this is much more than talking about some new technology; it’s about the co-operative model in the 21st century. What do you see, from your personal perspective, as the main points of concern in the ecs consultation on fintech?

From my personal point of view, this consultation applies “fintech” synonymously with “fintech start-up companies” and ignores that technology-enabled innovation in financial services does not depend on the size or legacy of a firm. Many banks including co-operative banks have been developing technology-enabled innovation in financial services for many years.

It is a triviality that a – greenfield – fintech start-up can be faster or more agile compared to a bank with a banking license (and regulation to comply with), with a secure and reliable information technology, and with 79 million members and 210 million customers as in the case of the EACB.U s anti money laundering laws

However, any regulation should be (i) principle-based rather than rule-based, (ii) proportionate, (iii) consistent (iv) balanced, (v) fully technology agnostic and (vi) required only when justified by measurable data about any kind of misconduct or market misuse. I have the feeling that the current consultation violates the neutrality, which would be required in a market economy, and exploits “fintech” for invention. The EACB will organise its second digital day on 29 – 30 june: what will it be about?

The 2nd EACB digital day will tackle two main issues. We have an important discussion about the impact of the general data protection regulation (GDPR, including the new “portability of data” and the agenda of the EC for a “free flow of data”) and the interaction with other initiatives such as PSD2’s “access to accounts”. From a very practical perspective, there is much gray zone and many open questions.U s anti money laundering laws

The second issue will be the impact of new “digital” technologies – from blockchain to artificial intelligence and robotic process automation – on process models of banking, on work place in the future, and – especially – on the co-operative model itself. In the new “digital” normal of volatile and uncertain developments, the co-operative model has much to offer, if we understand digitalisation beyond technology.

Newsletter – EACB monthly interview – n.2 june 2017

Dr. Udo milkau is chief digital officer, transaction banking of DZ BANK, central bank of the co-operative banking sector in germany. The primary focus of his responsibility is the ‘digital transformation’ of DZ BANK’s transaction banking including payment services, card services, securities transaction services and derivative processing – with a strong P/L perspective. Mr. Milkau is also the chiarman of the EACB working group digitalisation and the use of data.U s anti money laundering laws

Dear mr. Milkau, what does the digitalisation trend in your view mean for co-operative banks?

Maybe the most important thing about digitalisation is the fact that digitalisation is not “technology”. Banks have been quite experienced about implementation of technologies for decades from the first mainframe computers to online banking. Digitalisation changes two things: first, the relationship between client and banks and, second, the business model of banking.

Concerning the relationship, we see different forms of re-intermediation driven by digitalisation; and a general example can be amazon replacing traditional book shops and interfering in the business between producers (of books) and consumers. Amazon does not “produce” books, but is the global platform for the book market with purchasing power to the one side of the market and “recommendation engines” and “prescriptive analytics” to the other side.U s anti money laundering laws additionally, devices such as amazon’s echo and personal assistant alexa go a step beyond pure business platforms and could be the primary customer to business interface of the future.

Of course, this trend concerns any type of industry and any bank. However, co-operative banks are built on the model of membership, which was – and still is – more than client relationship. Therefore, we have to re-define “membership” in the new normal of digitalisation. This is much more than talking about some new technology; it’s about the co-operative model in the 21st century. What do you see, from your personal perspective, as the main points of concern in the ecs consultation on fintech?

From my personal point of view, this consultation applies “fintech” synonymously with “fintech start-up companies” and ignores that technology-enabled innovation in financial services does not depend on the size or legacy of a firm.U s anti money laundering laws many banks including co-operative banks have been developing technology-enabled innovation in financial services for many years.

It is a triviality that a – greenfield – fintech start-up can be faster or more agile compared to a bank with a banking license (and regulation to comply with), with a secure and reliable information technology, and with 79 million members and 210 million customers as in the case of the EACB.

However, any regulation should be (i) principle-based rather than rule-based, (ii) proportionate, (iii) consistent (iv) balanced, (v) fully technology agnostic and (vi) required only when justified by measurable data about any kind of misconduct or market misuse. I have the feeling that the current consultation violates the neutrality, which would be required in a market economy, and exploits “fintech” for invention. The EACB will organise its second digital day on 29 – 30 june: what will it be about?U s anti money laundering laws

The 2nd EACB digital day will tackle two main issues. We have an important discussion about the impact of the general data protection regulation (GDPR, including the new “portability of data” and the agenda of the EC for a “free flow of data”) and the interaction with other initiatives such as PSD2’s “access to accounts”. From a very practical perspective, there is much gray zone and many open questions.

The second issue will be the impact of new “digital” technologies – from blockchain to artificial intelligence and robotic process automation – on process models of banking, on work place in the future, and – especially – on the co-operative model itself. In the new “digital” normal of volatile and uncertain developments, the co-operative model has much to offer, if we understand digitalisation beyond technology.