TRX 22 - The digitization of the financial industry

We were visitors at Transactions 2022

The digitization of the financial industry

A field report by Lisa Gebhardt and Levent Kara

With the increase in remote working and the ever-growing demand from consumers to purchase goods and (financial) services online, companies must increasingly open themselves to the digitization of payment services and online payments.

In recent years, the financial sector has become one of the most globalized, digitized and regulated industries in the world.

On Thursday, 17.11.2022, the who’s who of the payment and banking industry came together on the occasion of Transactions 2022 in the old industrial building Fredenhagen in Offenbach am Main, and we were there!

Transactions was opened with a video greeting from the Federal Minister of Finance, Christian Lindner, followed by a live podcast by Jule and Sascha Lobo on the topic of bad banks. “No film or series portrays bankers positively. There are more sympathetic serial killers on Netflix than bankers – and in the end these are narratives that stay in people’s heads” (quote Sascha Lobo). No wonder, then, that the customer journey in the financial sector is fraught with negative emotions among many citizens and that there is great reluctance when it comes to trust and digitization. According to the Lobo family, the aim is to break the taboo on the topic of money and to create real closeness again in order to win back the trust of the people. In general, the live podcast can be summarized as My Money -> My Capital -> My Security = No Trust in Third Parties.

Digitization has significantly transformed the financial sector and over the past decade has also enabled the entry of new market players in the form of technology companies, especially FinTechs.

As a highly digitized industry, both traditional and new operators are increasingly adopting similar approaches and models, focusing on the creation and development of large-scale digital financial platforms and the analysis of the generated database. This massive digitization process brings undeniable benefits for businesses and end customers, but also poses new challenges for the market.

Another highlight for us in this context was the lecture by Lilith Wittmann at noon on the topic of digital identities: Please, do not dear market!

Lilith is an alpha animal when it comes to looking critically at Smart-eID, ID-Wallet and Co. More and more people from the banking sector are convinced that the eID can’t come soon enough without worrying about how stolen data will become a verified record that is highly traded on the black market.

Therefore, user convenience and security, through proper identity management, should always be the focus of customers. One of the options would be an MFA that not only focuses on safety, but also on comfort.

To further refine this, one can, for example, use cidaas to carry out event-related legitimization by a 2nd factor as soon as this becomes necessary. This allows your customers to interact quickly with your services without any major hurdles.

Things got even more exciting in the following panel, Digital Identity: Who am I in a digital world and how many? Where, in addition to Lilith Wittmann, there were also Oliver Lauer, Helge Michael and Frederik Wardrobe. It was a controversial panel discussion, very well chaired by the moderator, André M. Bajorat. The efforts of governments and companies looking for new ways for verification systems and the associated impact on users were discussed.

In principle, there was agreement on the need to develop new approaches to maximize the benefits. At the same time, however, the risks to which a highly digitized industry can be exposed must also be monitored and controlled.

With so much change, it is important to emphasize that this process requires intensive education and the guaranteed security of user data. The purpose of considering security is to increase the competitiveness of the market, prevent fraud and data theft, and promote a revolution in the digital financial market.

A crucial step for companies now is to meet customer expectations and adapt the business model to their needs. This includes, first and foremost, placing user convenience and customer centricity at the focus of the digitalization strategy.