Dr Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank, has given a speech in which he discusses the risks and rewards of a digital revolution within the financial services industry. Expressing his belief that such a revolution will lead to a social upheaval and is ‘something to be reckoned with’, he urged senior management at banks to address digitalisation as a priority going forward.
From a regulatory perspective, Dr Dombret said regulators had an interest in the sustainability of any technological advances, giving blockchain technology as an example. However, he also mentioned the threats to cyber-security and data protection which using technology can bring. He stated that regulators will be expecting firms to demonstrate how they plan to tackle and manage such risks going forward, as these remain priorities for the Single Supervisory Mechanism in 2016.
Whilst Dr Dombret was keen for firms to embrace technology, he was cautious to add that a ‘critical eye’ should remain so that checks are made of digitalised processes. Going forward, Mr Dombret stated that he wanted a regulatory regime that treats technology neutrally and intervenes at the very moment instruments and institutions produce disproportionate risks.