Professor Dr Michael Bruno Klein and DR. Johannes Winter explain:

The digital transformation is on everyone’s lips and represents a fundamental structural change that affects and changes all areas of life. Yet this “structural change” sounds so technical and impersonal, but it means the exact opposite, namely a change in the consciousness of all actors. An example: car sharing is not just borrowing a car, but availability – no longer ownership. So something is changing here on the mental level. The entire library is now in the eReader and no longer as documentation of one’s own (supposed) education in large bookshelves that dominate the entire study – and are gladly used as background (or faded in?) in online meetings.

In the economy, numerous areas of value creation have had to continually adapt to new market conditions (keyword “globalisation”). Digital networking, the development of a platform economy and advances in artificial intelligence (but beware: calculating is not thinking and correlation does not equal causality) will continue to change value creation. Previously successful business models will be innovated or disappear altogether, and data-driven business models will increasingly dominate.

The world of work will become more autonomous and flexible (that is the positive assessment) or more unmanageable and uncertain – that is the negative interpretation. One thing is certain – and not only triggered by the Corona pandemic – life and work are moving closer together – the keyword is home office and the somewhat worn-out term “lifelong learning” is making a comeback in this context – and not in the sense of “further education holidays”.

Digital technologies as a basis for social participation

In 21st century society, digital technologies – and the competent use of them – are synonymous with improved access to social participation. Whereas in the past the ability to read and write was enough to participate in social life, new skills will be needed in the future.

Let us first look at the concept of cultural techniques: Cultural techniques are cultural concepts for coping with concrete challenges in different life situations. The development of such cultural techniques always involves achievements that arise in a socio-cultural context, which is why cultural techniques are based on social interaction and social participation.

Simple cultural techniques are e.g. hunting and making fire, more complex cultural techniques are e.g. agriculture and science. Individual competences are necessary for each of these – here are some very simplified examples: Stone Age man had to be able to hunt, make fire and fight. Later, agriculture and animal husbandry were added, as well as the ability to trade; hunting and fighting took a back seat. The medieval knight had to be able not only to hunt and fight (also in tournaments), but also to dance and “Minne”. Today, social participation is usually determined by reading, writing and arithmetic. What was important at all times, however, was the ability to communicate, i.e. to be able to exchange ideas.

But how is digitalisation to be understood as participation? What skills do people need in the context of digitalisation as a cultural technique? Let us first ask what the goal of digitalisation actually is? Often the answer is – the networked society, but that is too short-sighted. The goal of digitalisation is a society in which we can live better, healthier and safer. The means to this end can be digitalisation. A key feature will be a new coexistence of man and machine, as well as being untethered to space. The “leap into digitalisation” initiated by Corona is an example of this – zoom meetings with partners worldwide and status symbols such as a large office or the assistant in the anteroom simply fall away. However, the previous means of assessing the counterpart associated with this also fall away; the atmosphere and the “chemistry” are no longer so easy to grasp. Communication becomes more direct and intercultural, but not more personal. One example is the development of foreign language competence in the future: who wants to cram vocabulary and grammar hour after hour when the little language computer (C3PO sends his regards) has a perfect command of all languages and all I need is a little microphone and a button in my ear? However, mastering a foreign language is more than just language, it is access to and understanding of a culture. Whether this awareness will be enough to learn vocabulary and grammar hour after hour is, in our view, more than questionable.

What skills are needed in digitisation? Here we often speak of “general literacy”, i.e. the basic understanding of digital functional logic and its implementation in hardware and software (functional logic not to be confused with programming). Further competences are application competence (i.e. the active and purposeful use of digital media) and discourse competence (i.e. the fact-based and constructive participation in debates and the collective solving of problems). This cannot be achieved with a compulsory subject of computer science, but on the contrary: digital competence must be developed in relation to every area of life (and every school subject).

FinTechs are digital pioneers

So what does this mean specifically for the financial sector? Where are the opportunities of digitalisation for new business models or new sources of income? What specific skills do employees of financial institutions need to have?

One answer is – as always – to see what the pioneers are doing, i.e. FinTechs in the financial sector, since they have digital competences that are at least worth knowing.

Two practical examples from the large pool of the German AI map provide some insight: In times of electronic payment networks, e-wallets and blockchain, three- to five-digit financial transactions per second are not uncommon – and given exponential growth in the IT industry, this will not be the end of the line. However, with this flood of data, no human can identify fraud incidents such as identity theft, account forgery or account takeover and stop transactions in time. Especially not in real time (less than a millisecond). This is where FinTechs like Risk Ident come into play with their digital business model: the fraud detection software of the Hamburg-based company, which emerged from the Otto Group in 2012, uses machine learning algorithms to detect irregularities such as account takeovers through phishing, malware or data theft. In this case, digitalisation reduces the potential for damage and helps where we would be defenceless against threats. Nevertheless, nothing works without humans: human data scientists, for example, develop algorithms, analyse data, check for plausibility and thus have something ahead of computer programmes: they are usually able to distinguish correlation from causality – a very important skill.

The second example shows how liquidity can be secured in companies (more important than ever in Corona times) by digitising receivables management and debt collection. FinTech PAIR Finance helps clients such as Zalando and Klarna to recover outstanding receivables and uses the AI method reinforcement learning to make target-oriented strategies and successful processes repeatable. For this purpose, the Berlin start-up evaluates characteristics such as reaction speed and trustworthiness of defaulting clients in order to identify behavioural patterns and derive willingness to pay. Since the number of people who fall behind with payments through no fault of their own often increases in times of crisis, digital receivables management is also about finding ways out of the predicament for both sides. This can be, for example, instalment payments or deferrals that enable both creditor and debtor to continue their customer relationship in a trusting manner. This can also be participation through digitalisation.

In order to establish new, demand-oriented business models, platform-based solutions are also gaining in importance for companies. Platforms are not a new phenomenon. They have long been established in the private sector. Companies like Facebook, Uber or Amazon are among the most valuable companies in the world today and address millions of users. The platform economy has also been slowly but surely gaining a foothold in the financial sector for several years. In addition to classic comparison portals, from the banks’ point of view it is above all digital credit marketplaces that have grown in importance. Such electronic platforms connect capital-seeking companies or public sector institutions with investors and act as “matchmakers”.

Investors connected to the platform have the opportunity to submit individual offers to the customer. Algorithms that filter according to region, sector, term and loan volume, for example, help here. Only after approval by the borrower are the financial institutions informed of the request and can view the company data. The internet-based application allows investors digital access to the prepared information of the borrowers with corresponding download options – conversely, the companies have equally complete transparency at all times, as offers can be viewed as soon as they are uploaded by the credit institutions. Customers thus have the opportunity to compare conditions online and vis-à-vis the credit institution at this point in time without any commitment obligation.

Let’s go back to the beginning: cultural techniques are based on social interaction and social participation and this also applies to digitalisation. Reading, writing and arithmetic will no longer be the be-all and end-all of social participation in the future (although they will certainly be useful). Digital competence in the sense of application competence (= active and purposeful use of digital media) and above all discourse competence, i.e. fact-based and constructive participation in debates and collective problem-solving, will continue to increase in importance.

By the way, nothing and no one will be able to do the thinking for us in the future – but only if we have already thought for ourselves. But if we haven’t done that (thinking) so far, then we don’t need to ask ourselves who will be doing the thinking for us in the future, because someone else is apparently already doing it. ….