andreas dombret : banking on big data – different policy issues? statement by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the third frankfurt conference on financial market policy “ digitizing finance ”, frankfurt am main, 6 november 2015. * * * thank you for giving me the opportunity to briefly state my opinion on data - based banking and policy issues. first of all, i would like to talk about one received idea in connection with new technologies flooding the financial sector that i find somewhat misleading. it is a common perception that fintechs have been set up purely in opposition to banks. as a matter of fact, their distinctive features are the all - embracing use of it and, in particular, internet - based technologies and their business structure and appearance. they may look different from traditional banks and they may care about customers ’ needs, such as 24 / 7 accessibility, ease of use and individualised services, but that doesn ’ t render the basic financial functions of banks obsolete. some fintechs have even already acquired a banking license. although the appearance of banking business and its technical implementation may very well change across the entire sector, banks as they are defined by regulation are still necessary and important players in our financial system. you cannot grant loans to businesses or offer deposits without adhering to the prudential requirements regulators impose on banks. our financial system relies on licensed monetary intermediaries, and computer algorithms don ’ t change this fact. nevertheless, banks are definitely coming under pressure with respect to their profitability and visibility. fintechs naturally focus on the most profitable areas of banking. this implies that banks have to deal with new competitors, and it is conceivable that we will encounter substantial changes in the composition of the sector over the next decade. but banks are not destined to become obsolete. first of all, banks have built up trusting relationships with customers, which includes knowing about the business and also knowing about changes in regulation over the past decades. and there is not only a competitive relationship between banks and technological innovators. from what i gather from the sector, fintechs are frequently approaching banks as soon as their ideas have matured. banks are not likely to be as innovative and as quick off the mark as newcomers, although many cooperative arrangements are possible. with regard to regulation, this means that we should stop drawing an imaginary line between technology - driven and traditional approaches to financial services. regulation by no means serves to

greece italy - 10 spain us - 20 - 30 1999 2001 2003 2005 2007 2009 2011 2013 2015 source : oecd graph 10 : output gap ( % of potential gdp ) graph 10 shows the development of the output gap of the total economy. the output gap is measured as deviation of actual gdp from potential gdp as a percentage of potential gdp. vertical line separates the pre - crisis period ( up to 2007 ) from the crisis period ( as of 2008 ). 15, 00 10, 00 5, 00 france germany 0, 00 greece - 5, 00 italy spain - 10, 00 us - 15, 00 - 20, 00 source : oecd graph 11 : productivity ( 1999 = 100 ) graph 11 shows the development of multifactor productivity ( mfp ). mfp reflects the overall efficiency with which labour and capital inputs are used together in the production process. changes in mfp reflect the effects of changes in management practices, brand names, organizational change, general knowledge, network effects, spillovers from production factors, adjustment costs, economies of scale, the effects of imperfect competition and measurement errors. growth in mfp is measured as a residual, i. e. that part of gdp growth that cannot be explained by changes in labour and capital inputs. in simple terms, therefore, if labour and capital inputs remained unchanged between two periods, any changes in output would reflect changes in mfp. this indicator is measured as an index and in annual growth rates. no data available for greece and 2016. vertical line separates the pre - crisis period ( up to 2007 ) from the crisis period ( as of 2008 ). 1999 = 100 france germany italy spain us 1999 2001 2003 2005 2007 2009 2011 2013 2015 source : oecd graph 12 : research and development expenditure ( % of gdp ) graph 12 plots the average r & d expenditures ( % of gdp ) in the pre - crisis ( 1999 - 2007 ) against the average r & d expenditures in the crisis period ( 2008 - 2014 ). no data available for 2015 and 2016. expenditures for research and development are current and capital expenditures ( both public and private ) on creative work undertaken systematically to increase knowledge, including knowledge of humanity, culture, and society, and the use of knowledge for new applications. r & d covers basic research, applied research, and experimental development. 3, 00 germany us 2, 50 france 2008 - 2014 2, 00 1, 50 spain italy 1, 00 greece 0, 50 0, 00 0, 00 0