cannot predict how banking will look in ten or twenty years ’ time, we can be almost certain that risks of fraud, theft and manipulation in banks through cyberspace will continue to rise. the reason is straightforward : digital channels can be used to steal a lot of assets with comparatively little effort today. nowadays, a large proportion of banks ’ assets and value - generating capability is stored on hard drives and servers. the technical infrastructure facilitates the managing of bank accounts and grants access to money. but it also provides access to vast sources of data. there have been several incidents recently of truly large - scale data theft. company secrets, too, are at stake. if, for example, the trading algorithms of your bank became known to others through illegal activities, they could be exploited in the market, causing huge losses to banks. in the same way, politically motivated acts of sabotage jeopardise trust in financial functions and integrity. looking at those on the other side of cybercrime, the potential attackers – they often have access to far more powerful weapons than before and convenient access through the internet. targeted attacks on it systems can originate from anywhere in the world. hackers often need little more than a laptop with internet access. why do we have to expect a continuous evolution in this field? attack vehicles like computer viruses differ widely and may target any chink in a bank ’ s defence, rather as human viruses attack biological systems. its logic follows the arms race between criminals and law enforcers that can be traced down through human history, but is now taking place with digital weapons. what makes this evolution more dangerous still is that we now face a highly complex digital world where progress is constantly being made in technologies and innovations. but, crucially, you cannot risk a trial - and - error process here. once an easy point of attack is identified in the it infrastructure, the word will quickly spread and criminals from all over the world will try to exploit the weakness. on top of this, we need to bear in mind that cyber and general it risks are not only of a technical nature. the human factor often plays a crucial part. employees may act in gross negligence, or they may be tricked by a trojan horse or a phishing mail. in complex it systems, even small system errors can quickly cause enormous damage. the error - prone human factor can only be eliminated by installing an appropriate system of controls and incentives. in today ’ s world, this is an important management task. 4. adaptation as

andreas dombret : digital darwinism and the financial industry – a supervisor ’ s perception speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the speech at the ebs ( ebs university of business and law ) symposium, oestrich - winkel, 18 september 2015. * 1. * * introduction ladies and gentlemen thank you for the opportunity to contribute to this ebs symposium. as a banking supervisor, i am happy to share with you my thoughts on digital darwinism in the financial industry. 2. digital transition from an evolutionary perspective dinosaurs are an often - used means of illustrating how “ darwinism ” works. we still don ’ t really know why those creatures – which ruled the earth for millions of years – suddenly became extinct. some make volcanic eruptions responsible ; others cite meteorites or a sharp drop in sea level as a possible explanation. in any case, the assumption is not that dinosaurs ceased to exist because they could not cope with their new environment or adapt quickly enough. applying this diagnosis to the financial sector, where banks have reigned throughout the last few centuries, and supposing that the digital transition indeed constitutes a new environment for banks, one may pose a rather provocative question : are banks dinosaurs that will one day become extinct? you may guess that i do not share this doom scenario, so let me start out by describing my views on the evolution of the banking business. the digital era may indeed be considered a new environment for banks. digitalisation of the financial sector is an irrevocable change that came about due to several factors. first, the digitalisation of the financial sector has been fuelled by the development of highly effective, state - of - the - art technologies like broadband networks, advances in data processing and the ubiquity of smartphones. and there is a premise that is common to virtually all technological advances in market economies in the last few centuries : when a product becomes available, sooner or later it creates its own demand and puts market forces into action. that means technological and social changes are intertwined. bank customers are becoming increasingly open to digital banking. think of innovative concepts such as online video consultation services, digital credit brokerage and the incorporation of social media into banking. banking is still a “ people business ”, but it ’ s no longer reduced to proximate and personal relationships. so there is plenty of demand for use of the technological potential of digital banking : cheap and quick