#MyDataAndI

back to the overview

Regulating data: A moving target

Deutsche Bank’s Global Head of Regulatory Affairs Karin Dohm chats with Avatar Marcus about the new data regulations facing banks and what they mean for clients.

75

Hi, Karin. 25

There has been a wave of new regulation in Europe about how banks deal with data. This must be a pretty exciting and busy time for you.

75

It’s a super exciting time. There is fundamental change happening to the financial industry, and it’s a huge opportunity for Deutsche Bank to broaden and deepen the services we provide to clients. We need and want the right regulatory framework to make that happen.

75

Since when do banks welcome regulation? 25

75

50

Emphasis on the RIGHT regulation. I think both regulators and banks understand the need to cater to some of the current developments and foster innovation whilst also addressing responsibilities you have when you handle client data.

75

Are these new regulations good news for bank clients like me?

75

Yes, I think they are good when they empower clients and bring more transparency, choice and more suitable services. Let’s take the Payment Services Directive 2 – or PSD 2 – as an example. This is an EU policy that went into force this year. It requires banks and other institutions to open their infrastructure to other providers. This brings more variety and a broader set of offerings for clients.

75

Are there any disadvantages for clients?

75

Another yes. In MiFID II, there are new requirements for informing clients and documenting that. Informing clients is obviously a must, and something we value. The documentation part and the requirements around that… sometimes that annoys clients, because it can be pretty time-consuming and might feel patronising. Ultimately, it is an example of how regulators sometimes struggle to find the right balance. This goes back to my request for the right regulation. 25

75

I bet the technology is changing faster than the regulation.

75

Regulators have a moving target. They need to define standards and rules for something that is evolving as we speak. There is reasonable clarity today about the journey of data in retail banking, but in broader corporate banking and in platform banking, there is a lot of development. Just think about distributed ledger technology, which is currently more talked about than used. This will surely change quickly and affect data provision and utilisation again substantially.

75

When I hear the word “platform”, I think of companies like Amazon and Alibaba. I don’t really think about banks. 25

75

That’s bound to change. The future of banking will be less and less about classical lending and less interest payments- and product-driven. That will always be part of the portfolio, but the way it’s going is into platform banking – catering to a variety of services for your clients, and offering them the possibility to connect with other parties whilst being well grounded in our capital market and financing expertise.

75

25 “Other parties” sounds a bit scary to me. I am used to trusting my bank with my data. Is this on regulators’ radar?

75

Yes. The new PSD 2 framework allows – via application programming – for mechanisms that provide data securely. You must avoid the risk that by opening your infrastructure, there is somebody joining the family, so to speak, who is not as cautious with data as we are. And of course, the framework ensures that access is granted only if the clients wish.

The question for a regulator is how to foster innovation whilst making sure the same risk is subject to the same regulation, independent of whether it’s a bank, an Internet giant, or any other type of company.

75

But aren’t all players offering financial services subject to the same regulations?

75

We feel there are certain gaps, and sometimes it might just be that there is not enough alignment across jurisdictions. Data gets used in different ways, depending on the country or industry.

75

There is also more cybercrime.

75

Yes, cybercrime and data abuse do not stop at national borders. Combatting cybercrime calls for international cooperation in the industry and amongst supervisors. In times marked by regulatory and political fragmentation, that’s not necessarily a given. You need to make sure that – independent of national preferences or economic ambitions – you have regulatory cooperation, otherwise you will be lost, both due to the technological developments as well as in any crisis situation.

75

Be honest. Are regulators ready to deal with the rapidly changing financial industry?

75

We welcomed the European Commission’s recent efforts to understand developments around data, and then to introduce intelligent regulation that helps clients at the end. But I think it’s still a mixed bag.

Take the public debate around cryptocurrencies. Some parties think it’s evil, and want to regulate it until it ideally disappears. And there are others who say it’s just another format of payments or currency. Let’s just make sure we have the right standards, and then embrace it.

About #MyDataAndI

Data is the stuff that dreams are made of. On the basis of data-derived insights, big platform businesses and small start-ups alike seek to make individualised offers to potential customers. Many people are just now beginning to understand the value of their data. They want to maintain control over them and want to know what is being done with their data, by whom and why.

On this website, the avatars Amy, Julian and Marcus invite you to chat with them – about what your data is worth in the “data economy”, about the ways you can profit even from your bank data, and about data protection and data security standards. The three fictional characters assume the perspectives of our diverse customers and pose questions that we all have. Openly, curiously and critically. Talk with them!