“Non-digitization” is risky

Digitization is advancing and is also evident in the banking industry on a daily basis. However, how investors, companies, startups, talent and skills developers systematically get to grips with managing digitization risks to business models is completely open to debate, say BBL columnists Dr. Peter Lender and Prof. Dr. Arnd Wiedemann. What is needed, therefore, are "measuring devices and tools" for digitization.

First of all, it is important to be clear about whether and what digitization changes at all.

Currently, there often seem to be n+1 opinions and evaluations on digitization in discussion groups and forums with n participants. First, the apparent contradiction between "everything the same" and "everything new" needs to be clarified. First, it should be noted that digitization does not change the fundamental rules and mechanisms of business. What does a customer pay for and what is the real business model of a company? Customers buy services and products because they expect value in return. The price that companies can realize on the market and with their customers is exactly what the customer pays for it. The countervalue consists of the benefit of the product or service and an image associated with it. These fundamentals apply to both analog and digital business models.

It should also be noted, however, that the digital transformation is triggering fundamental changes in business through networking and automation, digital customer access, the connection between people, machines and the environment, and the generation and harnessing of digital data. From the intelligent combination of these four factors, existing products and services will be replaced. As a result, the question is no longer "if" digitization will take place, but only when, where and by whom?

Criteria for digitization and its implementation

The implementation of digitization is accelerated by price reductions for processors, sensors, servers and mobile data networks. Increasing profitability has long since led to "GDD," global digital Darwinism, in some industries. This means that future economic success depends on the successful implementation of the opportunities offered by digitization. It is also apparent that the rates of change in the implementation of digitization – comparable to other waves such as electrification or mobilization – are exponential. This corresponds to the course of the long-running Kondratieff waves.

In contrast to earlier waves, however, the rate of increase in change or the speed of change due to digitization is greater. It is worth remembering Albert Einstein at this point, who said as early as 1932: "The greatest danger in times of upheaval is not the upheaval itself, but meeting it with outdated logic.". The following questions are therefore of decisive importance for the future viability of companies:

  • Why and with what success factors do individual companies and groups succeed in shaping this transformation process better and more successfully than others??
  • What can be learned from other transformation processes such as the energy transition, changing data protection or emerging electromobility for risk management of an accelerated widespread implementation of digitization?
  • Which business model-related risks can be identified in the context of this digital transformation process and how can they be avoided?
  • Which production factors and management skills are needed in which form, sequence and dosage for digitization?
  • How must credit industry risk systems that map corporate digitization risks be adapted?
  • How can a "digitization audit" be designed for companies and can it be used as a building block for improved rating?

The following ten factors seem particularly significant for implementing digitization and leveraging the potential benefits:

  1. Input, automated by sensors
  2. Output resp. Communication through images, sound, augmented reality (augmented reality) or holography
  3. Intelligent, self-controlling machines/robotics
  4. Data existence and availability
  5. Artificial intelligence
  6. Replacing existing products and services
  7. Linking of products and services into new service bundles and offerings
  8. Networking of machines, robots and people
  9. Effect of crowds (groups)
  10. Use of clouds (storage of large amounts of data in physically unknown locations).

These factors are to be evaluated in terms of their effect on the business model individually, in direct linkage and indirect linkage. The complexity of this task is reflected in the arithmetically possible 10 + 910 combinations, which – at least theoretically – would have to be examined individually for feasibility, sense and benefit creation and market acceptance.

Understanding and predictability of the effect of the factors of the potential uses of digitalization result in simple, complicated, complex or chaotic model combinations (s.in addition Fig. 1). Such an assessment of possible future business models or even innovation management derived from it has been a challenge for companies not only since the digital transformation.

In retrospect, it can be seen that the evaluation of innovations in terms of their (technical) potential and the associated market opportunities have always been the decisive success factor. From a company’s point of view, therefore, the question of which goals are to be achieved with a digitization project must be focused on at the beginning: Offering new value propositions or offering new value foundations – or both.

Empirical studies have shown that companies are more successful than average if they cover both dimensions – new customers with a new offering. Therefore, both dimensions should also be taken into account in a risk assessment. In addition, with regard to the business model, the question must be answered: What should be digitized – the sales channel and/or the product resp. the service?

Differentiated view of digitization

The examples listed in Figure 3 show that a differentiated view of digitization is necessary. The benefit of the product or. of the service is to be evaluated in relation to the factor "digital (virtual) customer access". Digital customer access in particular has a disruptive character in relation to stationary retail and especially also in relation to the banking industry ("Amazonization of retail") and must therefore be particularly evaluated in the risk assessment.

In summary, the necessary changes for a sustainable business model can be summarized as follows:

  1. Adaptation of the offering to the changed framework conditions and digital possibilities (e.g. B. digital customer access, trend toward individualization)
  2. Consideration of the trend "use instead of own" (z. B. Car sharing models etc.) and the changing values of society
  3. Creation of new innovative service offerings and service bundles for new customer groups by designing the ten factors shown as part of the implementation of digitization.


Digitization will continue to profoundly change society and the economy exponentially – analogous to previous cycles.

Global change processes cannot be stopped.

Change processes are similar to earlier waves such as electrification – but in much shorter periods of time.

The intelligent use of digitalization will lead to economic success. Future economic success will depend on the successful implementation of the opportunities offered by digitization.

Managers and credit decision makers in banks and savings banks need to understand the impact of digitalization in terms of the rules and mechanisms of doing business in order to understand and evaluate new digital business models.

In the future, risk systems at credit institutions will also have to record and map the degree of digitization (target/actual) of borrowers.

The risk of "non-digitization" must be measured systematically.


Dr. Peter Lender is managing director of digum GmbH and co-publisher of the blog Transformation Magazine.com.

Prof. Dr. Arnd Wiedemann is Chair of Finance and Bank Management at the University of Siegen, Germany.

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