The digitalisation of financial services should be approached with caution due to potential risks, according to the president of the ECB.
Speaking at a joint ECB and European Commission conference in Frankfurt, Mario Draghi spoke of the potential opportunities and risks that can arise with digitalisation, highlighting cybercrime as a major issue.
“The Eurosystem is always on the lookout for ways to improve the efficiency and lower the costs of its market infrastructure,” said Draghi.
“We must also be mindful about developments in new technologies and how these might impact the banking business of tomorrow.
“Indeed, when we talk about financial integration and market infrastructures, we cannot neglect to consider the potentially far-reaching implications which new technologies could have for our financial ecosystem going forward.”
Draghi specifically pointed to cybercrime as a key example of the risks associated with digitisation.
“All progress comes with risks as well as opportunities and one highly topical risk linked to digitalisation is cybercrime,” said Draghi.
“Increases in users and data on digital platforms, in cloud computing and across networks, have multiplied the number of potential routes for criminal attacks.
“As financial market infrastructures are highly interconnected, the potential effects of such an attack should not be underestimated.”
Industry participants have hailed digitalising operations as the future of the industry with such developments potentially being able to streamline various post-trade processes such as clearing and settlement.
Recent analysis by Deutsche Boerse and Celent suggested that digitalisation of post-trade operations is crucial to achieve maximum efficiency and gain greater control of costs.
The whitepaper pointed to 80% of OTC derivatives reconciliations still being manually processed over the telephone or being Excel based.
Deutsche Boerse and Celent explained this trend is expected to change, with technology playing a crucial role.
Other industry participants have expressed doubts over the potential benefits of digitalisation.
Speaking at the Global Custody Forum in London, Sonia Maloney, chief operating officer at Norrep Capital Management, suggested that asset managers were not experiencing the benefits of digitalisation as they were wary to collaborate on technological developments.