BANKS NEED TO CHANGE THEIR BUSINESS MODEL IN A NEW DIGITAL JOURNEY

BANKS NEED TO CHANGE THEIR BUSINESS MODEL IN A NEW DIGITAL JOURNEY

BANKS NEED TO CHANGE THEIR BUSINESS MODEL IN A NEW DIGITAL JOURNEY 

A single case study for Eigen Technologies with the VSD model 

Humanities division 

Ernst Jan Stokvis, Vrije Universiteit Amsterdam

What is the problem and why should people care? 

The financial industry is going through a fundamental change. Banks will only 

survive if they understand the digital journey and change their business model. It is a 

challenge but also a great opportunity for the new business models. The financial industry is 

transforming quickly, and banks are already claiming that they want to become a technology 

driven firm with a banking license. This is the first step, and a very critical one (Yoo, Boland, 

Lyytinen, & Majchrzak, 2012); (Brynjolfsson & McAfee, 2017) highlight that platforms 

should be carefully engineered and positioned to take full advantage for the strategic 

importance. Technology giants like Google, Microsoft and Facebook are a big risk to the 

traditional banking model. More so as the banks already have a banking license (and the 

giants do not have the banking license) and want to become a digital firm like these giants 

and act like Spotify and Netflix. But what does this really mean to be digital for a bank? 

The technical infrastructure for a bank is its own ecosystem and its extremely fragile 

and complex. For Spotify and Netflix, the internet is the infrastructure. Big steps need to be 

taken to become more data driven and generate new revenue from these digital services. 

Figure 1 Tikkie application ABN AMRO 

Tikkie is a great example where a bank is testing new business models whereby users 

can transfer money to other tikkie users (including web-shops), regardless if they are a 

banking customer of ABN AMRO. 

 

Blockchain or distributed ledger technology (DLT) is another perfect example that 

will fundamentally change the exchange of value. It contains a database that is shared across 

a network of computers and makes constant checks that provides trust where no bank has to 

be involved. Some use cases are developed by banks to explore the real value (also fear of 

missing out). Most banks have the knowledge and it is already emerging, but this needs to be 

transformed into a digital service offering. 

Figure 2 Blockchain explained 

But this is changing where banks need to differentiate themselves and add value to its 

stakeholders. Also, because the disintermediation is changing business models and the need 

to even own assets like cars in the “Uber model” or houses in the “Airbnb model”. 

Do banks even need assets on the balance sheet or in an open banking model. This is 

key and the biggest challenge for the new strategic visions that is happening in this 

intermediation era. Well run firms should have technology in place that uses responsible 

artificial intelligence, this helps them to transform into this new digital journey. 

Approach and results 

The challenges across the financial services industry are the same as for this use case 

that we present to you. The challenge is: (1) unlocking business value form the unstructured 

documents (such as text from legal documentation), that is not in a traditional “row-column 

database”. (2) transformed to be classified “structured” (meaning stored in fields in the 

database), which can be (3) analysed to (4) be adapted and build trust in the business 

decisions. 

Figure 3 Unstructured data Figure 4 Structured data 

For this Eigen technologies is selected as the tool extracts words, short phrases and 

sections from diverse text whereby it turns documents into data that can be used in larger data 

sets (see fig 3 & 4). The bank has a proof of concept which fits the profile of the innovative 

solutions that Eigen offers. Additionally, the bank needs a solution to automate a number of 

heavily manual and expensive processes. 

For this single use case we use desk research, open and (un) structured interviews, 

meetings on the subject with the product owner (project leader). Additionally, all project 

documentation (Proof of concepts, PowerPoints and other project presentations) are studied 

on the subject. Eigen Technologies mentioned that they are also available for questions. 

We focus on social and moral values that are central to the design and development of 

new technology. This originated at Stanford in the 1970s, where it was a central subject of 

study in Computer Science. It has now been adopted by many research groups and is often 

referred to as Value-Sensitive Design (Friedman, 1996). In this single case study, I 

investigate how financial institutions look at the key values for all stakeholders involved 

(directly or indirectly) that use the Eigen technologies platform. 

 

The challenge inside VSD is to focus on the participating stakeholders in this new 

business model design. This should be done by mapping (1) design trade-offs, (2) value 

conflicts, and (3) value tensions—a question of design thinking (Friedman & Hendry, 2019, 

  1. 49). I draw on the VSD theory and methodology to proactively include moral and ethical 

value for Artificial Intelligence used in financial organizations. VSD is still an emerging 

concept offered to others to improve (Borning & Muller, 2012) and that is exactly what I am 

going to do. 

 

Reference: 

Borning, A., & Muller, M. (2012). Next steps for Value Sensitive Design. Conference on 

Human Factors in Computing Systems – Proceedings, 1125–1134. 

https://doi.org/10.1145/2207676.2208560 

Brynjolfsson, E., & McAfee, A. (2017). Machine, platform, crowd : Harnessing our digital 

future. Retrieved 7 October 2019, from http://ide.mit.edu/books/machine-platform- 

crowd-harnessing-our-digital-future 

Friedman, B. (1996). VSD. ACM Interactions, 3(6), 17–23. 

Friedman, B., & Hendry, D. (2019). Value sensitive design: shaping technology with moral 

imagination. Retrieved from https://mitpress.mit.edu/books/value-sensitive-design 

Yoo, Y., Boland, R. J., Lyytinen, K., & Majchrzak, A. (2012). Organizing for innovation in 

the digitized world. Organization Science, 23(5), 1398–1408. 

https://doi.org/10.1287/orsc.1120.0771