COST CUTTING MEASURES AT COOPERATIVE BANKS IN GERMANY AS A RESULT OF DIGITALIZATION AND THEIR CONSEQUENCES

The banking market in Germany is facing big challenges due to digitalization. The digital transformation is significantly influenced by technological progress and the low-interest phase. The article deals with the group of cooperative banks, which consists of many individual cooperative credit institutions. Cooperative banks are credit institutions whose objective, according to their statutes, is the economic promotion of their members through joint business operations. The traditional classical business model is traditionally based on personal customer contact. More mergers are to be expected in the banking sector in the coming years. The process of branch closures and staff reductions is also inevitable. Although the role of branches is up for discussion, they are increasingly falling victim to increased cost pressures. These changes have an impact on many aspects of how bank customers demand, evaluate and ultimately purchase financial services. In recent years, it has become clear that banks lack a clear strategy. The aim should be that the strategy does not focus exclusively on cost cutting, such as branch closures and staff reductions. The main purpose of this research is to investigate whether these cost cutting measures in cooperative banks are operationally justified in relation to the available operating profit, cost income ratio and return on equity. The results of this article may be relevant for researchers dealing with the Digital Transformation in the banking sector in Germany.

COST CUTTING MEASURES AT COOPERATIVE BANKS IN GERMANY AS A RESULT OF DIGITALIZATION AND THEIR CONSEQUENCES

The banking market in Germany is facing big challenges due to digitalization. The digital transformation is significantly influenced by technological progress and the low-interest phase. The article deals with the group of cooperative banks, which consists of many individual cooperative credit institutions. Cooperative banks are credit institutions whose objective, according to their statutes, is the economic promotion of their members through joint business operations. The traditional classical business model is traditionally based on personal customer contact. More mergers are to be expected in the banking sector in the coming years. The process of branch closures and staff reductions is also inevitable. Although the role of branches is up for discussion, they are increasingly falling victim to increased cost pressures. These changes have an impact on many aspects of how bank customers demand, evaluate and ultimately purchase financial services. In recent years, it has become clear that banks lack a clear strategy. The aim should be that the strategy does not focus exclusively on cost cutting, such as branch closures and staff reductions. The main purpose of this research is to investigate whether these cost cutting measures in cooperative banks are operationally justified in relation to the available operating profit, cost income ratio and return on equity. The results of this article may be relevant for researchers dealing with the Digital Transformation in the banking sector in Germany.

The Chief Digital Officer – Savior for the Digitalization in German Banks?

Digitalization is changing processes in the German banking market. This fact means significant challenges for companies. Many German banks could miss the connection in the age of digital transformation. According to a study, the management consultancy McKinsey even expects the return on equity to decline. And if the change that digitalization offers, is not properly implemented. According to the study, German banks are forced to digitalize processes due to low yields, as new players in the market (Fintechs) could shed up to 40 percent of their sales and up to percent of profits. The situation of how to deal with Digitalization correctly is much discussed. Organizationally, a lot was promoted under management aspects, and the industry is talking about the necessity of installing a so called Chief Digital Officer (CDO) next to the Chief Information Officer (CIO) / Head of IT. Is this a valuable solution

Innovation Contests with Entry Auction

We consider procurement of an innovation from heterogeneous sellers. Innovations are random but depend on unobservable effort and private information. We compare two procurement mechanisms where potential sellers first bid in an auction for admission to an innovation contest. After the contest, an innovation is procured employing either a fixed prize or a first-price auction. We characterize Bayesian Nash equilibria such that both mechanisms are payoff-equivalent and induce the same efforts and innovations. In these equilibria, signaling in the entry auction does not occur since contestants play a simple strategy that does not depend on rivals' private information