Research Question III

This new technology can have a significant impact on the core of the financial industry. It will change the established principles of governance and value creation. However, it is unlikely to be a phenomenon that heralds the end of the era of banking and other financial market players through the innovations, as they are often driven by start-ups. While some start-ups may actually threaten established business models, there are also financial players who will defend their market position.

However, it is necessary to be warned against too much enthusiasm. For example, cryptographic exchanges currently do not use decentralized blockchain infrastructures for performance reasons, and traditional exchanges have been able to build digital, high-performance infrastructures without the blockchain. The digital endless chains developed by different international consortia offer the greatest economic efficiency, depending to a great extent on the specific application and the respective business model of the participants.

Basically, all blockchain types can be divided into three groups: private, public, and a hybrid. The private blockchains, in which only an exclusive, identifiable, and consequently discrete circle has

74 access to the digital cash book, have proven to be considerably more powerful than the public models. The advantage of the public blockchains (for example Bitcoin), however, lies in their general accessibility. Unlike a private blockchain, one of the purposes of cryptocurrencies is to remunerate the operators of public blockchain networks with performance-related payouts.

Therefore, tokens or coins of private blockchain networks, such as Ripple, have no use for the network itself. The purchase of these tokens is more comparable to a donation to the company Ripple.

When it comes to the ability to handle transactions between two parties who do not know each other and have to trust each other without running a trusted third party, cryptocurrencies provide an alternative to a major task of the banking sector.

This chapter mainly revolves around the question of whether cryptocurrencies are challenging banks for their business model and whether Austrian banks are already dealing with cryptocurrency issues and creating know-how in this new field.

Research question III:

Will the rise of cryptocurrencies and crypto assets in general reduce the importance and influence of banks on the Austrian economy?

4.2 Methodology

This part of the study is intended to explain the banking perspective on the issues brought about by the ever-increasing market of cryptocurrencies. For this purpose, interviews were conducted with willing experts from the major Austrian banking sectors.

A case-by-case analysis is to be used to depict the attitudes and progress in the area of cryptocurrencies in the respective banking sectors surveyed. A case-by-case analysis contains a statement typically for the interview, a concise statement of the person with regards to the question, and the central topics that were addressed in the interview in relation to the subject of the investigation (Pfaffenbach & Reuber, 2005 p. 164).

For comparative qualitative analysis, the content analysis is used in this work. The focus lies on the qualitative content analysis by Philipp Mayring that will be discussed in the chapter 4.2.1.

75 4.2.1 Content Analysis Process

This form of content analysis was developed by communications scientists in the early 20th century to analyze a variety of media, such as newspaper articles. Initially, the content analysis was mainly quantitative. For example, texts were analyzed according to the frequency of certain words or in what context these words were mentioned. However, converting text into numbers resulted in a significant loss of information, which led to the development of qualitative content analysis methods at the end of the 20th century. From a methodological point of view, a qualitative evaluation fits better to the format text than a quantitative approach (Mayring, 2015, p.

11-12).

In qualitative social research, the content analysis is used primarily for analyzing interview transcripts. It is especially suitable for guided interviews. In order to adequately describe the subject of investigation, this type of research requires the collection of a large amount of material, which is then subsequently analyzed. This leads to a wealth of texts, which must be analyzed by a suitable method. The goal of content analysis is to uncover its structure by systematic reduction of the text (Mayring 2015, p. 26-28).

The basic concept of content analysis is the analysis of texts based on categorical systems that are derived from the material and developed during the analyzing process (Mayring, 2015). The focus is on assigning the material to each particular category that reflects the context contained in the textual material. This is the basis for the subsequent interpretation of the material and constitutes the core of the analysis (Mayring, 2015, p. 51-53).

76 Figure 19

Content analyzing process according to Mayring

(Source: Mayring, 2015, p. 62)

The model of Mayring consists of nine steps that can be seen in Figure 19. The aim of the analysis is to ascertain important topics and to create a limited body of text by simplification that is analogous to the source material (Mayring, 2015, p. 62-64).

77 4.2.2 Guided Interview

An extremely revealing method of qualitative evaluation is the guided interview. It is one of the most popular and widely used methods of qualitative research. The main feature of guided interviews is that the researcher has an elaborate list of questions, points, or topic groups that they would like to work through as part of the survey. This guide is meant for orientation during the interview only and does not require rigorous processing. Through constantly new, targeted questions impulses can be set. In contrast to quantitative methods, such as a questionnaire, there are no ready-made answers or other guidelines in this methodology. The response is free and directed by the researcher only toward exploring thematic areas. This allows a very open, free, and authentic expression of the subject, which brings a high degree of useful information. This type of survey allows the researcher to deal with interesting aspects more spontaneously and flexibly, and to address topics in more detail. Thus, interesting, unforeseen impulses can be included in the research (Kleemann, Krähnke & Matuschek, 2013, p. 208-209).

Prerequisite for a guided interview is often a more narrowly defined research field. However, the questions should not lead to short answers, because this would be too close to quantitative research. Therefore, a question should be chosen as an introduction to the survey, which can be answered very openly and widely in order to enable the subject to describe the topic from the interviewee point of view. Subsequent to these relatively open impulses, more precise questions can follow to allow the subject to elaborate and provide more specific details and intricate arguments.

The guided interview has characteristics of an everyday conversation, but should not be too close to it. The separation of roles between the questioner and the respondent must be kept. Concerning the guideline, a systematic order of the topics must be maintained by the interviewer. The guide is organized according to blocks of topics that begin with general questions that gradually become more specific. However, at the time of the interview relevance takes precedence over a pre-determined order, which does not need to be followed (Pryborski & Wohlrab-Sahr, p. 128-130).

78 4.2.2.1 Advantages and Disadvantages of Guided Interviews

Guided interviews are typically conducted when there are people whose knowledge or participation in a particular process can provide significant information about the process. The guided interview, like all qualitative research processes, provides detailed insights and enables the interviewer to better understand what individuals really think about the topic in question.

As a method, this type of interview has two major advantages. Firstly, it allows both the interviewee and the interviewer to develop an understanding of the researched topic in general.

Secondly, it allows the interviewer to have control over the nature of the questions and their order. Therefore, as much information as possible can be gained from the respondents for each question.

The biggest drawbacks are the significant utilization of financial and time resources, the difficulty of getting access to interview partners, and the amount of research that is necessary in advance to conduct high-quality interviews. Furthermore, from this type of interview, no generalization to larger groups of people can be achieved (Stacks, 2011, p. 174-176).

4.2.2.2 Construction of the interview guide and definition of the main focus

The interview guide serves to provide an controlled platform within which the interviewee can answer questions about a certain problem. The interview should begin with a relatively open question in order to loosen up the conversation. This allows both parties to recognize the direction the interview may take from the offset. The created guide is not a rigid set of rules that dictate the development of the interview - certain topics can be rearranged and relevant new topics can also be addressed. It primarily serves the orientation of the interviewer, so as not to lose the thread (Buber & Holzmüller, p. 471-472).

Basically, the topics of the interview guide were structured as follows:

Involvement:

Questions would be formulated to find out how involved the interviewee is in the subject of cryptocurrencies. This applies to both personal and professional levels.

79 Blockchain / Cryptocurrencies:

This part of the interview would inspire discussion about the interviewee’s personal expertise in the mentioned areas, and their attitude towards this new technology. Both the personal view and the attitude of the bank should be captured.

The actual monetary system:

The interviewee’s stance on the current monetary system would also be determined. They would be asked what role the bank currently plays in our economy and whether this role has the potential to change as a result of new technological developments.

How to combine both worlds:

This part of the survey would focus on how the bank is currently trying to integrate blockchain technology or crypto asset trading into their business models. It should be ascertained whether there are already projects up and running, or are being considered.

4.3 Sample

In order to find out whether cryptocurrencies and blockchain technologies will and can change the influence and importance of banks, suitable representatives of the Austrian banking world should be interviewed.

The aim was to win expert representatives for an interview from the largest Austrian banking companies (Raiffeisen, Volksbank, Erste Group, Bank Austria). Unfortunately, no representative of Bank Austria has agreed to an interview. Likewise, the Österreichische Kontrollbank (OeKB) was requested as they have already launched a project on a public blockchain, the Ethereum blockchain. Off the Record, a representative was available for talks, but unfortunately a real interview could not be conducted.

As an alternative interview partner, however, a representative of the Austrian Financial Market Authority (FMA) has agreed to present his view on the topic of cryptocurrencies. Although, the FMA is not a bank, it works closely with the banking community, as a result it has a general overview in regards to the topic.

80 Through online research, experts from each of the banking sectors and the FMA were chosen. In part, these experts were easy to identify, because they are the respective leaders of the bank's internal blockchain workgroups, who can sometimes identify the individuals who have already published papers or publications in this field.

Four guided, in-depth interviews were conducted with the following representatives:

Dr. Marcus Presich: Raiffeisen Bank International AG - Digital Banking, Head of Raiffeisen Blockchainhub

Mag. Petia Niederländer: Ersten Bank - Head of Operations and Blockchain-Expert

Mag. Martin Heilinger: Volksbank Wien – Regional Director

Mag. Marc Gassebner: Financial Market Authority Austria. Senior Fonds Analyst. Main areas of responsibility: Crypto-Assets, distributed-ledger-Technologies