The bank has opened a fourth ‘innovation lab’ to work with Fintech start-ups to deploy artificial intelligence, cloud, cybersecurity and other technologies.
The new innovation lab, along with Deutsche Bank’s other labs in Berlin, London and Silicon Valley, is part of a banking sector trend towards greater collaboration with Fintech. Increasingly banks are looking to start-ups for technology that can help them manage business and regulatory challenges – a notable shift in the dynamic between the two sectors.
“I really think the relationship between financial technology start-ups and big banks has changed”, said Elly Hardwick, Deutsche Bank’s Head of Innovation. “Both sides have matured substantially and they realize they need each other. This isn't about fending off fintechs as competitors, but rather improving our position as a partner to fintechs and as an innovator in our industry.”
Deutsche Bank’s innovation labs are also part of a major overhaul to enhance its technology. Along with an investment of up to €1 billion ($1.07 billion) in digital technology, the bank’s plan includes winnowing the 45 operational systems in its corporate and investment banking division down to four by 2020. It also aims to increase its use of cloud technology by some 400%. Ahead of the IT overhaul, Germany’s largest lender appointed Pascal Boillat to the new position of Chief Information Officer and Head of Operations, Corporate & Investment Banking in December 2015.
On a panel at the Davos World Economic Forum in January 2017, Deutsche Bank CEO John Cryan emphasised the crucial role technology will play in the financial sector, particularly over the next five years. “We are placing our bets on technology”, Cryan said. “We can use technology to improve our own controls. We can use technology to improve our efficiency and then we can use technology to improve the customer service.”
Collaboration with big banks has been a challenge for entrepreneurs, who cite difficulties with the banks’ complex procurement processes, as well as the lack of a simple point of contact within large organisations, Reuters reports. Banks have been working to remedy the situation through initiatives like innovation centres as well as corporate venture arms. Deutsche Bank has set up its innovation labs to provide points of entry for smaller firms interested in working with its divisions.
Deutsche Bank’s other labs have succeeded in deploying technology that is expected to help the bank improve its network resilience and ability to design digital interfaces.