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Deutsche Bank explains why they’re spending so much on tech at Money 2020


One of the most interesting and engaging panel discussion at Money20/20 was undoubtedly the headline session on Deutsche Bank and Google Clouds’ strategic partnership. Moderated by CNBC International’s Karen Tso, Bernd Leukert, Member of the Management Board at Deutsche Bank, and Dr. Daniel Holz, Vice President for EMEA North, Google Germany discussed the two companies’ cultures, collaboration, and accomplishments.

Companies across the financial services industry are embracing the shift to the cloud for different reasons: to become more efficient, enable new financial products and services to become a fast reality, and tap into the opportunities of future technologies. Deutsche Bank and Google present an interesting use case as this shift will have major consequences in terms of how large banks and cloud providers develop an optimal relationship, balancing aspects such as security, innovation and efficiency.

The first part of the discussion revolved around the different cultures at the two institutions and to what extent those could be aligned. Leukert was quick to note that the whole idea of a strategic partnership is new on the big banks’ agenda. “It has been more of a customer and supplier relationship, and building a strategic partnership is new in the DNA of Deutsche Bank. I would say it’s new in the DNA of the financial service industry.”

After a series of negative episodes, Deutsche Bank now aims to be seen as one of the more innovative banks in the game. Tso cracked a joke that Deutsch Bank seemed to have passed the baton to Credit Suisse when it comes to scandals. But how does this past reputation impact the collaboration between Deutsche and Google?

When Christina was named CEO and announced the new strategy, the cultural renewal was an important aspect of that strategy,” Leukert recalled. “And in our partnership [with Google Cloud], it was not just about technology. It was our ambition and we were keen on incorporating elements of the tech of a Silicon Valley company into the DNA of Deutsche Bank, which has a lot to do with speed, with going fast.

Holz said they embraced the challenges because this partnership is indeed an unprecedented meeting of different worlds, the brick and mortar business world and Silicon Valley. “I have to say, it’s really great to work with and be able to work with a company like Deutsche Bank, with such deep roots and history and values. When we were invited at the end of 2020 to talk about how can we help Deutsche Bank achieve the targets of digitilisation, of bringing the culture to the next level, we gladly accepted.”

The partnership kicked off in late 2020 and unfolded in 2021. Now, in 2022, it’s all about migrating and modernising the applications. On the one hand, Google Cloud does the traditional lifting and shifting of the on-premise legacy workloads, on the other hand, it also modernises and creates cloud native applications from scratch.

So already now, more than 30 solutions have been brought from on-premise to the cloud,” Holz said. “And the aim for this year is going to be to reach about 100 or more applications to be running in the cloud native environment.”

The Google Team has been already training more than 2500 employees of Deutsche Bank to become cloud experts – not just IT personnel, but employees working across various business units. The joint Innovation Centre in Dublin with Deutsche Bank already had the experts for machine learning and artificial intelligence, and Google Cloud and Deutsche Bank now use this centre to accelerate this process, fostering cloud culture within all all the lines of business at Deutsche Bank.

The main benefit of the strategic partnership for Deutsche Bank is the resilience and elasticity provided by Google Clouds operations, Leukert noted. “We are very focused on on helping our customers to transform their business models and embed financial services into what they are going to change in future, which is fundamentally different. What we have done in the past by just more or less engaging with the treasurer or with the CFO. Now engaging is one of the business units and that makes a lot of fun.”

Another way Deutsche Bank benefits from its partnership with Google Cloud is the way they engage with customers. “We are in that massive transformation” Leukert noted. “So the customer engagement, whether this is with corporate customers, whether this is with private customers in balance management or retail banking is massively changing: you need the ability not just to connect with the customers but to give them guided advice.”

On Google Cloud’s side, the partnership enables the firm to cement its position as one of the leading companies in the clouds space. “So if you take a look at the cloud, Google Cloud was number twelve worldwide three years ago,” Holz said. “Right now, we are at number five. We are growing much faster than the number four and three, so we expect to take them over sometime soon.”

“So we are very pleased and we very happy that we give a certain strength, trust and reliability to our clients and  that customers known that they can really go with us for a ten year partnership because even if we have some ups and downs in the market, we are here to stay.”

Furthermore, the panellists talked about the current trends in fintech valuations, a recurring theme at this year’s Money20/20. Given the lower valuations in today’s markets, the question whether Deutsche Bank would prefer to acquisition instead of collaborations was an inevitable topic to discuss. “The temptation is higher [to acquire] if the valuation of the fintechs is not at all time high,” Leukert admitted.

On the other side, I think it’s less the fintech itself. It’s more the talent. It’s the people we are interested in. And in our partnership [with Google Cloud], we have joined recruiting initiatives… And then people who have great capabilities are welcome to join Deutsche Bank as technology experts, and, therefore, I consider this as a multi-faceted collaboration, not limited to only the partnership.”

Last but not least, the two touched on crypto markets and the anticipated downturn. “We are discussing the topic of crypto digital assets very intensively with our customers,” Leukert said. “At the moment they have a demand to us whether we can provide a custody service for the crypto keys. Of course when you provide the custody service, the next topic can be trade. At the moment we are not doing it. So we need to get more experience and not fall into the trap off of a compliance issue. But we are seriously considering this.

“We are observing the crypto markets very closely, and once we come to the conclusion that it’s time, we will probably also see that we are engaging. As of today, we are not active in the crypto, Holz said.

It is certain that the cooperation between Deutsche Bank and Google Cloud has paved the way for new, strategic partnerships between big tech firms and the financial services industry. We are keen to seen what other benefits will this, or other, partnerships entail.

Author: Benjamin Jenei

#GoogleCloud #DeutscheBank #Cloud #Tech #DigitalAssets

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