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Deutsche Bank to set up innovation division to drive digital transformation

More details about Deutsche Bank’s new technology division in internal company email

This article can also be found in the Premium Editorial Download: CW Europe: CW Europe: Deutsche Bank creates innovation division

German investment banking giant Deutsche Bank is opening a division focused on innovation as part of its plan to digitise all business operations. 

More details have emerged about the new technology plans, which first became public in July, when CEO Christian Sewing said the bank wanted to become a technology company and digital leader.

In a memo to staff, the bank said it’s opening a technology division known as Technology, Data and Innovation, to be led by former SAP executive Bernd Leukert.

In July, it said it would cut staff by 18,000 to reduce costs but spend €13bn on technology through to 2022, which this is part of.

At the time, the bank said it would create a separate technology function, with “responsibility to further optimise Deutsche Bank’s IT infrastructure and drive the digitisation of all [the bank’s] businesses”.

Former SAP executive Leukert has 25 years’ experience in product development. With fintech companies chipping away at the business Deutsche bank, like other traditional banks must change how it uses and develops digital technology.

The new technology division will focus on five main initiatives, according to the internal memo from Leukert to staff, which was published by NS Tech.

Agile teams

The bank will create agile teams where “product owners in business and infrastructure divisions will lead teams of technologists, using agile principles, to continuously work on products and ensure progress meets their expectations”.

It will also increase the proportion of software engineers in the workforce and better support and motivate them, as well as “reduce the burdens that slow them down.”

There will also be a programme of IT simplification. “While we have made progress in removing applications and simplifying our technology, our efforts are hindered by how inter-dependent our environment is,” said Leukert’s memo. “We will decouple applications and use common reference data sources to reduce complexity. Essentially, we will continue to retire applications and ensure the ones that exist can work with each other.”

The bank has also committed to more use of the cloud and will gradually migrate systems to it. “We’ll bolster our cloud strategy, but, recognising this won’t happen overnight, we’ll also commit to investing in our legacy infrastructure and platforms on which the bank operates today.”

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Leukert said long-term tech budgets will be set so budgets aren’t cut when objectives change.

Speaking to investors in July, Deutsche Bank CEO Sewing said: “The aim is to position [the bank] as a technology company, be a leader in digital banking with new ideas, and establish systematic research and development for innovations through combining state-of-the-art technology with analyst know-how.”

“Digitisation offers new competitors, such as cross-industry entrants or financial technology companies, market entry opportunities,” said Sewing. “We thereby expect our businesses to have an increased need for investment in digital product and process resources to mitigate the risk of a potential loss of market share.”

The announcement marks significant change in the corporate culture which is vital if Deutsche Bank is to compete with new players in the financial services sector.

According to Peter Schumacher, CEO at Germany based  business consultancy the Value Leadership Group, Deutsche Bank’s leadership is saying all the right things and with a lot of candor.

“Deutsche Bank’s statement is not abstract. They are seeing the world as it is. They have positioned their change programme as an opportunity,” he said. But he added that they have also raised expectations. “History at Deutsche Bank has shown that after the dust settles everything remains fairly unchanged.”

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