On its way to becoming a cloud-based financial-services company that can move at the speed of the digital economy, Deutsche Bank recently disclosed a slew of innovations and goals it has already engineered as part of its 10-year transformational deal with Google Cloud.
On my weekly Cloud Wars Top 10 rankings, Google Cloud is #3 behind #1 Microsoft and #2 Amazon.
Deutsche Bank’s chief technology, data, and innovation officer Bernd Leukert and Google Cloud president Rob Enslin discussed the goals and progress of the strategic partnership at a virtual conference late last month. And I, your humble correspondent, have gone through the transcript of their conversation and pulled out 15 noteworthy examples of the transformative innovation the 151-year-old bank is boldly undertaking with Google Cloud, which is by far the fastest-growing vendor on my Cloud Wars Top 10 list.
You can read the entire conversation here, but in the highlights I’ve pulled out below you’ll see how Deutsche Bank is aiming to overhaul not only its technology—as challenging as that is, it might be the easiest part—but also its culture, its business model, its approach to talent, and the core value it can offer to customers and clients.
To me, this is what the Cloud Wars are all about: big dreams and big ambitions, and a willingness to confront significant risk in partnership with world-class companies that are enabling their business customers to do things those customers could never have done before.
Clearly Deutsche Bank expects this decade-long effort to result in lower costs, higher revenue, rising market share, and new types of customer engagement, but exactly how does it expect to achieve all that? Those are the types of specific insights I was looking for in the conversation with Leukert—who spent more than 8 years as a top product and technology executive at SAP before joining Deutsche Bank 2 years ago—and Enslin, who spent 27 years at SAP and eventually become one of its top sales executives before joining Google Cloud 2 years ago.
1. Become a destination for world-class talent. “So it will enable a cultural transformation for Deutsche Bank which goes significantly beyond technology,” Leukert said. “And this is an HR mindset for our employees, and we want to learn and engage a lot from the Google engineers. We want to jointly innovate and leverage leading-edge technologies which exist today but which Google will have in the pipeline going forward, and then provide exciting opportunities for our talent. We want to be the most attractive financial-service industry company on this planet. And I can share with you that since we announced the partnership, we see already a significant change on that.”
2. Accelerating trust through full leadership commitment. “The second important element was in terms of the leadership commitment from Rob, but I would say the entire Google leadership was fundamental on how the leadership between the two companies have worked together, how we built a partnership and how each member of the leadership was essential in framing such a strategic partnership, which Deutsche Bank has never done before… The partnership was already present while we had the proof of concept, so we leveraged the skill, the capabilities and the competencies in our daily business while we were still in the evaluation phase, which was creating, I would say, a lot of trust and confidence that it’s a perfect fit.”
3. Foundational and aspirational. “But when you look at two primary needs we see across financial services,” Enslin said, “it’s the need to modernize the foundational technologies to drive efficiencies, and then to scale and move more quickly, faster, have speed, have access to new capabilities, unlock the value of data assets that most of these financial service institutions have locked up.”
4. Collaborating at deepest level. “So we have built a lot of momentum, and we are building the cloud foundations with 20+ application landing zones now live already,” Leukert said. And the teams are developing design blueprints that we will reuse for other applications migrating to GCP in the upcoming months and years. So we are not making the mistake some companies did on everybody just getting started and then there has to be a reset button pressed in order to have an efficient and scalable way of moving to the cloud. In addition, we have a full secure network connectivity between Deutsche Bank and GCP and the networks in Europe established.”
5. 50 Google Cloud services running. “We have, as we speak, approximately 50 GCP services that we have made available on the landing zones for secure consumption in the native environment on GCP,” Leukert said.
6. AI and ML: “Huge excitement.” “And we have also been testing Google’s AI and machine-learning capabilities,” Leukert said. “And of course there is huge excitement to explore these capabilities in various areas.”
7. Become embedded within customers’ business models. “An example here is Asset-as-a-Service, where, in the past, I think we have sold our financial-service capabilities to the CFO or to the treasurer of corporations,” Leukert said. “But now, with the service enablement and the transformation of the business model of our customers, we want to embed our financial services into the business model. When customers are transitioning from selling products towards offering outcome, which is the service the product gives, we want to be the financial ingredient in that capability. (Emphasis mine.)
“Another example is Contextual Banking, so an understanding of our customers very deeply through the understanding of the data. So the ability to create a platform that enables our corporate clients to manage their order-to-cash process much more efficiently and, again, of course, leveraging capabilities like machine learning. And through an application, they can gain access to their invoices, to their credit notes, to their debit notes, to their promotional efforts, to their available financing, and then further enable them to make payments through one of various electronic payment options.
“And this is all available on an app at fingertip. The platform will also enable our clients to manage their counterparty risk, which is getting more and more important, of course, through a built-in risk solution, where we feel we have a very strong advantage against many competitors.”
8. Embracing the FinTech revolution. All of the work described to this point, Leukert said, “will allow us to bring together FinTech companies with Deutsche Bank capabilities and offer a solution that is integrated, that is embedded, that is frictionless, again, to the advantage of our clients.”
9. Embracing the FinTech revolution, Part 2: Enslin then elaborated on that point from Leukert. “Look, FinTechs are keen to partner with financial institutions and banks and are rapidly developing strong focused areas of expertise around ML and AI. And they’ve been able to use those via the cloud and through open APIs, which will accelerate the bank’s ability to innovate faster and work with best-in-class technology companies. I mean, this is really important. Many FinTech start-ups offer machine learning platforms built already on Google Cloud, enabling banks to evolve relationships with their clients. If you take an example like a FinTech ML-powered platform that can learn from de-identified customer data to accurately predict additional products and services, deepening the relationship between a bank and its clients, or machine learning that allows this approach to achieve a high success rate in much less time than the required traditional manually supervised approaches, this is really key,” Enslin said.
“The benefits of this approach are bidirectional. Large banking institutions have a rich understanding of transactional data that is typically beyond the reach of FinTech start-ups. Banks can provision synthetic datasets resembling actual customer data, providing FinTech start-ups with better data on which to train these models. This creates a flywheel effect, enabling both the bank and the FinTech start-up to rapidly progress with each other’s help. And this, I believe, adds tremendous value to your customers.”
10. Creating a “Data Factory.” “We want to get rid of the siloed business information warehouses which we have today—one for finance, one for treasury, one for risk—and instead create a secure data lake in the cloud, which we call the Data Factory,” Leukert said.
11. Converged analytics, “a single source of truth”, and the power of speed. “Then we can converge analytics, and converge all kinds of usage, all kinds of reporting on this shared data across the various domains, across the various businesses, and establish kind of a single source of truth for the data which we manage,” Leukert said. “And then we can build on that and provide tools for easier access of data so that the business teams can increase their data literacy and we can empower ‘citizen data scientists’ to leverage this. And I just last week had a session with our colleagues from the private bank, and one guy was saying, ‘Oh, this allows us, with that insight, to introduce new products, new capabilities within days or weeks, while today it takes months, sometimes up to a year!’
“It’s a tremendous benefit of reacting to a fast-changing environment in the business. And, finally, to provide data in a more, I would say, real-time fashion so that we can use data and the analytics to drive, but as well to measure a wide variety of processes which we have in the company and including key operational processes, where we have a tremendous need to automate, but as well not just to automate the process as it is today, to reengineer a process and make it leaner.”
12. Speed and more speed! “Finally, when we talk about our apps to be ‘cloud-first,’ it’s about speed,” Leukert said. “It’s about providing ideas into concepts, into value, into service offerings to our customers which we have not been able to do at the speed we desired in the past.
13. Driving growth in move from “closed shop” to open-innovation platform. “I want to reiterate that we want to onboard FinTechs—we want to partner,” Leukert said. “That is new for Deutsche Bank—this was a closed shop. And now we want to integrate them into our offering. We have a tremendous opportunity on giving them access to our huge customer base, and while on the other side, enabling them to consume our services, because when we moved to the cloud, it was quite cumbersome for them to be complementary in the past. And why not team up and offer the services which we offer to the customers as well to them?”
14. Co-creation of products and services with customers and clients. “This has a longer time horizon, but we want to solve the evolving challenges of our clients and support entirely a new business model,” Leukert said.
15. Driving a “cultural reset” and an “entire transformation.” “Eventually we want this partnership with Google Cloud to set in motion a cultural reset and, I would say, an essential driver of our entire transformation that has engineering, that has software, that has technology at its core.”