GC Perspective: Deutsche Bank’s GTB on the Move to Digitalisation

As the financial and banking industry increasingly turns to digital solutions, securities services providers may have to rethink their business and operating models. The potential opportunities blockchain technology could provide have sparked wide interest in the banking world. However, it has also caused concern over the increasing role of independent financial technology firms. According to Deutsche Bank’s Werner Steinmueller, head of Global Transaction Banking (GTB), the only way forward to is to embrace digitalisation, and create component-based solutions and assets to create the value clients want.

GC: Why is a move to digitalisation so important?

WS: Global banks have recently announced massive investments in digitalisation because everyone is afraid they could lose a lot of their business. One thing I also want to address is that I want to have same playing fields. These (fintech) companies that don’t have the same requirements as banks could lead to disruptions in the payment. This has to be taken care by regulators, and this is supported by a lot in the industry. With a focus on transparency, it is more important than ever to do better anti-money laundering and (provide) more safety to payments.

GC: What will this move involve?

WS: The Transaction Bank has been highlighted as a key parameter of the bank’s 2020 strategy, confirmed by John Cryan our new co-CEO. He also confirmed that we have €1 billion in investments going forward to GTB if we are performing well.

For us, digitalisation in transaction banking means building on our digital basics and digital assets. What I mean about digital basics is I mean foundations – automated processes. Looking at the total Transaction Banking industry we are pretty much fully automated and standardised. Digital assets are products developed on these foundations, but if you don’t have good foundations then it is very difficult.

GC: Where will GTB devote these investments as it moves towards digitalisation?

WS: Number one is on regulations. Nowadays to fulfil regulations, this has to be automated because it can’t all be done by hand. Regulations are increasing, not decreasing, and this happening around the world, coming from the US, and in Europe and Asia we have to do more. Secondly, is on stability of systems. Systems are becoming more and more complex, so we have to makes sure they are stable and reliable because this is what the clients are requesting. Having proper data quality is important, for both the regulator and also building our business model. Thirdly, after doing the first two right is setting time to invest in our own solutions. With these three steps, digitalisation and digital solutions play a very important role.

GC: Given technological innovations in market infrastructures, could they pose a larger threat to securities services than fintech?

Satvinder Singh, global head of Institutional Cash and Securities Services: With T2S came the predicted death of the sub-custody world. Everything indicated that the equilibrium would be disturbed (among market participants). But a level playing field would be reached because the client needs the value that the banks can provide. As long as clients need the value there will be a level playing field reached in terms of who provides what.

Christian Westerhaus, global co-head of Client Products & Solutions: Intraday liquidity and reporting as well as managing transactions and providing collateral solutions are all important in the real economy that regulators are trying to boost.