40
we have applied a very simple and direct approach here by bringing clients into the process, asking them what they want. The aim is to build the products of the future that will predominantly serve their digital strategy not ours.
“
solve 80% of your problem, and this is Steve from a fintech and he can solve the other 20% of your problem. This way we can work bilaterally or trilaterally to solve our clients’ problems.”
Watson admits that this new approach is considerably different to the one which banks have traditionally taken. In addition, it requires substantially more advisory time in order to choose and vet which fintech to work with, given the sheer amount of providers which have recently emerged. “Banks can have an equally big impact on fintechs as vice versa. If banks go all in with the new fintech community, and support them in some of their ventures, there is a great chance for bilateral success. Benefits of such collaboration include 1) trusted regulator status 2) additional access to the marketplace 3) access to the existing franchise 4) extended value chain solutions that the fintech may not be able to offer.”
In finance you often find yourself partnering depending on the type of deal, Watson explains and gives the example of
cooperating on a big loan where no single bank wants to provide full exposure, so they get together and divvy it up.
“It’s just like this with new fintech led consortia – you can’t do everything, so you pick partners who do the bits you can’t or don’t want to execute.”
When explaining how Deutsche Bank interacts with the new fintech community and chooses the right partners, Watson talks about the bank’s innovation labs approach. “At other banks the labs often function as software development centres where you have a bunch of guys who can code and build products. Ours function as a docking station for innovation - an expert community. There are a small numbers of experts based in hotbeds like London, New York, Berlin, London and Silicon Valley with a focus on the business areas which are managed by one of the chief digital officers or one of the product heads. When we need to solve a problem in a particular area, they will then vet and bring in selected fintechs to help solve the problems.”
The how of data
When asked about the most important technology problem facing the banks, the one Watson turns to first is data. “All of this is about data and that is forgotten about by a lot of people. Even in my job with a heavy digital focus, it’s all about data not about tech - and we have to keep coming back to that concept. Technology is the enabler – it is the how not the what. The data that we sit on concerning our clients’ businesses is the key. The products we develop should and will be based on data and not technology. Data is the future – both the data we have and what we do with it. Clients repeatedly tell me that they would pay for information based on what they have sent me. I’d rather they send me more data, and then let me work out how they can better farm that and use it to make decisions.”
www.ibsintelligence.com | © IBS Intelligence 2017
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