Bank plans £11.7 billion in IT spend between 2018-2022
Germany’s Deutsche Bank has agreed a multi-year deal with Google Cloud (GCP), after putting out a request for proposals in February to the cloud hyperscalers, amid a sweeping IT overhaul at the storied bank
The decision will help Deutsche — which runs four divisions spanning corporate, investment and private banking, along with its DWS asset management arm — “transform its IT architecture” it said today.
(It’s not fully signed, sealed and delivered yet: the two have signed a Letter of Intent and “plan to sign a multi-year contract” within months.)
What’s Deutsche Bank Up To?
A December 10, 2019 investor “deep dive” [pdf] revealed that Deutsche plans to spend €13 billion (£11.7 billion) on IT between 2018 – 2022; much of it targeted at automating workflows, improving digital offerings for clients and stripping out back-office and mid-office costs using tech.
As part of that process, it expects to see €1.2 billion in software impairments as it ditches legacy applications. (It’s not alone: as Computer Business Review reported earlier this year, HSBC plans to slash software costs by $900 million amid similar sweeping digitalisation efforts.)
Some 80% of a planned €1.2 billion in reductions at Deutsche this year will be achieved by using technology, said Ram Nayak, head of Deutsche’s markets business in December. One example: the bank is replicating the platform that underpins its FX trading business across the whole of its fixed income division. That move will help it decommission 30% of the bank’s applications over the next three years, saving it €200 million.
“New Business Models”
“This cooperation with Google Cloud is a significant step forward for our technology strategy, and will transform the way we produce and deliver our client services,” added Bernd Leukert, Deutsche’s Chief Technology, Data and Innovation Officer, in a canned statement. He added: “We look forward to creating new business models leveraging artificial intelligence, data analytics, and more, with an established technology and innovation leader.”
The multi-year transformation and optimisation of the bank’s current systems will take place in a “phased approach”, the two said in a joint statement. “Both parties are committed to compliance with privacy and data protection regulation to maintain the confidentiality, integrity and availability of customer data and Deutsche Bank’s information assets.”
They did not specify precise applications to be either migrated to the cloud or newly spun up via GCP, but suggested that potential use cases include “helping treasury clients with day-to-day tasks such as cash flow forecasting, improved risk analytics, and advanced security solutions to protect clients’ accounts.”
Sundar Pichai, CEO of Google and Alphabet said: “We’re excited about our strategic partnership and the opportunity for Google Cloud to be helpful to Deutsche Bank and its clients as they grow their business.”
Deutsche reported core bank revenues of €6.4 billion in Q1, reported in February.