German investment giant Deutsche Bank has unveiled plans to create an innovation division as part of a £12bn investment in new technology.
In an internal memo shared with employees on Monday (7 October), the bank’s recently appointed tech chief, Bernd Leukert, said the division would lower costs and “fundamentally shift” how the bank builds platforms.
“For our product owners in business and infrastructure, this [strategy] means they will continue to define what the bank delivers […],” Leukert wrote. “For our technologists, this means more freedom to get on with what they do best.”
The bank announced plans in July to invest €13bn (£11.6bn) in overhauling its technology platforms between 2019 and 2022. The pledge came as the company laid off 18,000 workers, and around a year after its then chief operating officer reportedly described the bank as the “most dysfunctional” place she had worked.
In his internal memo, which has been shared with NS Tech and appears below, Leukert vowed to bring an end to an era in which the bank “offered too much optionality” and did not “consistently follow Group wide architecture and tooling”.
In our strategy announcement in July, we outlined the critical role technology will play in the future success of the bank. Since then, many of you have asked how we expect to efficiently invest in transforming our technology platform during a time when our focus on cost is much sharper than before and our industry is going through a number of challenges. To succeed, we need to fundamentally shift how we build technology and move to a new way of working. Today, we are sharing our way forward with you, with the full backing of the Management Board.
At its heart, our technology strategy empowers our businesses to control “what” is produced, while technology has control of the “how”. In the past, the “how” offered too much optionality and did not consistently follow Group wide architecture and tooling. Therefore we will create one technology division called Technology, Data and Innovation, led by Bernd Leukert. In this division Neal Pawar will continue to act as Group Chief Information Officer and run the respective function. In addition, he has been tasked to build a strong central Chief Technology Office (CTO) establishing common Group-level standards that ensure the consistency and simplification that we are striving to achieve. The Chief Information Officers of the Private Bank, Corporate Bank and Investment Bank will directly report into Bernd. Furthermore the division will also include the Chief Security Office (CSO) and Chief Data and Innovation Office (CDIO), ensuring a deeply integrated IT, data and security agenda. Our technology community will be more focused on engineering expertise, we will strive to reduce administrative overhead and we will take further ownership of processes we have outsourced to vendors.
Our business and infrastructure product owners will continue to define what they need, but will be part of dedicated teams with technologists to speed up delivery and check progress. This agile way of working will bring product owners and technologists closer together, which is an absolute necessity in our technology-driven world. These teams will continue to work in close partnership with our digital and data experts to ensure the bank takes advantage of cutting edge innovation.
This full subscription to agile working is a bold and exciting vision, and is a clear commitment to building a technology-led company. To deliver, we will need a shift in culture and focus on five major initiatives:
– Agile teams: 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. These teams will be assessed against shared business, controls and technology outcomes.
– Engineering culture: We have a bank-wide commitment to strengthen our engineering expertise in the bank by increasing the share of internal technology expert staff. To support and motivate our community of technologists, we will aim to reduce the burdens that slow them down.
– Commitment to strategic initiatives: In the past, it was common for objectives to shift and budgets to be cut. We will plan and budget for the long term, and at the same time focus on fewer things that are the highest priorities of the bank.
– Simplification: While we have made progress in removing applications and simplifying our technology, our efforts are hindered by how inter-dependent our environment is. 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.
– Invest in modernisation: We will bolster our cloud strategy but recognising that this won’t happen overnight, we also commit to invest in our legacy infrastructure and platforms on which the bank operates today.
For our product owners in business and infrastructure, this means they will continue to define what the bank delivers, at a lower IT cost. For our technologists, this means more freedom to get on with what they do best. For the bank, this means we can compete in an increasingly challenging market place and reduce complexity at a scale not seen before.
Our Technology, Data and Innovation leaders will be working together on how best to implement this vision. As we make decisions and agree our way forward, in full consultation with our employee representatives, we will ensure you are fully informed and understand what you can do to help. In the meantime, please approach your CIO or their leadership teams with questions or ideas.
Thank you for your support by taking an active and engaged role on this exciting journey for the bank.