With innovation at the heart of Deutsche Bank, purpose-built labs have been established to accelerate the Bank’s adoption of new technologies to compete more effectively in the digital age. Jon Pearson, Director and Lab Manager at Deutsche Bank Labs London, explains the vision behind the labs.
For all types of banking, the issue is pressing, as tech savvy clients expect their bank to anticipate their needs. Any bank that fails to do that will soon find its clients migrating elsewhere.
A whole ecosystem, from Silicon Valley via the Silicon Roundabout in London, to the hubs popping up all over China and South Asia generally, has grown up to serve this insatiable appetite for innovation and progress. But increasingly, innovation is not just the preserve of funky start-ups: a growing number of larger corporates are now looking to foster innovation in-house.
Since 2014, Deutsche Bank has chosen to build labs in the midst of thriving innovation ecosystems. Three are now open – in Silicon Valley, London and Berlin – with teams in Frankfurt and Bengaluru that span the Bank’s operations. A further lab is set to open in New York later this year.
Jon Pearson explains that the accelerated pace of technology innovation that fuelled the rise of the Fintech phenomenon “now permeates everything that we do in banking; and with the advent of crypto-currencies, and particularly developments like Blockchain, it is essential we keep pace with this ever-changing landscape.”
With that in mind, and with the Strategy 2020 of streamlining and simplifying the group’s operational structure fresh in mind, Chief Operating Officer Kim Hammonds spearheaded an effort to create what Pearson calls: “A dedicated environment where innovation can be allowed to flourish.”
“We’ve engaged with relevant eco-systems to foster relationships with academia, start-ups, vendors, accelerators and VC’s, to connect and build Deutsche Bank’s brand as a fertile ground for innovative technology,” Pearson explains.
The tech is out there
“The aim,” says Pearson, “is to discover innovative technology in the local eco-system and assess what value it may bring to the firm. We would then develop that technology in order to directly inject into Deutsche Bank, whether it be through tools, process or people.”
Pearson, who co-founded the first joint Deutsche Bank-HCL innovation lab in 2012, says the labs have also been set up to ensure Deutsche Bank’s pioneering intrapreneurs can engage with early to mid-stage companies, where innovative technology is currently under development and needs to be nurtured. “We get in early and make decisions on mentoring, or help pivot the technology, while preparing our business for potential disruption. This ensures that they have the relevant foresight to feed into their business strategy,” he explains.
The labs work on a simple blueprint, with three main streams of innovation. “The first element is demand-led innovation,” Pearson explains. “The second is supply-led innovation; and the third is thematic innovation. They all support our main goal in terms of technology transfer into the firm: finding new technology and bringing it into Deutsche Bank.”
Demand-led innovation principally involves a team of people within each of the labs who engage directly with the business and the IT organisation to identify challenges that the current business and IT teams cannot solve. “That’s not because they’re incapable of solving them; it might be that it isn’t in their current book of work, or within their current remit, or they have budgetary constraints,” says Pearson.
“We bring these challenges into the lab, and work with the business and IT teams to search for potential solutions,” Pearson continues. “The lab team can also define the overall client value chain, focusing on client needs and their desired experience. This can highlight additional challenges and opportunities for improved client experience. Once we have clarified the challenges, they are prioritised through divisional innovation advisory forums.”
Supply-led innovation is largely fostered through existing links with partners, clients, suppliers and the rest. Keeping an open mind and monitoring what partners are doing can play an important role in feeding the labs’ need for new ideas.
Discovering emerging tech
The third, and perhaps most intriguing strand of the Deutsche Bank labs’ work, focuses on thematic innovation. “This is where we investigate and experiment with emergent themes like machine learning, API economy, cyber security, cloud technology and distributed ledger technology,” says Pearson.
“We work within those themes to firstly educate the business, ensuring everybody understands the value and the disruption that could occur from the realisation of this technology; and then we work up business cases for proof-of-concepts.”
That will allow the innovation teams to demonstrate the value of new technology to both the business and clients, “with a view that technology is continually iterated into a banking product, or with us proving/disproving that the technology has validity. If proven, the technology is prepared for adoption and subsequent implementation.”
Given the pace and variety of new ideas and processes that are currently emerging in Fintech, what does Pearson think success will look like?
“We are creating and evolving new business models and new products that drive significant, tangible returns in both cost savings and incremental revenue,” he says. “Our focus is on growing as thought leaders within the firm, driving emerging technology, and contributing to the broader discussion across the business.”
Ultimately, Pearson and the other Deutsche Bank lab teams are motivated by a desire to have an impact on the perception of technology in banking, so that those within the business look at digital projects differently.
“That means breaking down silos, increasing transparency and collaboration – not just across desks or teams, but also across divisions,” Pearson concludes.
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