Deutsche Bank will launch three innovation labs this year, partnering with big development firms to speed up the creation of financial technology for its own uses and will spend up to 1 billion euros (£730 million) on digital development in the next five years, a Reuters report said on Tuesday.
Germany’s largest lender, which is overhauling its own infrastructure, said it would work with three technology partners for the labs, including Microsoft in Berlin, HCL in London and IBM in Silicon Valley.
The announcement confirms speculations which said Deutsche Bank was preparing to launch the labs by year-end to address rapidly changing needs of the banking sector and its clients.
"These labs will act as a bridge between start-ups and different parts of the bank, enabling it to apply innovative technology to enhance service to clients and internal processes," said Henry Ritchotte, Chief Operating Officer and Chief Digital Officer at the bank in a statement.
The news first broke out back in November 2014, when it was said that the goal is to send bankers from across all business units to these labs to gain insight in how to enhance clients’ experience or internal processes.
The move underscores the massive changes lenders face in the wake of mobile banking applications and the rise of independent platforms that threaten to grab market share from traditional financial institutions.
It seems as the likes of Apple Pay and PayPal have finally forced banks to react.
These firms threaten to curb profit at banks’ transaction banking operations. Banks on average earn 0.3 per cent or 0.4 per cent on transactions made with credit or debit cards.