Deutsche Bank’s strategy for collaborating with fintechs

Matthaeus Sielecki, Head of Working Capital Advisory in the financial technology department at Deutsche Bank, tells us what he believes is the most effective strategy for working with fintech companies and outlines his thoughts for the future of the financial services industry

Lindsay James
Lindsay James
By Lindsay James on 29 September 2016
Deutsche Bank’s strategy for collaborating with fintechs

This article first appeared in the Autumn 2016 issue of The Record.

At a time of huge digital transformation, traditional retail banks are faced with a number of significant challenges which are inhibiting their success. That’s according to Matthaeus Sielecki, head of working capital advisory in the financial technology department at Deutsche Bank, who says that restrictions presented by the new regulatory environment, not-unrelated budget constrictions and banks’ internal cultures are holding them back. “While the heightened regulatory burden has been much discussed – with compliance-related projects claiming a significant amount of bank resources and attention – banks also need to overcome their traditionally-siloed infrastructure, to become nimbler and more flexible in their approach to innovation and solution development,” he says.

This is all the more important when fast-paced adaptability is the hallmark of a host of new market entrants – the fintechs that are revolutionising the payments market by altering mindsets and expectations around the speed, method and convenience of transactions. “While banks must access this adaptability, they must conversely continue to be conservative in their approach and protect their digital foundations as well as client data and privacy,” Sielecki says. “Technological innovation will solve many problems and facilitate trade – but it also continues to necessitate debate around regulation, standardisation and risk-management.  In such a rapidly evolving technology environment, it is difficult to pinpoint which technology standards will gain traction, and this will continue to be in flux, impacted by both regulatory requirements and client demand. While standards remain ambiguous, integration continues to be a hurdle to technology also as a multitude of banking clients are operating under dozens or hundreds of different standards or solutions.

There is no doubt that banks realise faster innovation is critical if they are to retain their ­market-leading position. Indeed, the earlier banks enter the new highly-digital realm of services, the greater their opportunity to influence market developments and set industry standards. But this is easier said than done. “In order to create the best environment to nurture and bring to market new technological offerings, many players are now considering collaboration (rather than competition) with new market entrants,” Sielecki explains. “Indeed, the fintech culture and role as disruptor can be used as an advantage, with fintechs’ position outside of bank walls providing the necessary gateway to innovation, if the two parties learn to work together.”

Sielecki believes that fintech innovation will continue to shape customer expectations, and the way the financial services industry interacts and conducts business. “As such, banks who wish to safeguard their market share must develop a strategic plan for remaining competitive, while complying with a changing and increasingly complex regulatory environment and managing market risk,” he says.

 


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