Deutsche Bank reduces branch network in Germany
Deutsche Bank is cutting its retail outlets in Germany from 700 to 500 as it looks to lower costs and adapt to digital banking.
Christian Sewing, head of private, wealth and commercial clients and member of management board, Deutsche Bank, says the cuts are “necessary as the retail bank’s profitability has decreased over the last five years”.
He says the bank presently spends €0.80 for each euro in revenue it generates, €0.10 more than it was spending in 2011 and short of its 2018 target of €0.65.
At the same time, investment is necessary to help the retail bank cope with fintechs, regulation and low interest rates, he says.
“It is easy to just rant about interest rates. We cannot always use that as an excuse, but have to think how to react to that,” Sewing says.
Deutsche Bank says it is investing in sales staff and investing €1 billion ($1.13 billion) in digitalisation, of which 750 million will go to the retail bank, Sewing says, adding that the lender plans to roll out 72 new digital products this year.
No Crayn, no gain
This latest development follows on from last year when it announced it was to shed 9,000 full-time staff and 6,000 external contractor jobs.
The jobs will go in its global technology and operations infrastructure as it sets out to “modernise its outdated and fragmented IT architecture” and improve control systems.
Last year, John Crayn, who became co-chief executive of Deutsche Bank in July 2015, said there would also be an overhaul of the IT and internal processes to increase efficiency
“About 80% of our 7,000 applications were outsourced to a multitude of vendors, design was basically done in silos and joint standards either hardly used or not used at all. The result is that our systems do not work together, they are cumbersome and often incompatible,” he said.
“A figure that particularly worries me is that 35% of the hardware in our data centres is close to or beyond the end of its life-cycle. We have identified these challenges and will tackle them by making additional investments in data centres, which means, among other things that data centres will be consolidated, but by 2020 they will be state-of-the-art.”