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Jackson Mueller
Associate Director, Center for Financial Markets
Jackson Mueller is an associate director at the Milken Institute's Center for Financial Markets. He focuses on fintech, capital formation policy and financial markets education initiatives. Prior to joining the Institute, Mueller was an assistant vice president at the Securities Industry and Financial Markets Association (SIFMA), where he focused on...
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With Foray Into FinTech, Deutsche Bank Joins Global Trend

By: Jackson Mueller
June 11, 2015
   
   

Last week, Deutsche Bank announced that the global financial services firm would launch financial technology innovation labs in Berlin, London, and Silicon Valley by the end of this year. It was reported in 2014 that the German bank would partner with IBM and Microsoft to develop three innovation hubs in FinTech hotspots. This initiative is part of Deutsche Bank’s Strategy 2020, which includes investing more than $1 billion in digital capabilities to become a “leading digitally-enabled advisory bank for private and commercial clients.” Recently, though, the strategy has come under fire from investors, and it remains to be seen how far CEO John Cryan, who was involved in drafting the program, will go toward implementing it.

Deutsche Bank isn’t the only financial firm looking to venture into FinTech to update its legacy systems to meet the digital demands of the 21st century. Banks of all shapes, sizes, and locations are undergoing a digital shift for reasons that include changing demographics, heightened regulation, efficiency, security, managing Big Data, and reducing costs.

Recognizing FinTech’s potential, financial incumbents are increasingly creating their own innovation hubs or supporting the accelerators and innovation hubs already in operation (for example, Accenture’s FinTech Innovation Labs). Below, we profile a few of the firms that are hitting the Refresh button.


“The financial services industry is moving towards a more digital communication and digital engagement with their clients. This is something that Citi, or any other bank, cannot do on their own. The evolution of this industry is such that FinTech, financial technology, is happening all over the world and we need to recognize that.”

Jorge Ruiz, Managing Director, Digital Acceleration Program Head, Citi.


Barclays. In late 2013, the Britain-based bank announced a partnership with TechStars London to run a startup accelerator, which selected its first crop of companies in June 2014. The partnership has been such a success that a second accelerator will be launched in New York next month.

BBVA. Over the past few years, the Spanish-headquartered bank has taken steps to implement digital solutions to update its systems and processes. In 2013, the bank established a $100-million venture arm to invest in technology-driven start-ups focused on digital payments, e-commerce, and data analytics. The venture operation has backed at least 10 start-ups and plans to expand into Europe. BBVA has also set up a digital banking unit to transform itself into a technology company and founded BBVA Data & Analytics in an effort to master that field.

Capital One. As Capital One CEO Richard Fairbank said in a 2014 quarterly earnings report, the bank continues to make significant investments in digital banking, including the expansion of Capital One 360, the bank’s national digital platform. Late last year, the bank also announced the creation of its own innovation center in San Francisco, with a focus on mobile applications and data analysis. It plans to hire upward of 150 people to fill the center by the end of 2015.

Citi. The Silicon Valley-based venture arm of the banking giant, Citi Ventures, recently teamed up with Plug and Play to launch a global FinTech accelerator program with offices in the U.S., Germany, Singapore, Brazil, and Spain. Separate from its venture team, Citi is involved in digital payments through its Citi Mobile Challenge initiative, a collaboration with IBM. In February, the initiative expanded to Jerusalem, London, Nairobi, and Warsaw.

Santander. The financial services provider launched its venture arm in July 2014 in London. The $100-million InnoVentures Fund focuses on digital delivery, e-commerce and payments, online lending, e-financial investments, and big data analytics. Last December, the fund hired Mariano Belinky as managing director and has since invested in several companies.

UBS. In April, the world’s largest wealth manager opened a technology lab in London to explore the potential of “blockchain” technology—a distributed digital ledger system containing all transaction records. The firm also opened innovation labs in Zurich and Singapore within the last year to develop user-friendly, digitally focused products.

Wells Fargo. Based in San Francisco, which topped the Milken Institute’s Best Performing Cities 2014, the bank launched its start-up accelerator in August. Also in 2014, the bank announced that Charles Thomas would become its first chief data officer. Thomas oversees Wells’ data strategy with a $100-million budget and a team of 600 people


Comments

  • The graveyard of failed Corporate incubators/accelerators in Silicon Valley is running out of room! Every time technology scares a big industry like this, the industry scrambles and often consider incubators their best solution to address innovation. Financial Services should look for help from the many other industries that have been through this phase...their incubators lie in that graveyard. Experience from industries outside of fin srvcs is invaluable at this point in the fintech cycle. Incubators or Corp Venture Cap $$ are likely not the solutions for incumbents. Firms like www.brandgarage.com can help fin services corporates address THEIR PROBLEMS, then plan for an innovation solution/program.

    Posted by Sanford Ewing, 06/15/2015 (3 years ago)


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