Case Summary

The case depicts German Multinational investment bank Deutsche Bank and its struggles in information
systems. Headed at Frankfurt in Germany, this bank is one of the oldest (established in 1870) and
renowned banks not only in Europe also worldwide. It has its boots in 58 countries with a large presence
in Europe, the Americas, and Asia. It has the world’s largest portfolio of derivatives (valued at about $46
trillion) and also as of 2017–2018, Deutsche Bank was the 21st largest bank in the world by total assets
according to World Bank. Our case gives us a visual representation of how big corporate banks or financial
institutions’ inefficiency in the IT sector dragging them to consecutive loss of millions. After the banking
crisis of 2008, Deutsche Bank was forced to pay $7.2 billion because of its flawed derivatives, toxic
mortgage securities, and also it had to undergo much trouble from the Commodity Futures Trading
Commission (CFTC) for its subsequent credit swap data. Back in July 2015, Company’s new CEO John Cryan
tried to ensure standardize the bank’s systems and procedures, improve efficiency, and laying off
thousands of employees. Regardless of Cryan’s efforts, Company had to face a third consecutive loss and
ending up with his termination as CEO. In the global banking sector, Deutsche Bank wasn’t the only one
to face this kind of system problems. Lack of technological expertise in information systems is one of the
core problems for Banks like Deutsche Bank.

Question-Answer
Identify the problem described in this case study. What management, organization, and
technology factors contributed to this problem?

 Management Factor: Aftermath of the 2008 financial crisis, Deutsche Bank was fined to pay $7.2
billion to the US regulatory authority. This could happen because of its regulator complaints, toxic
mortgage securities. Management was making bad decisions in response to regulatory change in
their industry, for which the bank partly still struggles.

 Organization Factor: As one of the corporate Banking giants, Deutsche Bank had to go through
a lot of mergers and acquisitions. But the organization always neglected to adopt an appropriate
supervising system for their employees and also their lack of adequate disaster recovery plan and
business continuity plan contributed much to their organizational inefficiency.
 Technology Factor: This factor was the leading crux of Deutsche Bank that it always ignored and
neglected to enhance its information systems which eventually provoked the bank to not run
systematically. It might haven't happened if they were after up-to-date technology. Although,
within the technological context, it's not actually an individual solely responsible for this issue,
after a short time with the CEOs and other board of directors putting their old technology on the
side because it had been not a serious concern for them at the time. Their technology was so old
it caused many things to truly be done manually. CFTC (Commodity Futures Trading Commission)
had always complained about the bank’s untimely credit default swap data. Bank had put to
successive efforts to alleviate the matter of credit swap data repeatedly which ultimately
amplified remaining reporting problems and also conducted to the creation of fresh reporting
 problems. The next effort also didn’t help as there was an integrity issue with few data fields (e.g.
invalid legal entity identifiers). Outdated technology employed by the bank (identified by U.S
regulators), poor data system, trouble in handling complex financial products, etc. caused the
bank lot of criticism.

What was the role of information technology at Deutsche Bank? How was IT related to
the bank’s operational efficiency, decision-making capability, and business strategy?

 In any banking institution, Information Technology enables sophisticated development, better

market infrastructure, implementation of feasible techniques for control of risks, and helps the
financial intermediaries to succeed in geographically distant and diversified markets. Deutsche
Bank wasn’t so different from others and IT played there a pivotal role. The role of IT at Deutsche
Bank was to manage- financial derivatives, default credit swap data reporting, and storing legal
entity identities, etc.

 Since the inception of Deutsche bank has undergone a lot of mergers and expansions throughout
the years, and but it didn’t perform necessary changes while integrating the information system
from newly acquired companies. Hence proved, IT management is a mandatory thing for
operational efficiency in Deutsche Bank. As the Bank was facing a severe financial crisis and back
to back loss in revenue, it led them to use older Information systems to save cost and extra
expertise efforts. Unfortunately, this ends up having more sophisticated problems. Lack of Proper
knowledge of IT could be a major reason for this kind of decision-making from the management.
There were inconsistent platforms, so the strategy of pitting teams didn’t help as data sharing
was avoided. Having adequate expertise in IT could have prevented this kind of mismanagement
and helped in forming the correct business strategy to sort out these problems.
Was Deutsche Bank using technology effectively to pursue its business strategy? Explain
your answer.
 From the case, it was absolutely clear that Deutsche Bank wasn’t using information systems
effectively to pursue its business strategy. As there was a lot of scope for improvement in terms
of operation, information system, and decision-making process. It was repeatedly stated that the
technology was inadequate, antique, also as fragmented. Lack of proper up-to-date IT facilities
proved to be very costly to the bank. Such as- in 2008, they received a penalty of $7.2 billion to
settle U.S. regulator complaints, and also in 2016, the bank got a complaint from CFTC for giving
a late submission of swap data. Their old IT systems justified why they were not to be able to give
the right information in order to run its business properly and respond to other regulators. The
bank also had trouble with managing the underlying value of the traded financial products they
had which also cause not efficient operations because of non-compatible platforms. This clearly
indicates how Deutsche Bank was incapable of properly using IT systems to conduct its banking
activities.
What solution for Deutsche Bank was proposed? How effective do you think it will be?
Explain your answer.

 After being CEO in July 2015, John Cryan identified the core problems that were lagging
them behind. Such as- inadequate and backdated information technology, inefficient
business process, and manual handling of tasks instead of automation, etc. Cryan
appointed Kim Hammonds as Chief operating officer to deal with the problem of
information systems and operations. Kim quickly identified the information system at the
bank was operated by trial and error, and proposed the automation of manual tasks,
replaced outdated computers and adapted new applications, and abandoned outdated
applications. He didn’t stop there and made a 10-year deal with HP to simplify IT
infrastructure, reduce costs, and create a more agile technology platform to launch new
products and services. Deutsche Bank also decided to withdraw from high-risk client
relationships, improve its control framework, and also it’s automating manual
reconciliations. One of the major steps Km had taken was migrating to cloud computing
infrastructure where the bank’s information system runs on HP’s remote computer
centers. Bank handled application development and information security and delegated
tasks like storage, hosting, and computing services to HP. As a result, thousands of Bank’s
software applications will be shifted from mainframe to HP cloud computing services. This
kind of automation process and system upgrading operations like above are expected to
save by 800 million euros and from an operations perspective, eliminating 6,000
contractors will create savings of 1 billion euros for the bank.

 With the above-proposed solution by Kim, Deutsche Bank can definitely improve their
business a lot. In my opinion, I believe the solution of Kim will be very effective if it is
implemented properly. Due to its cost-saving approach, this solution helps the company
to save a lot of money in the long term as well as making the bank progress to a more
secure and efficient system of banking.