EXCLUSIVE: ‘Striking a balance’ – Dennis de Weerdt and Kerstin Montiegel, Deutsche Bank; Carole Elias, ProgressSoft in ‘The Paytech Magazine’

Legacy relationships and innovative technology, infrastructure and front-end services, uni-and multi-banking… incumbent institutions must weigh up all these and more, as Dennis de Weerdt and Kerstin Montiegel from Deutsche Bank discuss with ProgressSoft’s Carole Elias

For decades, incumbent banks have provided a regulated, safe environment for a business to operate in. And, as the complexity and geographic reach of a business increased, it often resulted in the corporate treasury managing not just a single but several banking relationships.

Each aware that there was more than one partner in this marriage, institutions hunkered down on getting ever closer and more dependable. But, while critically important, that steadfastness will not, in itself, be enough in future, according to Dennis de Weerdt, Deutsche Bank’.s global of client service, implementations and client connectivity products. In his view, institutions like his own must offer clients value-added digital services (with real-time as standard) that are multi-bank by design.

That doesn’t just help solve a headache for the client, but, particularly in the area of payment fraud, it is also very much in the interest of the financial institution offering the technology. In March this year, Deutsche Bank entered a strategic partnership with Treasury Intelligence Solutions (TIS) to develop and distribute multi-bank services for corporate treasury and finance. Their first focus is on providing an innovative payment fraud prevention plug-in, using TIS’ Cloud platform and leveraging the bank’s long-established expertise in keeping client money safe.

With payment fraud becoming a major issue for CFOs and finance departments, the software service will extend beyond the payment data of individual customers to mutualise the knowledge of all corporates using the service, while the shared data remains anonymised. The regtech solution will help improve the detection of potential fraud, before the payment instruction even leaves a client’s system – thereby ticking de Weerdt’s two essential requirements for corporate banking solutions of the future: that they add value to the client’s business by embracing the idea of multiple, concurrent banking partnerships.

“Multi-bank solutions are the key things that corporates are looking for,” he explains, adding that it doesn’t mean CFOs value the personal relationship they have with any one bank less. “They would still like
to have core advisory and value-add conversations on a person-by-person basis. That’s something that will continue to exist, in my view,” says de Weerdt.

It’s one of the many ‘balancing acts’ that banks must perform, he adds – in this case between providing best-in-class digital as well as personal relationships, because these institutions are still seen as ‘a trustworthy environment for safe conversation, safe instruction, and where payments are executed in a safe way’.

“We are turning the corner in achieving that balance with the right multi-bank solutions, working with partners to make it happen,” says de Weerdt. “It’s in that mix that the future of client differentiation and client satisfaction will exist.”

Crucial to achieving that is what he describes as a ‘multi-purpose middle layer’ where normal electronic banking channels, sit comfortably next to two-way API integrations with third party providers, and direct connections between the bank and a client’s enterprise resource planning (ERP) and treasury management systems (TMS).

“You can see that the middle layer is where the real difficulty sits, on the one hand, but also the opportunity if you handle it really well,” says de Weerdt. “Banks should focus on going beyond traditional banking services,” agrees Carole Elias, business development and strategy officer at payment solutions provider ProgressSoft. It has just launched a digital banking platform over which banks can offer both corporate and retail clients the ability to manage a range of treasury and payment functions, wherever their accounts reside. “Because the more banks are in touch with their customers, the more likely they are able to retain those customers or attract new ones,” Elias explains.

She urges banks to be ‘very meticulous and careful, and focus on the flexibility and resilience of the infrastructure they choose – by utilising smart, modular solutions, built on microservices architecture, for example, for the middleware’.

“These are the engines connecting the front-end channels of the banks with the bank end, and you need to be able to upgrade them to ensure that whatever will be needed in the future can be seamlessly and easily implemented.”

Kerstin Montiegel is head of digital client access channels at Deutsche Bank, and says that when it comes to payments, just looking at the number of touchpoints clients have with banks, means it’s critically important that they get this part of the relationship right.

“Client access channels are really the most tangible, day-to-day insight for us into what they need – our cash portal alone transacts €600billion of transactions every month. And what we see is that clients really want us to strike the balance between the old and the new. Clients want business continuity with a connectivity backup solution – which has obviously been very important during the pandemic. They want us to continue to ensure that they can handle large volumes, that we are there 24/7, and that we can help them also in the conversion services. When it comes to the new, they really want easy ways to access and consume our products – at any time and anywhere.”

One such tool to help them do that is digital signatures, which Deutsche Bank originally introduced in 2018 to make it easier for corporate clients to do business with the bank by eliminating a lot of the time and complexity involved in document and contract signing, especially in areas where the bank did not have a physical presence. Having piloted the service in the Benelux region, digital signatures using DocuSign technology were extended to countries across much of Europe, the US and Asia Pacific where Unilever began using the solution for its global cash management activities with the bank. Daimler soon followed. Deutsche Bank has since said it’s keen to extend electronic signing in other areas of its corporate clients’ businesses.

“Our aim is to help clients on their own digitisation journey, when it comes to driving their own efficiencies, reducing their manual work, improving integration with banks,” says Montiegel.

When it comes to payments, though, she believes that innovation is best achieved at a network level.

“Banks already co-operate over payments, just look at SWIFT,” says Montiegel. “With more standardisation and more joint innovation, payment processes will be driven very efficiently – which has benefit for the client because when banks co create, they can spend the money they’ve saved on other new solutions.”

Elias suggests that while, on the face of it, digital challengers are better equipped to respond to client needs, with the right technology choices incumbents are in an even stronger place.

“From our perspective, neobanks benefit from the digital framework that they have built to cater for these new market needs,” she says. “Traditional banks would require transformational efforts to be able to achieve the same, but solutions such as ProgressSoft’s Payments Hub exist that are able to achieve it with a seamless shift to legacy systems and minimal disruption to their existing infrastructure.”

In fact, being the white beards of banking when it comes to regulatory experience – dealing with clearings at a local level in particular – means challengers, even if they have the tech, increasingly defer to them for advice, says de Weerdt.

“Often they seek our cooperation. Five years ago, we would maybe have seen that as a threat, but those partnerships are growing. That’s also why I believe multi-bank solutions, the front end and the infrastructure, and the regulatory and security components, all need to go hand in hand. It comes back to that balancing act.”

This article was published in The Paytech Magazine, Page 40-41