In the aftermath of the financial crisis, digitization presents unique opportunities—and challenges—for the banking industry. So says Marcus Pertlwieser, COO of Deutsche Bank’s private- and commercial-client business in Germany. In this interview with McKinsey Digital’s Barr Seitz, he discusses how Deutsche Bank is changing corporate culture, from the C-suite to the branches, to adapt to unique customer needs. Below is an edited transcript of their conversation.
The promise and challenge of digital
I think digital is truly a lucky chance for us to refocus on the market, on the customer, in order to find a new way to grow. The main point of digitization isn’t the technology; the technology is only the enabler. The main point is the need to understand the change in customer behavior. From my perspective, this is the biggest challenge for us, because there’s a phenomenon in terms of how banking customers shop that’s called ROPO—Research Online, Purchase Offline. It's therefore tough for banks to be relevant on the first online steps of the customer’s journey, because our strengths are the branches and advisors.
The other challenge is that customers don’t typically think about their bank every day, the way they think about Amazon or iTunes. We’re looking for ways to become relevant, as a bank, on a daily basis.
The new concept of failing fast
What’s really different in the digital world, in my view, is that it's not the classical approach, where you think through the concept, then do the execution, and then, after three years, take a look at the KPIs and say, “This was a great project.” No, it's day by day—and especially, it's trial and error.
There's a new concept of failure: fail fast. This is also not in the DNA of a bigger bank. I think it’s a great challenge for our leaders to be a role model, to say, “Okay, just try it out. If it's great, go for it. If it's not great, no problem. Skip it and do the next thing.”
We had a discussion on whether or not we should build an app for the Apple watch. Two or three years ago, we would have decided, “Let’s wait till the Apple watch is in the market and see if people like the Apple watch or not.” But we decided we wanted to be first, not “a fast follower.” So we built an app for the watch. And our app was on the first newspaper listings of the top must-have apps for the must-have watch on the market. So I think the first signals are good.
Now we’ll see whether our customers like the watch app. If they don't, we’ll skip it. If they do, we’ll push. This is an example of how Deutsche Bank’s mind-set has changed over the past months and years: It’s not enough to just aspire to be number one in digital banking in Germany and Europe; to actually be number one, you have to take some risks.
Listening to the customer
One thing that may be surprising is that we require all our employees to be digital customers of the bank, because you can only explain the products to your customer if you know them yourself. In many, many branches, we found that the employees weren’t using the bank’s internal systems to do their own banking. They weren’t even familiar with all the offerings we have. So to address this, we require employees to use the same online mobile banking offering that our customers use. Many of them are often surprised to learn what Deutsche Bank already has.
In the digital world, you'll receive much more feedback from a customer than you did before. And whether you like it or not, it's transparent to everybody. Every week, or even twice a week, I read through all the comments our customers are giving us on our applications. For example, we have launched a personal-finance management tool where you can see all your expenses, your income, what your balance sheet is at the end of each week, at the end of each month, to make it easier to evaluate what kinds of investment you can or can’t afford.
We launched it with no marketing at the beginning, just to see if it works properly. After eight weeks, we have more than 300,000 customers who have activated the service. We’ve received more than 6,000 comments, 5,800 of them truly positive. The next launch will incorporate lots of the feedback we’ve received.
Responding to the customer
At Deutsche Bank we’re extremely proud of our capital-market research. I think Deutsche Bank has some of the best research in the world. But our customers said, "Market research is great but I’d also like to know what other customers do with Deutsche Bank."
So we launched a service where you can see, once a week, which were the five highest-rated stocks, the five highest-rated ETFs, from other customers. People really like it; you see that in the way trading volumes go up the day after it’s been posted. So now we put it into the hub of our investment-advisor business. We are more about providing our customers with responsible access to a variety of information.