Deutsche Bank: If we don’t work with digital currency companies, we may disappear completely

The number of banks exploring blockchain technology and seeking to issue their own versions of digital currencies is growing by leaps and bounds, and it’s no surprise that Deutsche Bank is also exploring its own blockchain technology.

In a recent statement, the bank said: “ Banks must work with fintech and digital currency companies or risk disappearing altogether .”

While Deutsche Bank is one of 42 member banks in R3CEV, a blockchain consortium that is developing blockchain technology protocols for the banking industry, it has been quietly running its own blockchain experiments.

Recently, Bank of America, JPMorgan Chase, UBS and the Bank of England have stated that their respective banks are looking for suitable blockchain technology for their own use.

But unlike Bank of Tokyo-Mitsubishi, Citigroup and Bank of New York Mellon, Deutsche Bank is not seeking to develop its own digital currency. The bank believes that customers are seeking more digitalization and convenience, but not necessarily a new currency.

In a forthcoming white paper called FinTech 2.0, Deutsche Bank is signaling to investors and clients that it is looking to partner with new fintech startups to accelerate its shift to digital banking, which also includes blockchain technology.

For the banking industry, the Deutsche Bank report is a wake-up call, warning that unless banks learn to work with fintech companies and "digital disruptors", they could disappear from the financial services landscape altogether.

The report, which is due to be published, documents Deutsche Bank's losses and share price fall in 2015, and says it is time for banks to adopt a new business model and recognise the importance of digital disruptors in financial services.

In an interview with Bitcoin Magazine, Deutsche Bank Managing Director Rhomaios Ram said that the bank is not only ready to adopt new payment innovations, but also considers the adoption of blockchain technology to be inevitable.

“As pointed out in the white paper, the biggest barrier to adopting new technologies and partners is the different regulatory and legal requirements around the world,” Ram said.

“Fintech companies, especially the large digital ecosystem, have entered this market and have made a huge impact,” he said.

The white paper also calls on the banking industry to “modernize the entire financial system infrastructure” and cooperate with new digital market forces, including cryptocurrency startups. The report said:

"Banks have to change their attitude towards fintech companies if they want to survive."

Fintech startups happy to work with Deutsche Bank

Ram told Bitcoin Magazine:

“I’ve talked to dozens of different fintech startups about the possibility of working with us, and they’ve all been very happy to work with us,” Ram said. “They’ve been able to see the benefits of working with us, and we can bring them some potential partnerships, customer base, and regulatory certainty, which is great.”

In addition, the report also lists a list of "payment innovation" projects: including PayPal, M-Pesa, Bitcoin, Alipay, Stripe, Payoneer, Samsung Pay, Apple Pay, Square and Google Wallet.

Speaking of collaborative spirit, JPMorgan has teamed up with Digital Asset Holdings (DAH) to create a blockchain pilot project that aims to make the trading process more efficient and cost-effective.

So what does this mean for new fintech companies? The white paper states:

“To maintain their position, they must find a way to meet regulatory, investment and risk requirements to focus on their core competencies. They may partner with a global banking provider, which is the most strategic approach, and in the next few years, many of these developments will evolve into alliances. Several leaders in the market have realized that banking alliances are the way forward.”

Deutsche Bank’s three blockchain labs

According to Ram, Deutsche Bank currently runs three innovation labs, including one in Berlin, one in London and another coming soon in Silicon Valley.

Ram calls blockchain technology “genius,” but the bank has yet to adopt a specific blockchain technology.

“We are blockchain agnostic and we are interested in all the different blockchain technologies, including Bitcoin, Ethereum, Stellar, etc., to make sure we can adopt the best version,” he said.

In early December 2015, Deutsche Bank announced that it had successfully tested a corporate bond platform based on blockchain technology.

On the question of Bitcoin as a currency, Ram does not know what the future of this digital currency will be, saying:

“While many people are saying that Bitcoin will be a future currency, I am not sure that its widespread ownership is a sure thing. The public seems to be most interested in digitalization and the convenience brought by new payment methods, rather than changing the currency itself.”

Original article: https://bitcoinmagazine.com/articles/deutsche-bank-banks-must-partner-with-fintech-and-digital-currency-businesses-or-risk-disappearing-altogether-1454613938
By Jessie Willms
Translator: Satuoxi
Source (translation): Babbitt Information (http://www.8btc.com/deutsche-bank-banks)