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Deutsche Bank Meets Startups

The Frankfurt-based financial institution is now also increasingly banking on collaboration with young companies. In recent years, Deutsche Bank has not only brought three Innovation Labs into being, but has also supported young founders in dealing with financing issues and established contact with investors. With the communication portal ‘Pitch Portal’ and the support project ‘Made for Good,’ the company also has further interesting projects for startups up their sleeve. We spoke with Sabine Schmitt and Dieter Hierner, who head Startups@Germany – Bavaria, about Deutsche Bank’s offers for startups.

How exactly does Deutsche Bank work with startups, and what support do you offer young founders?

Deutsche Bank offers startups support from the very beginning and in all stages of development. In the beginning, the main focus is on consultation and initial payment products, such as accounts and cards. We firmly believe that young companies should organize their finances as early on as possible so they can grow quickly without being overwhelmed by that growth. That applies even more so when they operate across borders and receive assistance from Deutsche Bank. Questions come up early on that we can help founders with, for example about international payments, covering supplier risk, international expansion or professional development of financial functions.

Support with scaling

In the digital economy, scaling is a major topic. We can assist with scaling because we’re familiar with the pitfalls and tricky aspects of transitioning from being a startup to an SME and from an SME to a corporation. When these transitions work, companies can achieve their full potential for success.

Is Deutsche Bank also a direct shareholder in startups? If yes, does Deutsche Bank own any shares of Munich companies?

Fintech and insurtech companies are an important component of our innovation strategy as cooperative partners. That means in any cooperation, we also consider a strategic investment in our partners. We’re already cooperating with a double-digit number of tech partners. Together, we’ve brought many products to market maturity for our customers. We want to be the first point of contact for B2B cooperation among leading fintech and insurtech companies. If fintechs or insurtechs want direct access to end customers, however, then we view those companies as competition and act accordingly. For example, one of our first cooperative partners (without shares) was Gini from Munich. They make photo transfers with a smartphone possible.

Deutsche Bank as the link between the old and new economy

What else does Deutsche Bank have to offer startups?

We offer startups our network for potential cooperation – we can be the link between the old and new economy. We have a good overview of business models and technologies in both worlds. That can be used to generate hypotheses about which partners could work together well. Above all else, it’s about creating a secure environment where both parties can exchange ideas. We try to provide such an environment in the form of workshops and conferences. We create that environment, but don’t claim as a bank to find the perfect matches. It’s also important as a bank to be close to the networks of the companies and startups on a local level. And we also need to have a sound understanding of what it’s all about, which is why we have our own technology and industry experts on board.

Does cooperation with startups concentrate only on fintech or does Deutsche Bank also work with young companies across industries?

We have different ways of cooperating with startups. First and foremost, we don’t only focus on fintechs. We also work with young companies whose offer goes beyond banking. These value-added services are something we also want to offer our customers. A cooperation can take on various forms: That allows us to utilize technologies, approaches and value chains and make them available to our customers through our platform. In this case, we establish cooperation with the providers regarding the use of their technologies and expertise. What can be called “forwarding business” is also an option. That means we forward customers to startups or fintechs so they can offer their services to them. We also have the option of putting startups on our own platform. We do so by connecting their products to our “bank world” with API interfaces, which makes it easy for our customers to use their services. In select cases, we are also shareholders of the companies.

Deutsche Bank: Existing cooperation with Munich startups

Some shareholdings already exist. That allows us to participate in a potential increase in value generated by additional business from our cooperation. We’re currently cooperating with roughly twenty startups – but we’re not financially involved in all of the companies.

What success stories have emerged from cooperation with Munich startups?

In Bavaria and in Munich specifically, large numbers of new startups are founded. Two successful examples are Supernutural and Holodeck VR. Supernutural manufactures sustainable, indestructible nut grinders. They can be found not only in organic supermarkets and packaging-free grocery stores, but now also in hotels and companies like FC Bayern Munich. They focus on nutrition and like to offer their employees and guests a holistic concept.

The technology from Holodeck VR offers groups with up to twenty people – equipped with the right headsets – exciting virtual reality adventures. That allows amusement parks, festivals or other public places such as shopping malls or hotels to offer their clientele unique experiences. The origins of the globally patented technology can be traced back to the Fraunhofer Institute for Integrated Circuits IIS, which is where the founders developed the idea and fundamentals of the product.

Our specialists advise these startups on bank services and solutions for every stage of development of their company while also providing access to the bank’s entire network. We also appear at events together and bring startups together with successful entrepreneurs and sparring partners. One example is the “Münchner Unternehmersalon.”

How you can apply for a cooperation

How can startups apply to cooperate with Deutsche Bank?

We focus on platform economy. That means we want offer our customers the broadest possible access to excellent products through our platform. They don’t necessarily need to be from Deutsche Bank. The concept of “open banking” plays a central role in a platform economy. That means opening our interfaces so third-party providers are able to use our customer data for external applications, much like an app store. With the “Payment Services Directive II” (PSD II), lawmakers even require banks to do so. But we even go a step further.

On the developer portal of Deutsche Bank (https://developer.db.com/), comprehensive information can be found about PSD2 and our API offer, which is already available now to third-party providers irrespective of PSD2. All data requests about account information, as required by PSD2, can also be carried out with what we call our premium APIs. We also offer APIs with a scope of service that goes beyond PSD2 – most notably customer information as well as information about credit cards and investment portfolios in addition to custom-tailored data requests, such as proof of age or income.

Our API program goes far above and beyond the requirements of and compliance with PSD2. That’s why we opened up to working with third parties much earlier and more comprehensively – as the first major German bank back in 2017. Our API program is the technical foundation for our platform business. It is first and foremost about winning over new partners. But we also believe it holds major potential, particularly in online shopping and the B2B realm.

We are also developing our premium APIs in close cooperation with current and potential new partners. In that respect, we invite interested companies to contact us and share their needs and ideas with us. We would like to offer the opportunity to become part of our API Partner Network. We founded it to come together and evaluate the potential bank data holds for each individual case and to test pilot projects. By doing so, we’re making sure our premium APIs not only deliver data, but also solve very specific business problems. A four-digit number of external developers are already developing new products and services for our customers through dbAPI.

Gauging Germany as a fintech location

How would you gauge Germany as a location for fintech, and what conditions are important to remain internationally competitive in the future?

Other countries are much further along than Germany. There are two reasons for that: First, IT isn’t as far along in Germany as in other countries. Second, Germany is different culturally and structurally when compared to the US or Asia. Several factors play into that: There is a surplus of established financial institutions in Germany, which has a negative impact on the demand for fintech. German society also has a general risk aversion to fintech services. And even when there is demand, the German-speaking market for fintechs is often too small to expand and go global.

To solve the first problem, the Scandinavian model for IT infrastructure investments is an option. There are still areas in Germany where internet connections are extremely slow. The solution for the second problem is much more complicated. It involves extremely long-term planning, such as early IT training in school. Due to these two aspects, fintechs in Germany are most often B2B oriented and focus more on business than retail.

Dieter Hierner – Head of Startups@Germany – Bavaria Deutsche Bank

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