If you’re employed by Deutsche Bank and you see technologists taking an unusual interest in your workflows, beware: The bank still has thousands of jobs to cut, and technology is its primary weapon in their elimination.
“Eighty per cent of the coming €1.2 billion [$1.6 billion] of reductions at Deutsche will be achieved by using technology to streamline costs,” said Ram Nayak, head of Deutsche’s markets business and co-head of the investment bank, speaking at last week’s ‘investor deep dive.’ Deutsche cut 975 jobs from the front office in the first phase of its restructuring between July and October, but the next few years are all about cutting from the middle and back office… and using technology to achieve this.
The German bank is already busy simplifying its technology architecture and decommissioning unwanted applications. In fixed-income trading, for example, Nayak said Deutsche is consolidating all its activities from client interactions to post-grade services onto “three best-in-class internally engineered platforms.” In particular, the platform underpinning the FX trading business is being replicated across the whole of fixed income so that 30 percent of the bank’s applications can be decommissioned over the next three years (and spending on tech can be cut by €200 million [$260 million].
Technological improvements are already making some humans at Deutsche unnecessary. When Deutsche moved its rates business onto the new infrastructure platform, it reduced the workload of related finance teams by 70 percent, said Nayak. Elsewhere, a new automated valuation process enabled a 25 percent reduction in headcount in the valuations team, rising to an anticipated 30 percent once the changes are baked in. Nayak added that automation in the Asian credit risk business has enabled the elimination of the “entire support area” focused on monitoring credit exposure in some derivative transactions.
Deutsche’s successful automation of various finance jobs follows its former CEO’s observation that a lot of employees at the bank were doing jobs that involved “basically being an abacus,” and that therefore could easily be given to “robots.”
Someone has to build the “robots,” though, and this is where Deutsche’s technology staff come in. Somewhat confusingly, Nayak said that half the 10,000 investment bank staff Deutsche defines as being in the “front office” on its quarterly reports are actually working in technology roles. The implication is that Deutsche employs far more technologists (and far fewer front office bankers and traders) than previously thought.
Even as these technologists set to work extracting costs from the investment bank by 2022, however, some of their own jobs may be under threat. Some €300 billion [$400 million] of the cost-reduction number is due to come from spending less on technology itself, both as a result of decommissioning applications and from investing in “offshore centers of excellence” in places such as Romania and India. Deutsche’s army of technologists is key to its future, but it may look rather different in three years’ time.
A modified version of this article originally appeared in eFinancialCareers.