This could be a big opportunity for startups looking to get a foot in with one of Europe’s biggest banks
As one of the big players on the German and global banking scene, Deutsche Bank made waves with their recent news that they had developed an API platform for connecting with services developed by startups.
Feeling pressure to keep up with the move towards innovation in the fintech space, Deutsche Bank opened their Digital Factory in Frankfurt last September with the goal of developing new solutions for their customers. With an initial team of 400, they have plans to grow to 800 team members by 2018.
For those less familiar with Germany’s tech scene, Frankfurt is fast becoming a hub for B2B and fintech startups, due in no small part to the city’s corporate density – second only to Munich – and its seat as the home of European (and some say global) banking. While Berlin continues to attract much of the attention, Geektime’s recent visit to Frankfurt uncovered a vibrant scene with a significant potential for growth.
With the rollout of the API platform, the DB team has made available to the developer community all the necessary documentation of the API functionalities in English, opening the doors for teams from around the world to get in on the action. They note though that the products that they are hoping to lay out are aimed at the German retail market, which could impact the involvement of foreign teams.
Local Frankfurt podcasters Joern Menninger and Gaurav A. Sharma of Startuprad.io spoke with Joris Hensen and Frank Pohlgeers from the Digital Factory in one of their latest episodes about what led the bank to reach out to third parties for innovation, and covered some of the opportunities.
Hensen is the project manager for the dbAPI-Project that held the kickoff hackathon for their initiative in October, while Pohlgeers works in the digital innovation section of the Private, Wealth and Commercial Clients business division.
If banking is already considered to be a more rigid and long tail part of the tech scene, the challenge only increases when it comes to the German institutions which have a reputation for moving at a glacial pace.
Having already opened their own internal innovation center, what was the incentive to look outside their own walls?
“We wanted to understand the functionalities we have implanted because we just started with a set of basic functionalities and we wanted to further grow with the philosophy to understand what the need is,” explains Hensen.
Banks like DB are quickly realizing that if they are unable to keep up with the demands of their customers to improve their products, then they can easily turn elsewhere. One of the newer options that has come on the scene as an alternative is N26, offering a completely digital banking experience. Licensed as a bank, they have quickly grown their user base to over 300,000 without spending a cent on marketing.
Hensen tells Menninger and Sharma that they have started their program off working on basic kinds of functionalities including transactions and account details.
One of the exciting aspects of this API initiative for startups is that Deutsche Bank is opening up not only the door to their backend to developers but their data as well. Within their sandbox, teams will be able to play around with made up profiles for testing out their products. What is interesting here is that they can use dummy profiles that are based on DB’s customer data – info like spending habits and more that would be hard for a startup to gain access to on their own but are essential for building a stronger product.
While this change in policy to open up to outsiders is a big step, the Deutsche Bank team appears to still be working out their way when it comes to where they want to take their new relationship with the startup community. Do they intend to buy up companies? Are they prepared to continue down the path of increased openness?
“When partnership models are concerned we very much believe in establishing an ecosystem that is based on a platform approach, which means at the end of the day, we are very much interested in partnering with startups, with third parties in order to establish near banking related, but also beyond banking creative products and offering to our clients,” says Pohlgeers, laying out some of their thinking behind the project.
Even if the path ahead is still uncertain, he believes that “At the end of the day, that makes us more relevant to the clients, in the best case on a daily basis. Can we say at this point in time if we do believe in acquisitions etc.? Do we have the one and only way how we want to do this? No. We are still at an early stage. At the end of the day, I would say: everything is possible.”
While the chance to work with Deutsche Bank should be an exciting one for most startups, there can be pitfalls. Having spoken with an entrepreneur who had embarked on a project to integrate his company’s product into one of the major banks, he told Geektime that the bank had tried to reshape the product too much in a way that he felt compromised both its effectiveness and integrity.
This is not meant to warn off startups from working with banks. Of course not. It just means that if you are going to team up on an initiative, you’d better know what it is that you stand for, and be prepared to walk away from one customer if you think that it will hurt your chances for real growth down the line.
The ball is now in the bank’s court to see whether they are ready to follow through with their proposed drive towards innovation.
For startups and developers that are interested in playing with DB’s API, Hensen says that “Everyone can just register through our developer.db.com portal. Just I think it’s a really simple, straightforward registration on there. You just have to fill out a simple form. Then you can start testing and working with the API.”
Click here to listen to the interview and read more news from Startuprad.io