- Deutsche Bank is aggressively experimenting with AI capabilities to transform the bank.
- DB is going on a hiring spree, trying to more-than double its AI employee base of around 300.
- But uncertainty around regulation, talent wars, and the cost of scaling the tech won’t make it easy.
A handful of men clustered around a structure of half a dozen computer screens erected overhead. They stood face-to-face with what could be the future of banking.
With a touchscreen pre-populated with questions in front of them, they queried the machine about the performance and ESG strategy of a fictitious company called Cymbal. Line graphs, bar charts, company reports, and stock charts whirled across the screens. Then they cut to black before text came into focus to provide intel on Cymbal, a hypothetical corporate client of Deutsche Bank.
The tool presented a client briefing, a report to prep investment bankers before client meetings. Thanks to generative AI, what would usually take a team of junior bankers a day or two to put together was produced in seconds.
The German bank’s interest in the buzzy technology was fully displayed at Google Cloud Next 2023 in San Francisco in late August. Live demos of genAI tools drove a steady stream of admirers as they experimented with souped-up chatbots that could change language mid-conversation, dashboards that brainstormed potential clients, and a new way to generate software code.
Generative AI has become all the rage on the Street since the splashy debut of ChatGPT. For all of Wall Street’s interest and investment in generative AI, many are still exploring applications of the technology.
Deutsche Bank is aiming to transform the business and work of banking. The firm is running about 25 pilots, with many experiments going live in early 2024. It is looking to double or triple its AI-related workforce in the next year and retrain existing front- and back-office employees as the technology permeates DB’s ranks, from HR to tech to the investment bank. But it will also be a trusting moment for the bank, with a minefield of unknowns, including future costs, evolving regulations, and a talent war that’s heating up.
“On generative AI, it’s like net new. There are no benchmarks. There’s a lot of assumptions,” Gil Perez, Deutsche Bank’s chief innovation officer, told Insider.
“You need to basically get people to do a bit of a leap of faith and say, ‘Yes, I understand that we don’t have all of the details, but we will get there.’ And that’s really difficult for a lot of boardrooms, a lot of CFOs,” Perez said.
From the back office to the boardroom
Deutsche Bank has been establishing its AI strategy since 2021, a year after the bank pivoted to the public cloud, forming a partnership with Google Cloud. A centralized AI team with less than 100 technologists builds core AI capabilities.
The bank is aggressively hiring more technologists to build out its AI empire. In total, between 300 to 400 technologists are working on all of Deutsche’s AI projects. Perez said the bank will at least double, maybe even triple, the size of the team in the next 12 months.
A Deutsche Bank spokesperson declined to comment on the amount it is investing in its AI efforts.
What’s unique about the bank’s approach is that it is being driven by about 13 chief operating officers who span the firm and suggest ideas for how to improve their business lines through tech.
With the business driving the momentum behind Deutsche’s AI ambitions, technology is being developed at an unprecedented speed. Usually, tech needs to convince the business to allocate budget before a new capability or tool can be developed — and that’s usually met with pushback about years’ long product roadmaps, Perez said.
But with ideas generated by the businesses themselves, tech teams get the green flag to move quicker.
“The analogy is that we’re not pushing any more, we’re being pushed,” Perez said.
Reimagining the corporate bank
By as early as January, a day in the life of a Deutsche banker could look very different. The corporate bank, which drew in 1.6 billion euros, or more than $2 billion, in revenue in the second quarter, serves Deutsche’s institutional clients, financial services firms, and investors.
The division has been a hotbed of experimentation ever since February, and many of the use cases are targeted at improving time-consuming processes usually shouldered by junior ranks.
The pilot that was on display at the Google event produced a client briefing with the touch of a few keystrokes.
The time saved will allow junior bankers to spend more time critically thinking about the client, headwinds within their industry, or something a client isn’t doing that its competitors are, Tamara Bitticks, vice chair within the corporate bank, told Insider. Bankers can focus on building people skills, like building trust, reading the room, and being a good listener, she added.
“What I struggle with our juniors a lot of times is they’re gathering the information, and they’re so consumed with the gathering that they don’t think about the analyzing,” Bitticks said.
“It will be a new way of being a banker,” she said.
Deutsche is currently piloting a genAI chatbot to serve corporate and investment banking clients. It has the ability to answer complex questions, like if a client needs to update account signatories, the chatbot could provide the total number of accounts a client has where a specific person is a signatory or authorizer.
The bank has plans to launch the chatbot in the first quarter of 2024. It’s testing it on a sampling of everyday customers and internally for HR employees. Reusability of these so-called core platforms will be a core piece of how Deutsche scales its AI capabilities, Perez said.
Risks and unknowns
Deutsche Bank’s genAI journey won’t be easy to pull off.
The bank will need to compete for in-demand AI tech talent, a market that is only set to heat up. And it will need to establish retraining and upskilling programs for existing employees across the firm, not just the developers building the tech.
“We are going to ensure that people understand that you now have somebody that helps you, just like a personal assistant helps you and does something for you, but at the end of the day you need to take responsibility,” he said.
There’s also a gap between regulatory acceptance and generative AI. Red tape is a common source of frustration for many innovation and tech teams on Wall Street, but how Washington D.C. will regulate genAI has yet to be determined.
Determining the technology’s return on investment will be another tricky unknown to navigate. Unlike other advancements, like the public cloud or mobile apps, finance firms don’t have a precedent to stack themselves up against.
“That makes the discussion in the boardroom when you’re trying to quantify this a lot more difficult, a lot more challenging,” Perez said.
And the pricing of these compute-intensive genAI applications could be 10 or 20 times once the pilots graduate and the tech is live, he said.
“This is great, but what’s going to be the return? How do we quantify it? What’s going to be the benefit? The answer is we don’t know,” he said.
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