Online threats

Banks Slow to Click on Digitalization

  • Why it matters

    Why it matters

    German banks have been slow to react to the threat from digital providers and are now having to play catch up.

  • Facts


    • The consultancy Consileon estimates that annual earnings in German retail banking come to €60 billion, of which €15 billion comes from new business. This is where financial start-ups are hoping to lure customers away from traditional banks.
    • Sixteen million Germans use the U.S. online payment service PayPal, while a German equivalent that was launched in 2015 is still having teething problems.
    • Up to €7 billion in earnings is thought to be at stake in retail banking, as a result of fintechs and competition among established banks.
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Traditional banks are losing out to fintechs and online giants such as PayPal. Source: Getty

In his speech, Asoka Wöhrmann made it clear right from the start: while a lot of people might be comparing banks to dinosaurs right now, he does not expect them to die out, despite constant attacks on their business model by young financial start-ups. “The dinosaurs couldn’t escape their fate, but we can,” said the head of retail business in Germany at Deutsche Bank, Germany’s largest bank.

But it won’t be easy. “Banks’ ability to survive depends to a large extent on their adaptability,” Mr. Wöhrmann said at Handelsblatt’s annual conference on retail banking business. It isn’t just financial start-ups, or “fintechs”, as they are known, that are in competition with banks, but increasingly also Internet giants such as Google and Amazon. “This competition will change us dramatically,” he said.

In some cases, fintechs have already overtaken banks. Sixteen million Germans use the U.S. online payment service PayPal, while Germany’s answer to the service, Paydirekt, was only launched in 2015 and is still struggling to get off the ground.

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