Deutsche Ditches U.S. Digital Bank

Deutsche Bank Construction-ArneDedert-DPA
Deutsche Bank has an infrastructure problem.
  • Why it matters

    Why it matters

    Deutsche Bank had previously said its new planned digital bank would play a “key role” in its restructuring, but it must now find new ways to grow profits and expansion.

  • Facts


    • Deutsche Bank announced plans last October for the creation of a new U.S. digital bank led by former board member Henry Ritchotte.
    • Chief Executive John Cryan shelved the project on Monday.
    • Over the weekend, Deutsche’s existing online banking system was plagued by errors, with double transactions showing up on customer accounts.
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Deutsche Bank’s IT systems are notoriously outdated, a point driven home over the weekend.

On Friday, customers at Germany’s largest bank opened their online accounts to find erroneous double transactions. While the embarassing glitch was lifted the following day, it highlighted just how far Deutsche Bank still needs to go to upgrade its clunky infrastructure.

The timing of the glitch was especially awkward given the announcement that would follow on Monday: Deutsche’s Bank has abandoned its long-hyped plans to set up a new digital bank in the United States.

The bank had hoped to make the new digital operation a key part of its restructuring program. John Cryan, the bank’s chief executive, has made updating Deutsche’s IT systems a central part of his reform plans since taking over the top job in the summer of 2015.

But in announcing the reversal on Monday, Mr. Cryan signaled the bank needed to spend more time upgrading its own infrastructure before taking on a new project like the digital bank.

“Despite the high quality of the concept, the executive board has decided against pursuing the creation of digital banking services in the USA at this point in time,” Mr. Cryan told bank employees in a letter seen by Handelsblatt.

Mr. Cryan said the project would have used up resources needed for “the implementation of our core strategy – focusing and modernizing our customer offerings and reorganizing our infrastructure.”

“We have lousy, horribly inefficient systems.”

John Cryan, Chief Executive, Deutsche Bank

Money is tight at Deutsche Bank, which posted a record loss of €6.8 billion in 2015 thanks to writedowns of failed businesses and billions in legal fees and fines stemming from wrongdoing. Its share price has fallen by nearly 50 percent in the past year.

Aside from upgrading its IT systems, the bank is also spending billions on a giant reorganization of its entire global business, pulling out of unprofitable  segments and leaving a dozen countries around the world where it no longer sees a future. Mr. Cryan has said he hopes to make the bank consistently profitable again by 2018.

The weekend’s technical glitch hasn’t done Deutsche Bank any favors with its already rattled customers. The system error caused some accounts to overdraft, while others were credited with more funds than they actually had. Some customers couldn’t withdraw money from ATMs or shop with their debit cards.

“What chaos, I’m canceling my account on Monday,” one Deutsche customer wrote on Twitter.

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Deutsche fixed the problem Saturday morning, but it’s still unclear what exactly caused the error.

That is symptomatic of a wider problem: “We have lousy, horribly inefficient systems,” Mr. Cryan, the chief executive, said near the start of his term in July 2015.

Plans for the U.S. digital bank were unveiled the following October as part of Deutsche’s IT makeover. Paul Achleitner, chair of the non-executive supervisory board, which overseas board appointments and strategy, went so far as to say the project “would play a key role in the new direction of the bank.”

But it was unclear from the beginning how the digital bank, which was to be led by former board member Henry Ritchotte, would differentiate itself from all of Deutsche’s other online services.

Christian Sewing, who leads the private and business clients division, told Handelsblatt in a March interview that “this digital bank is separate from my area.”

And Handelsblatt’s sources within Deutsche Bank said that despite the hype, the development of the U.S. digital bank was never made a top priority.

Some speculate that the project was just a way to keep Mr. Ritchotte busy after he was forced off the executive board by Mr. Cryan.

In a report published last year, German regulators criticized Mr. Ritchotte for his role in the Libor scandal, when Deutsche Bank employees, along with other staff at other banks, were accused of manipulating interest rates. The bank paid $2.5 billion in fines to U.S. and British authorities, more than any other bank involved in the scandal.

With the digital bank now history, it’s unclear what role Mr. Ritchotte will play at Deutsche in the future.

“In the coming weeks, Henry Ritchotte and I will discuss how we can integrate his team in the existing business areas,” Mr. Cryan wrote.


Yasmin Osman is a financial editor with Handelsblatt’s banking team in Frankfurt. Michael Maisch is the deputy chief of Handelsblatt’s finance desk in Frankfurt am Main. To contact the authors: and

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