Deutsche Bank CEO Says Regulation is Stifling Innovation

Traditional financial institutions are not as innovative as they should be due to the excessive regulatory constraints that have been placed in recent years, according to Deutsche Bank’s Chief Executive John Cryan. “As regulation becomes more granular, traditional institutions tend to become less innovative and we’re looking elsewhere for disrupters. Everything regulated tends to continue as it is. Regulation is not generally a facilitator of change,” said Cryan, while speaking at Davos on the future of finance. He blamed regulation for hindering even his bank’s innovative plans, as they abandoned plans to launch a digital bank. Deutsche bank launched a digital factory in Frankfurt last year, but Cryan added that their best option might be to invest in fintech start-ups.

He stated that the future of banking is in technology, and that should draw a bulk of funding over the next five years. “We haven’t been innovative other than in delivery channels. So technology is key in the next five years.”

“We don’t think the demands of our clients and counterparts will change too much. We can use technology to improve our own controls. We can use technology to improve our efficiency. And then we can use the technology to improve the customer service,” he said. Deutsche Bank is buying equity in fintechs “but with some degree of exclusivity and we can capture some degree of intellectual property without necessarily employing the individual” Cryan added. He also said that fintechs and entrepreneurs are hesitant to work with traditional institutions, so they have to keep a distance in their investments.