Starting points

German banks are actually well-positioned to take on the challenge of innovation in many respects,
but they often overlook their own potential:

• Banks with extensive branch networks have access to various client groups. Translating this
geographic proximity into valued “client proximity” is not a trivial task, and approaches need
to vary by client segment.
− It surely helps if risk managers in the corporate segment can physically visit the
warehouse of a local SMU client.
− It is less clear whether a local branch really helps to identify a “millennial” customer’s
needs when it comes to giving investment advice.

• Thanks to its innovative strength and standing in the world market, the German industrial
sector should be a perfect counterpart for innovative bank services – making it an ideal
partner for developing and testing new solutions.

• The German banking landscape, home to a great number of independent medium-sized
financial services providers and a few larger, centrally organised banking institutions, can
serve as an incubator for new ideas. Large institutions can help push and scale innovations
that smaller players cannot drive forward due to a lack of critical mass – e.g. By putting into
effect cross-sector cooperation agreements as opposed to fragmented decentral cooperation.

• Given growing modularisation, banks will not be required to develop each and every techno-
logical solution themselves; instead, they can focus on the flexible integration and application
of new technologies as part of their technology portfolio management. In this context,
investment prioritisation based on client-facing or internal activities needs to be made
transparent.

Indeed, there are leverage points to prepare for a modularised financial services universe.