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Deutsche Bank announced that it will enter a 10-year partnership with Google to use the tech giant’s cloud computing capabilities, Bloomberg reports.
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Through the long-term partnership, the companies reportedly plan to make joint investments in technology and develop products together, sharing revenue that results from the products — additional financial details about the arrangement were not released. Google beat out Amazon and Microsoft for the opportunity to overhaul Deutsche Bank’s networks.
The Google Cloud partnership will play a prominent role in propelling Deutsche Bank’s sweeping restructure, which CEO Christian Sewing initially announced in July 2019. The ambitious transformation plan includes a €13 billion ($15 billion) investment in technology by 2022. Here are two areas where Google Cloud will be particularly important:
- The bank intends to modernize its infrastructure by transitioning to the cloud and standardizing its selection of third-party software. Deutsche Bank has previously blamed its legacy systems for struggles to keep down costs, ensure anti-money laundering compliance, and keep up with the innovations of fintechs. The use of public cloud computing could reduce or eliminate the cost of running on-premises data centers and servers. The cloud also offers amplified storage and the ability to access a range of applications and emerging technologies like blockchain. Other banks, including Lloyds, have signed deals to use Google Cloud to similarly spur their digital innovation.
- Stronger cloud computing capabilities will help Deutsche Bank digitize more functions and reduce personnel costs. A key part of the bank’s restructure will see it cut 20% of its global workforce by 2022. Though it paused cuts at the onset of the coronavirus crisis, Deutsche Bank recently resumed them, with Sewing saying that “the transformation is essential for the future of our bank, and we bear the responsibility for a sustainable business model.” The bank has previously outlined plans to use AI to reduce personnel costs going forward, including implementing machine learning tools and bots. The Google Cloud partnership could support those endeavors by giving the bank access to Google’s strong data science, AI, and machine learning capabilities, which it can apply to its internal functions as well as creating new customer-facing services. Advancements in technology such as cloud computing are expected to lead the banking industry across the board to a massive 200,000 job reduction over the next decade, per Wells Fargo estimates.
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