Bernd Leukert, Head of technology, data and innovation at Deutsche Bank

In digitalisation and especially in the platform economy, the competition from China and the US look to be extending their lead. Governments and businesses both face challenges to ensure that Germany and Europe can compete globally in the medium term. At Deutsche Bank, we are also obliged to make our contribution: we must pinpoint the challenges of the platform economy and tackle them so that we do not concede the digitalisation contest to these overseas players without a fight.

My 5 theses on the platform economy are:

  1. 1. The actual disruption that digitalisation triggers is not technological, but rather the emergence of completely new business models.
    • The most successful and valuable companies in the world today are platform operators. Their biggest asset and the secret of their success are not actually products or the means of production, but direct access to customers, their preferences, desires and plans.
  2. 2. Banks have to decide whether they want to be a (substitutable) product supplier for others or whether they want to become platform operators themselves and are able to do so.
    • A bank which only supplies its products to a platform will always remain a vendor that fills a shelf. This renders you substitutable, however. It is therefore necessary to form strategic partnerships with technology companies in order to jointly operate platforms.
    • As suppliers and makers of products, banks take their chances in a contest based purely on scale and efficiency where only a few players in Europe can survive.
  3. 3. Deutsche Bank’s path is clear: we want to form partnerships in order to become a platform provider ourselves.
    • We aim to provide the best products and services for our clients. As with all successful platforms, we want to retain our customers and acquire new ones by continuously expanding our portfolio of offers. Customers should always be able to come to us and find what they want to satisfy their financial needs and beyond.
    • In this context, it is clear that we are not going to develop and produce everything ourselves – none of the platform operators is in a position to do this. The aim is to be attractive not only to customers, but also to the best partners, associates and third parties and to organise and orchestrate these external companies in the best possible way for the benefit of our customers.
    • A change of mindset from outsourcing to strategic partnerships will help accelerate the digital transformation to a platform economy.
  4. 4. The logic and mechanisms of the platform economy will lead to more rapid consolidation in the European banking sector, even across national borders.
    • The network effects of the platforms – several providers attracting a lot of users that, in turn, attract more providers to the platform, and so on – result in consolidation and generate economies of scale.
    • And even if a case of “winner takes all” is unlikely in the tightly regulated banking sector, the big fish will swallow up the minnows or drive them out of the market.
  5. 5. Germany’s citizens, companies and politicians need to develop an even greater awareness of the social and ethical consequences of the platform economy.
    • Germany needs a strong Europe and it’s citizens, companies and politicians need to develop an even greater awareness of the social and ethical consequences of the platform economy.
    • The platform economy is not intrinsically good. It can also have a negative impact on our private and social, economic and political lives. We are particularly sensitive about this in Germany and Europe.
    • Rightly there are growing calls for this economic upheaval driven by new technologies to receive firmer social and regulatory scrutiny. We have to become more vigilant and take active countermeasures in some areas:
      • For instance against misanthropic, anti-scientific and anti-democratic machinations on social media.
      • The right to data privacy has almost completely been lost. After all, people in Europe have gradually been losing sovereignty over their data over recent years. The fact is that individuals no longer have any real control over which companies hold which data about them. At the same time, ensuring the secure and proper identification of people and machines online is of huge importance to Europe as a location – for economic actors and society.
      • Also given potential job losses and a creeping “disempowerment” of organised labour.
      • Taking into account the hitherto inadequate taxation of profits earned by overseas platform companies in Europe.
    • The looming marginalisation of European expertise and European products by overseas platforms is something we finally have to take seriously and respond to accordingly. And we cannot ignore the fact that many people’s response to digitalisation is not only carelessness but also fear. The problems of the platform economy have to be addressed and tackled, otherwise the acceptance of digital transformation will evaporate.

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