Deutsche Bank asks McKinsey to help draft strategic plan

21 December 2017 3 min. read

Deutsche Bank has hired management consultancy McKinsey to identify areas where the bank should spend its limited cash reserves to revive its ailing business. According to internal sources, the consultancy has recommended an overhaul of the bank’s legacy IT systems, just months after CEO John Cryan suggested many jobs at the bank could soon be automated.

Earlier in the year, Deutsche Bank's investment bank saw revenues in every almost every business line fall by double digits during the third quarter of 2017 – a period chief executive John Cryan described as "challenging". The disappointing numbers came the morning after it was confirmed that the German bank had agreed to pay $220 million to settle allegations in the US that it had illegally manipulated the Libor rate. The bank's results for the three months to September 30 showed group revenues of €6.7 billion, down 10% year-on-year.

Now, according to bank insiders, Cryan has been handed a report outlining how it can boost its three business segments. Deutsche Bank hired McKinsey & Company in June as the institution fell into panic amid a flat-lining economic performance, before dividing itself into a retail unit, an investment bank and an asset manager earlier this year. It is understood that McKinsey has recommended that a bigger chunk of Deutsche’s budget should be pumped into its US business, as well as its trading platform, and a significant portion should be spent on upgrading its creaking IT system.

Deutsche Bank asks McKinsey to help draft strategic plan

Englishman Cryan took the helm of Deutsche in June 2015, and has since devoted his time to the restructuring the bank, which employs 100,000 staff around the world. The hiring of McKinsey comes after extended speculation of layoffs at the bank, following comments made about automation in September.

Speaking before an audience in Frankfurt, Cryan did not pull any punches, declaring that a “big number” of his staff will likely lose their jobs as robots take over. Refusing to mince his words, the CEO further warned his staff that, “In our bank we have people doing work like robots. Tomorrow we will have robots behaving like people. It doesn’t matter if we as a bank will participate in these changes or not, it is going to happen.”

He later suggested that accountants inside his bank who “spend a lot of time basically being an abacus”, would also ultimately be replaced by machines.

This is not the first link between McKinsey and the German bank, during a period of sustained change for the bank in particular. The German arm of the US consultancy has been called in a number of times in recent years to support with strategic and organisational programmes. 

In addition, around three years ago Deutsche Bank hired a senior executive from McKinsey in order to oversee a plan for strategic change. In January 2014, Thomas Poppensieker, the head of McKinsey's risk management branch in Germany, became responsible for the implementation of the Strategy 2015+ program, an initiative with the aim of boosting the profitability of the bank through better internal controls.