Deutsche Bank Struggles with IT Integration Fallout

Deutsche Bank is facing significant challenges stemming from a complex IT integration, causing customer account lockouts and service disruptions. In July, the bank claimed to have successfully migrated 12 million Postbank clients and 50 billion data sets to a new IT system, but issues have arisen in its German retail business since then.

The integration problems have overwhelmed customer service centers and disrupted critical internal workflows, leading to thousands of clients, including vulnerable individuals, being locked out of their accounts for extended periods. The disruptions prompted a rare public reprimand from financial watchdog BaFin earlier this month, criticizing Deutsche Bank for "considerable disturbances in the handling of customer business."

Deutsche Bank's CEO, Christian Sewing, has made resolving these issues a top priority. He canceled a celebration event for the project's completion even before BaFin's intervention and now receives frequent progress briefings. The bank has warned that fixing the remaining problems will take over three months, and some senior managers are preparing for potential BaFin sanctions, which could include fines.

The integration challenges stem from Deutsche Bank's takeover of Postbank in 2010, a troubled retail lender that was formerly part of Germany's state-owned postal service. Despite failing to find a buyer for Postbank over the past decade and a previous botched IT integration effort, Deutsche Bank decided to fully integrate Postbank in 2017 under the project name "Unity," which was completed in July.

While Deutsche Bank claims no data was lost or corrupted during the migration, several internal workflows have been disrupted. One significant issue is the handling of "garnishments," where Deutsche Bank struggles to comply with the requirement to leave a minimum amount in an account after funds are deducted for garnishments.

As a result, numerous clients have been cut off from their accounts, making it difficult for some households to cover essential expenses like food and rent. BaFin's reprimand highlighted the high volume of complaints, leading Verbraucherzentrale NRW, a consumer protection group, to criticize the bank's handling of garnishments as "catastrophic."

Deutsche Bank's customer service has also been overwhelmed, resulting in long waiting times, and Postbank is rated the lowest German bank on Trustpilot, with a score of 1.2 out of 5.

Despite these disruptions, Deutsche Bank insists that its goal of reducing annual costs in retail banking by €300 million by 2025 will not be compromised, and it has not seen a significant increase in account closures so far.

Internal frustrations among Postbank staff have surfaced, with employees flooding Deutsche Bank's intranet with critical comments. One employee compared the bank's ambitions to operate like a Michelin-star restaurant while its retail clients experienced "the quality of a chip shop."

Deutsche Bank faces the daunting task of resolving these IT integration issues while maintaining customer trust and operational efficiency.

By fLEXI tEAM