Following its acquisition of Dresdner Bank in 2008, Germany’s Commerzbank is now turning its focus back to developing products and services, its chief information officer tells The Banker.

Stephan Müller has been Commerzbank’s chief information officer since April 2012. However, he has seen the bank from many different perspectives. His career at the bank actually began at Dresdner Bank, which was acquired by Commerzbank in 2008.

After the merger between Commerzbank and Dresdner Bank, he moved to the back office. “I’d worked as a client relationship manager and on the IT side, so now I wanted to see the back office too to understand the whole chain of processes. I did this for three-and-a-half years and, about one-and-a-half years ago, I moved back to the IT side as CIO following the merger.”

It was not an easy time, he admits. “We had just finished the integration, but the IT systems were the last [part] to be integrated. It was both a challenge and a time of change that gave me a sense of achievement,” he says.

Merging platforms

Initially, Commerzbank’s main focus was on keeping the platform stable. “At the time of the integration, we wanted to keep the Commerzbank platform as it was, so that when the flow of [new] data came, it would be easier to integrate it,” says Mr Müller.

But that also meant that the bank had to clean up ‘excess’ after the integration, such as security patches and different data bank versions – needed to check whether the infrastructure may have been too big – “because at the beginning you use a lot of data capacity”.

The bank has now turned its focus back to developing new products. “During the integration phase, we focused on ourselves. It is now time to be actively developing products and services,” says Mr Müller. “We are revamping. We have two main focuses: digital strategy and branch strategy. With the branches, we are looking at ways to make them more appealing to customers,” he adds.

Commerzbank’s business model is split into three segments: retail; the famous Mittelstand (called Mittelstandsbank at Commerzbank), which serves corporate clients; and corporates and markets, the bank’s investment banking arm.

Retail strategy

Mr Müller explains that from an IT point of view, a core focus in retail is its digital strategy. This includes online banking, but what he says is the next step of online banking. Ultimately, the bank aims to become a multichannel bank that combines and unites modern technologies while retaining customer trust. Commerzbank is investing about €1bn in its retail platforms, products, services and advisory processes up until 2016. The result of this, it hopes, will be a rise in customer numbers from 11 million to 12 million and an operating profit of €500m.

“We have been offering online banking for years now. What is different this time and what is a new challenge for us are the new internet-enabled products such as smartphones and tablets,” says Mr Müller.

“Another focus [in retail banking] is on social media. We are thinking about how we could bridge the world of classic online banking and social media. One example is PhotoTAN/mobileTAN [a mobile application for secure internet banking], which we launched this year. This way, we combined something that consumers take for granted – smartphones – with something they usually consider a nuisance – security [steps].” 

On Facebook, Commerzbank’s focus is on locality. Regional branches have their own Facebook page and so can connect to local customers and strengthen dialogue with the public, says Mr Müller.

Sepa challenge

In the Mittelstand business, Commerzbank focuses on delivering solutions for corporates under an incoming new regulation in Europe, the Single Euro Payments Area (Sepa).

“[Sepa] will impact upon how [the Mittelstandsbank clients] do cash management and treasury around Europe. So we decided to invest in the payments business, with a particular focus on Sepa. In Germany, we can see that many small and medium-sized enterprises [SMEs] are not quite ready for Sepa yet, even though the deadline is only a few months away now,” says Mr Müller. “We are currently consulting our customers, for instance, on how they could convert payment files.” Likewise, Mittelstandsbank also targets SMEs, as well as providing services to existing customers who are expanding abroad.

Meanwhile, in the investment banking business and from an IT perspective, Commerzbank’s biggest focus is on its electronic trading platform. “We continue to invest in trading platforms to support our continuous drive to service our clients better. In these platforms, speed determines whether you win a trade or, indeed, if you make a gain or a loss. It is about the frequency and latency in which we update our parameters and contribute prices. So we are also implementing infrastructures at the exchanges, as well as giving traders the tools to do fast and efficient hedges,” says Mr Müller.

This begs the question, is Commerzbank planning to get involved in high-frequency trading? After all, Germany’s regulator came up with regulation for this contagious activity earlier in the year. The answer, says Mr Müller, is no; adding that back in 2004, Commerzbank closed its dedicated propriety trading desks and has since focused on client-driven business only.

All of this is part of Commerzbank’s reorganisation. The bank is investing more than €2bn in its core business and by 2016 aims to achieve a return on equity after taxes of more than 10% in its core businesses.


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