Deutsche Bank’s Hidden Opportunity
Christian Sewing can turn things around and save Deutsche Bank. But to do so, he must begin focusing less on cuts and more on capitalizing on the bank’s hidden gold.
Deutsche Bank is in enough financial trouble that Christian Sewing is axing traders right, left, and center. London, New York, and Japan are all feeling the economic impact of the job losses. Christian is buying up the stock of the bank in the hopes of proving his confidence in better financial days ahead and, by showing this confidence, inspiring that of others.
His chosen strategy of cutting off the equities limb of the branch, cutting costs wherever he can, and putting a tourniquet around the bad debt by shoving it off into its own division may be too little, too late. Furthermore, he has chosen to focus his energy on returning to its roots serving Germany’s big companies by managing their investments and retirement funds.
This strategy may work. Eventually. However, the question is whether it will work in time to keep investors invested enough in the bank that money keeps coming into the bank rather than flowing out of it at such a rapid pace. Impatient investors are tired of getting no returns on their investments and watching their stocks plunge in value.
There seems little doubt that Deutsche Bank needs a new strategy. One that will position it uniquely in the market place and make it attractive to investors once again. Their currentchosen strategy isn’t inspiring that confidence.
The trick to rapidly build and protect wealth for both corporations, banks, and individuals is not to rely on a single stream of income but to create as many streams of revenue as possible. This ensures that even if a single stream of revenue collapses there are more streams coming in to cover that.
Banks like Deutsche Bank typically do that by diversifying the number and type of investments they offer and by having as many different investors as possible. Deutsche Bank is cutting off some of its streams of revenue and is losing investors at an incredibly rapid rate, a counter-intuitive move that has been seen as the beginning of the end for the bank.
However, Deutsche Bank’s problems are actually good news for the company, for investors, and for Christian Sewing. Those problems they’ve faced in the past and know how to solve are hidden gold just waiting to be mined, refined, and marketed to other corporations and banks that need them. Those problems they currently face but don’t yet know how to solve are future revenue sources.
Each of the problems they’ve solved can be turned into potential streams of revenue. They can position themselves uniquely in the marketplace by tapping into those potential opportunities for revenue and become more than just an investment bank. They can become a business solutions center along with an investment bank, skilled in advising banks and corporations alike on how to navigate their problems and challenges.
This would make them ideally primed to become the go-to bank for the EU’s new Capital Markets Union, which is still struggling to get off the ground. They could become the bank for small business owners, allowing them to become the central voice currently lacking for the CMU.
There are plenty of ways for Deutsche Bank to not merely survive the problems ahead but to thrive. The question remains whether Deutsche Bank will see, and seize, these opportunities or let them slip through their fingers as they have so many others.
