The German lender's tie-up with the technology giant is more extensive than originally reported – and puts rivals under pressure.

A technology-based partnership between Deutsche Bank and Google is more expansive than originally disclosed: the tech giant and the German bank want to co-develop digital financial services, according to «Handelsblatt» (behind paywall, in German). The two are specifically looking at applying artificial intelligence in their venture, the German daily reported.

Google, which also partners with U.S. powerhouse Goldman Sachs, is building out its bridgehead into banking as the coronavirus underscores the urgency of digitization for financial service providers. McKinsey believes that up to 90 percent of banking processes could shift to cloud-based solutions over the next decade, according to the «Financial Times» (behind paywall).

Lucrative Swiss Business

Winners of this are big tech including Google, Microsoft, IBM, and Amazon – all U.S.-based firms. They have made powerful inroads into privacy-minded Switzerland already, where market leaders UBS and Credit Suisse opted for Microsoft's cloud services. Swiss software providers Avaloq and ERI Bancaire work with IBM, while Temenos chose Google as well.

Deutsche's direct cooperation with Silicon Valley ups the stakes for other banks: while Microsoft and IBM have shown little to no interest in direct banking services, Google holds a banking license in a European Union country, Lithuania (though it hasn't done anything with it yet).

Lead Time For Swiss Cloud

The cloud-based tie-up isn't without problems: Swiss banks fret over U.S. federal legislation which allows extraterritorial access to data, even that not stored on U.S. soil. Meanwhile, regulators worry that a shift of banking processes into cloud-based solutions will escape their purview.

Last year's data leak at U.S. bank Capital One – an early adopter of cloud tech in the banking industry – illustrates the perils of cloud-based services for banks. The episode at Capital One, where UBS private banker Eli Leenaars sits on the board, has rattled rivals in Switzerland as well.

In April, the Swiss government said it would look at a «Swiss cloud» solution – meaning, the alpine nation's cantons, as well as business and academic communities, would team up to build a cloud- and data-based infrastructure. Initial findings from the report aren't expected until 2021.