Deutsche BankGlobal Transaction Banking

Macro Trends in Cash Management

Buckaroo Partner Event, 5th of November 2015

Detlef Henkel,

Head of Strategy & Investments, GTB Cash Management Corporates, Deutsche Bank

5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank

Global Transaction Banking5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank 2

The Bank's business model faces unprecedented internal

& external pressures…

Trends shaping the Future

Changing role of the Treasurer

Technology as a driver

Disintermediation of banks

Regulation and Macro

Closing Thoughts

Appendix

Content

5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank

Global Transaction Banking5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank

Expanding Competitive

Landscape

Tech Companies

Start Ups

Global Banks

FinTech’s

3

The Bank's Business Model is under unprecedented internal & external pressures compounded by macro trends in Cash Management

Customers

Shareholders

Regulators

RoE

IT & Systems

Inefficiencies /

Digitilization

Increased

Complexity

Disintermedia

tion

Changing

Ecosystem

Margin

Pressure 1

Capital Costs 1

4

Compliance

Costs

3

2

Graphic for illustrative purposes only

5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank

Global Transaction Banking5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank 4

Trends Shaping the Future Corporates follow an evolutionary journey, impacting opportunity and economics for the financial services industry

Evolutionary journey: more centralised models

Our client’s treasury

evolution…

Collection factories via

pan-European direct

debit/collections

«on behalf of»

Centralisation of

liquidity regionally

(in-house bank)

Centralisation of

liquidity by countryLocal cash

management

by subsidiary

Shared services

centre/payment factory

Phase of evolution

of treasury model (1)

Efficiency

(▼Cost, ▲Visibility, ▲Control,

▲Credit interest rate, ▼Debit interest rate)

(1) Local regulation (e.g. Exchange controls, movement of funds cross-border) limits how far treasuries can evolve in certain jurisdictions

Many accounts (by country, ccy, legal entity etc.)

Significant amounts of idle / stranded liquidity

Many transactions, transaction types and manual activity

De-centralised decision making

High degree of administrative complexity, no central

treasury policy, standard processes

Banks: Higher margins, smaller tickets

Corporates: Striving for control

Optimised account structure, minimal accounts centrally owned

Optimised global liquidity management (opportunity to term out

cash, pay down debt, seek best returns)

Payment consolidation driving down fee margins

Centralised decision making (improved CFF, FX management

etc.)

Banks: Tighter margins, bigger tickets

Corporates: More bargaining power

…impacts the

drivers of our

revenue

1

5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank

Global Transaction Banking5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank 5

Trends Shaping the Future The changing role of the Strategic Treasurer

Trend

Treasurer’s role growing in importance and

stature within the enterprise

Treasurers centralizing treasury and

consolidating bank relationships to increase

control and reduce costs

Treasurers expect insights and advice to enable

better decision-making

Treasurers drive efficiency improvements in

liquidity and operational cash management (and

increasingly working capital management)

1

Potential Implications to Financial Services

Client buying behavior shifting toward solutions that improve their

use/efficiency of liquidity and working capital across the enterprise

Financial Services facing tighter margins, bigger ticket RFPs (driving

winner-takes-all)

Consolidation of banking wallets favor regional and global providers

Financial Services firms leverage big data flowing through their pipes

and systems (as well as data clients are willing to share) to provide

interesting and actionable insights and advice

As corporates follow a well established evolutionary path, the

opportunity and wallet for banks will shrink, e.g.

Optimized account structures mean less accounts and less fees

Payment consolidation, through netting and POBO, reduces payment

volume

Payment optimization (more ACH) reduces fee revenue

Visibility into and control over liquidity improves cash utilization, i.e.

reduces idle balances (reduces bank NII) and improves management

of currency risk

5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank

Global Transaction Banking5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank 6

Trends Shaping the FutureTechnology as a driver

Trend Potential Implications to Financial Services

Advent of FinTech companies who are attacking

the existing cash management value chain

Competition, in general, drives prices lower and FinTech companies

may bring lower cost structures

Investment pouring into FinTech start ups are putting renewed

emphasis on innovation of products/services and thus poses risk of

disrupting to established Financial Services providers

Digitalization

Opportunities to review and dramatically re-engineer paper-based

and/or operationally intensive processes, e.g. A/R matching, account

reconciliation

Financial Services firms have the opportunity to significantly re-

engineer and drive operational excellence across their core processes,

e.g. sales, onboarding, pricing, service, etc.

Treasurers expect a consumer user experience

in B2B context

Consumer experiences driving emphasis on UX design for corporate

world, e.g. presentation of complex information will be made available

in an actionable and convenient way

Corporates are seeking to capture value from

their Enterprise Resource Planning (ERP)

software migrations

Financial Services firms have an opportunity to extract and present the

right data to support strategic and operational decisions, e.g. FireApps

extracts booked flows and summarizes currency movements for

optimal hedging decisions

Blockchain developments and increased

availability of e-ledgers and virtual accounts

Digital ledgers could reduce complexity in bank accounts and

accounting ledgers – greatly simplifying reconciliation

“Blockchains” could speed up and lower costs of settlements and

payments while providing greater transparency, and greater security

2

5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank

Global Transaction Banking5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank 7

Trends Shaping the FutureDisintermediation of banks

1. Source: Accenture, Future of FinTech and Banking (2015)

Advent of FinTech companies who are attacking the existing cash management value chain

Directly competing in traditional banking spaceEvolving the way Treasury operates & interfaces with

banks

Product

Area

Examples Description

Payments Facilitate online and

mobile payments

Lending &

Working

Capital

Allows individuals to

directly fund small &

medium sized

enterprises

Cards Merchant acquiring and

card payments through

mobile

FX Peer to Peer FX

transfers for individuals

and business

Product

Area

Examples Description

e-Invoicing &

Supply chain

Cloud based e-

invoicing & payment

solutions

Corporate

Procurement

Cloud based platforms

for procurement with

real time information

Payroll

Automation

Automated payroll and

MIS for employees &

contractors

Financial

Analytics

Consolidate existing

work flows and perform

advanced data

analytics

1 2

Investments into FinTech startups have grown from $3 billion in 2013 to $12 billion in 2014 1

3

5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank

Global Transaction Banking5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank 8

Trends Shaping the FutureRegulation and Macro

Trend Potential Implications to Financial Services

Since the financial crisis of 2008, regulators are

taking a tougher stance toward banks

Localized regulation, i.e. fragmentation, leading to segregation of

balance sheets and trapped liquidity impacting global network bank

models and increasing cost of compliance

Regulators more strict on customer treatment to thwart fraud,

implement sanctions, prevent money laundering, etc.

KYC: legacy processes compounded with increased KYC scrutiny and

FSI conservatism

In general, countries and economic blocks are

liberalizing regulations

As additional countries liberalize clients expect market updates/advice

and capabilities to take advantage of the new opportunities, e.g.

Clients are increasingly demanding RMB capabilities to integrate China

into global treasury structures

SEPA leading to structural declines in margins

Cyber threats/risks increasing

Wire fraud through business email compromise scams impacting

corporates

Opportunity for FS’ to differentiate by effectively identifying and pre-

empting attacks

Top talent departing Financial Services Industry

(partly due to negative image) for FinTech and

Technology firms

Brain drain challenges innovation in traditional Financial Services firms

4

5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank

Global Transaction Banking5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank 9

Closing Thoughts – All these trends will force the financial services industry to significantly invest and to develop new business models and solutions

Some Considerations

WHAT – The financial services industry needs to understand what clients really need...

WHO – The in- and external decision power of the Treasury area of a Corporate is increasing

WHEN – FinTechs are expanding to the Corporate world – what parts of the Commercial Banking relationships

are becoming commoditised?

HOW – Have you thoroughly considered how the regulation might ultimately impact your business?

WHY – Is your business case compelling enough to cope with the fast changing environment?

5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank

Global Transaction Banking5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank

Appendix

5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank

Global Transaction Banking5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank 11

GTB Global excellence with local expertise

Asia Pacific

Australia

China

Hong Kong

India

Indonesia

Japan

Malaysia

Philippines

Singapore

South Korea

Sri Lanka

Taiwan

Thailand

Vietnam

Americas

Argentina

Brazil

Cayman Islands

Chile

Mexico

Peru

USAAfrica/Middle East

Egypt(a)

Mauritius

Nigeria(a)

Pakistan

Saudi Arabia

U.A.E

As of March 2015

Europe

Austria

Belgium

Channel Islands

Czech Republic

France

Germany

Greece

Hungary

Ireland

Italy

Luxembourg

Malta

Netherlands

Poland

Portugal

Russian Fed.

Spain

Sweden

Switzerland

Turkey

Ukraine

United Kingdom

(a) Representative Office

The Global Transaction Banking division employs

4,279 people and is present in 49 countries, servicing

clients in more than 190 countries and jurisdictions

worldwide.

Region People

Germany 1,232

Americas 666

Asia Pacific 932

EMEA ex. GER 1,449

5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank

Global Transaction Banking5th November 2015

Buckaroo Partner Day / Detlef Henkel, GTB Head of Strategy & Investments

Deutsche Bank 12

Why choose Deutsche Bank for Cash Management and Trade Finance

Financial stability

– Stable business model between Transaction Banking/Retail Banking and

Investment Banking

– Capital basis

– Long history of strong external rating (Moody’s A3, S&P A, Fitch A+)

– Strong commercial banking

Innovative solutions

and expertise

– Market-leading provider of best-in-class working capital solutions through thought

leadership and innovative use of technology assets

– Structuring and problem solving culture

– Influential driver of major industry initiatives

Global leadership in

FX and clearing

– Leading FX bank globally (15.67% market share in 2014)

– World’s largest Euro clearing bank and No 6 in USD clearing

– Fully scalable platform and infrastructure to process large volumes

– Average daily payment processing in excess of €1 trillion(a)

– €77.7 billion(b) Trade Finance book

Global network with

a leading European

position

– Global footprint with Cash Management and Trade Finance operations in

47 countries and more than 190 locations

– ‘Follow the sun’ global operating model

– Full relationship, sales, service and technology teams across our global presence with in-

depth knowledge of clearing and settlement systems

Commitment to

service excellence

– Market differentiating, high quality trade and cash services and implementation channels

for our clients

– Proprietary global network of local customer service teams

– Easy to use client access channels

Reliable partner for sound

advice and fresh ideas

providing global market

access combined with

powerful execution and

excellent service

(a) Peak volumes Source: GTB Finance as of March 2014

(b) Source: GTB Finance as of March 2014