Case Study 1: Did Information Systems Cause Deutsche Bank to Stumble?
Course: ITM 102
Brief Summary with Key Issues
Deutsche Bank, one of the world’s top financial companies was founded in 1870. This bank offers a range of financial products and services, including retail and commercial banking, foreign exchange, and services for mergers and acquisitions. After the 2008 bank crisis, Deutsche bank is now struggling with enormous changes in the banking industry. One of their problems is that Deutsche bank submitted incomplete and untimely credit default swap data and failed to properly supervise employees responsible for swap data reporting. Eventually Deutsche bank’s efforts to end the system outage caused new reporting problems adding on to the problems that already exist. The swap data of Deutsche bank revealed persistent problems including numerous invalid legal entity identifier making this one of the banks problem. These problems occurred because Deutsche bank failed to have an adequate business continuity and disaster recovery plan for when time permits. The main reason as to why they could not provide the right information is because of their antiquated technology. Their antiquated technology was a poor information system which caused many problems since 2008. The effort and cost to reduce this problem were too great resulting in many banks using the old systems in place to handle the workload. Deutsche bank tried many solutions, one of them was announcing a multi-billion-dollar deal with Hewlett-Packard to standardize and simplify its IT infrastructure to create a modern agile technology platform. This resulted in losses as Cryan was unable to restore profitability. Overall, Deutsche bank was hampered
Q1-12 Identify the problem described in this case study. What management, organization, and technology factors contributed to this problem?
The problems identified in this case study were in regards to Deutsche bank incomplete information and swap data were not persistent. Overall, Deutsche bank experienced incomplete data and information was not persistent. One of the management factors leading up to the problems is because they failed to have an adequate business continuity and disaster recovery plan and other appropriate supervisory in place to help them. US regulators have said that the main reason as to why they could not provide the right information for running its business properly and responding to regulators is because of the banks antiquated technology. Deutsche bank had poor information system which even lead to the 2008 financial crisis. A technology factor contributing to the problem also included the complex financial products the bank had purchased and had trouble untangling them. An organization issue from the bank was to employ a strategy of pitting teams against each other to spur them on, instead this further encouraged the use of different systems which made it harder for information to get organized effectively.
Q1-13 What was the role of information technology at Deutsche Bank? How was IT related to the banks operational efficiency, decision-making capability, and business strategy?
The role of information technology at Deutsche bank played a significant role in keeping up with regulatory pressures or with changing consumer expectations. All problems Deutsche bank experienced including old systems all lead to problems leading in efficiency and decision making capability and business strategy. This lead to inaccurate information about the business resulting in bad decision making as the information Is not accurate. Deutsche bank and other banks are all heavy users of information technology as they rely on it to spot misconduct. Overall, IT plays a significant role to ensure business operations go smoothly.
Q1-14 Was Deutsche Bank using technology effectively to pursue its business strategy? Explain your answer.
Deutsche bank did not use technology effectively to pursue its business strategy as they were unable to restore profitability after trying to reduce their problems. Deutsche bank had great costs in order to cover integration and also coordination across many management teams resulting in them leaving their old systems in place to handle the workload for each of their businesses. This was not an effective strategy as old technology results in many downsides. Old technology can also be quite easy to hack compared to newer technology which is a safety problem as a bank provides many of client’s personal information. Old technology is comparatively slower to newer technologies resulting in less productivity as tasks will take time to complete. This is why I believe Deutsche bank did not use technology effectively to pursue its business strategy.
Q1-15 What solution for Deutsche Bank was proposed? How effective do you think it will be? Explain your answer.
Cryan was employed as the new CEO for this bank, he proposed that Deutsche bank had a 10 year multi billionaire deal with Hewlett-Packard to standardize and simplify its IT infrastructure to reduce costs and create a modern technology platform. I believe this is effective but Deutsche bank had not incurred profit in a while so in order to upgrade their technology a lot of funds would be required. Analyzing the banks current state, I believe this will not be too effective as a lot more financial funds are required to make this plan come to life. This plan was not successful as Cryan was unable to restore the bank’s profitability.
This case study enlightened me as to how old technology could hurt businesses. I found some reasoning as to why the bank did not do well. Not being on par with the latest technology can affect a business in many ways; loss of reputation, missing out on the best opportunities for a business, slow systems resulting in lack of productivity, and with old technology a company is not able to reach its full potential. The use of efficient IT software’s increases productivity for employers as doing work manually would use up efficient time to perform other tasks. Technological change can make room for future expansion within a company. Some more relevant research that I performed is about the company itself. I found out that they would cut 18,000 jobs which is one fifth of its global staff. This is the relevant research that I provided to get a better understanding of the topic.
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