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Germany’s financial regulator has appointed a specialized supervisor at Deutsche Bank, as the bank tackles worsening customer service issues at its subsidiary Postbank after a failed IT integration.
Deutsche Bank has been overwhelmed with complaints following the migration of 12 million Postbank clients in July, which the bank initially claimed was successful. However, since then, thousands of customers have been unable to access their accounts for several weeks, causing significant financial burden and frustration, while customer service centers have been inundated.
Last month, BaFin publicly reprimanded Deutsche Bank, criticizing the “considerable disturbances” and extended waiting times, deeming them “unacceptable.” Consequently, BaFin announced on Monday that it would deploy a monitor within the bank to ensure prompt, complete, and permanent resolutions to these issues.
The appointed supervisor added, “BaFin is fulfilling its legal mandate for collective consumer protection, and if the urgently-needed improvements in order processing at Postbank and DSL Bank are not implemented, we have the authority to intervene on a supervisory basis.”
Deutsche Bank stated, “We are making progress in improving processing times at Postbank. We will closely collaborate with the financial supervisory authority and its representative to meet the expectations of our regulators and provide swift resolution to our affected customers.”
The technology problems originated from Deutsche Bank’s ill-fated acquisition of Postbank in 2010, a troubled retail lender that was formerly owned by Germany’s state-owned postal service. Deutsche Bank’s prior attempts to sell Postbank were unsuccessful, and their earlier IT integration efforts were also marred by errors and wasted €1 billion between 2010 and 2015.
In 2017, Deutsche Bank decided to proceed with a full integration of Postbank, retaining only the brand and branches, with anticipated annual cost savings of €300 million by 2025.
The integration process, known as “Project Unity,” was completed in July when the remaining clients and contracts were transferred to Deutsche Bank’s IT systems. However, the Financial Times previously reported that Deutsche Bank did not adequately train Postbank staff on its computer systems and struggled to comply with legal requirements regarding court orders.
This appointment of a monitor is a setback for CEO Christian Sewing, who previously led Deutsche Bank’s retail business for three years before being promoted to the top position in 2018. Sewing has already apologized for the customer service issues and allocated additional staff to address them. The bank may now also face regulatory fines.
Deutsche Bank’s shares remained relatively stable after the announcement but have declined by 4.6% this year.
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