Deutsche Bourse Turns to Fintech Partners to Build 'Exchange 4.0’

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Wednesday, January 18, 2017 7:02 PM / FinTech

Big Data = AI = Blockchain

"New IT-based analytical tools for large amounts of data, and mobile devices are about to give the financial services industry a "DNA transplant".

Deutsche Bourse is promising to cooperate with fintech firms and tap new technologies such as big data, AI and, above all, blockchain as it moves toward the creation of an 'Exchange 4.0', says CEO Carsten Kengeter.

Speaking at a New Year's reception, Kengeter said that while Deutsche Bourse's upcoming merger with the London Stock Exchange is grabbing all the headlines, it is just one part of a technology-driven growth agenda.

He predicts that digital processes, new IT-based analytical tools for large amounts of data, and mobile devices are about to give the financial services industry a "DNA transplant".

"Exchanges will have an altogether different design in five years’ time:
they will be digital and data driven, and will be offering new services on this basis. We are focusing on cooperations to offer such services - with technology partners, with other capital markets players, with policymakers and with regulators."

With this in mind, last year the firm set up a dedicated fintech venture fund, DB1, and has already acquired digital foreign exchange trading platform 360T and taken stakes in other startups, including API specialist figo. Meanwhile, Kengeter also stressed the importance of data (market, big and smart) and AI in delivering new analytical tools to clients.

Longer term, blockchain technology "will trigger a true quantum leap" for the exchange industry. Deutsche Bourse has already teamed up with Germany's central bank to develop a functional prototype for blockchain technology-based settlement of securities, while further prototypes in clearing and collateral management are also underway.

On the LSE deal, with the spectre of Brexit in the air Kengeter stressed support for "Europe's future cohesion" and a bridge between London and Frankfurt.

Separately, the boss of another German powerhouse, Deutsche Bank's John Cryan, has also been talking up the importance of technology. Speaking at the World Economic Forum in Davos, Cryan said "we are placing our bets on technology."

"We can use technology to improve our own controls. We can use technology to improve our efficiency and then we can use technology to improve the customer service."

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