Mindset shift drives new digital identification platform
When it comes to making everyday purchases, booking travel, downloading a movie to watch on a mobile device, and conducting online banking transactions, more and more consumers rely on digitally enabled tools. Often many of these tasks require some form of digital identification. Innovators are quickly searching for convenient and secure ways to provide identity services and payments for consumers to use.
In Germany, Deutsche Bank is one such innovator. The country’s leading bank is a founding member of Verimi, a consortium of leading companies from a variety of industries including: Allianz, Axel Springer, Bundesdruckerei, Core, Daimler, Postbank, Deutsche Telekom, HERE Technologies, Lufthansa and Giesecke+Devrient.1
Verimi (the name is a combination of “verify” and “me”) is a cross-industry digital identification and verification platform to serve the needs of consumers. It provides a single sign-on for customers to access and use potentially limitless services—from banking to airline reservations to telecommunications) and allows them to transact with as many companies as they need to without having to provide their sign-in credentials each time. Using Verimi, companies will “recognize” users the way a doorman recognizes long-time residents of a particular apartment building.
At the same time, Verimi allows its users to remain in control of their data. Each individual decides how much or how little to share. These preferences can be changed at any time.
An expanding collaboration
When they first sat down to discuss a single sign-in platform, the members of the founding consortium saw some urgency to the project. They recognized the attraction of the platform and knew that big tech firms in the U.S. or Asia would soon be offering similar identity platforms to European consumers. However, because of cultural and regulatory differences, such as the European General Data Protection Regulation (GDPR), and generally greater concern in Europe about data privacy, they felt the solution needed to be uniquely European.
The aim of Verimi is to give German (and, later, European) consumers a single, secure payment platform that can be used for transactions with any company. To that end, Verimi is not an exclusive offering of its founders. Rather, it is an open platform, available to all. Other companies—even those in direct competition with the founders— are encouraged to adopt Verimi as their payment platform.
Currently, a customer who logs in to Deutsche Bank can simultaneously log in to Lufthansa and the other companies listed above. In the near future, that same customer will be able to log in to thousands of companies at a single stroke through the same platform. This may also include governmental organizations. The German Ministries of Economic Affairs, Internal Affairs and Finance have all taken notice and are closely following the development of Verimi.
The more users able to connect to more companies and organizations, the more relevant and essential Verimi becomes.
The ongoing question of security
Companies that offer cashless transaction services depend on building trust with their customers. Cyber threats and security breaches—both real and imagined—are genuine concerns. People need to know that their money and personal data is safe. Therefore, improving security against these threats is an ongoing concern for the corporate world as well as government agencies that regulate and oversee digital privacy and security. Verimi adheres strictly to the GDPR. During the development stage, Verimi’s founders sought and received input from experts in cyber security (including from the Ministry of Internal Affairs), quantum computing and specialists from the Deutsche Telekom and Bundesdrunckerel (an IT security firm).
Strong performance means more users
Unlike most banking services, growing revenue isn’t the immediate goal for Verimi. “None of the platforms should think about revenue first,” said Markus Pertlwieser, the bank’s chief digital officer. “It’s about consumer engagement, the number of active users and market share.”
To similar ends, Deutsche Bank launched a new business in the fall of 2018, a digital wallet called Yunar (from “yuna,” the Celtic word for desire). The goal of the business is to accelerate the expansion of the digital platform by making loyalty programs easier to use. For example, the Yunar app will allow customers to view point balances, thereby eliminating the need to stuff one’s wallet with various plastic cards.
However, while they are the initial focus, loyalty programs are just the beginning. According to Pertlwieser, Yunar will expand by adapting to consumer needs and preferences. “With Yunar, new ideas will be implemented faster in future, regardless of whether we act on our own or together with partners.”
Verimi, Yunar and similar programs represent part of a new way of thinking about the future of financial services that has recently become central to Deutsche Bank’s strategy. One of the few banks with a concerted research and development effort, Deutsche Bank has launched a network of innovation labs in cities around the world. A lab in Singapore, the company’s fifth, and first in Asia, was opened in November 2018. These labs are charged with working out the needs of the bank and its supporting functions, and then helping to find solutions through a vast network of startups. The start-ups, mainly in the fintech space, are encouraged to collaborate with the bank, so their ideas get funded, tested and executed faster.
Where fintechs were once seen as competition, Pertlwieser now views them as potential partners. “I see them as an opportunity,” he told Business Insider.2 “I don’t think the majority are even in direct competition with us anymore. Rather, a lot of [them] are focused on B2B solutions and they are much more heavily ‘tech’ than ‘fin.’ That’s why we at Deutsche Bank have already got some good co-operation projects off the ground. They combine speed with great benefits for our customers.”
This too, reflects a new way of thinking. As Pertlwieser also said: “A key belief is to decide whether you want to be an information provider or own the platform… More or less all products get commoditized. Many platforms need curation. You need to decide what expertise you can bring to the platform for your customers’ benefit.”
To make Verimi work as envisioned, the Deutsche Bank team had to learn a new mindset. “A pipeline business and platform business require two distinct ways of thinking,” said Pertlwieser. “In a pipeline business, the focus is on efficiency. In a platform business, only three to four out of ten things you try will work. Accepting that level of failure as part of the process required a cultural shift.”
What’s more, the bank needed to acquire new capabilities. “In a platform business, success comes from how well you orchestrate your network of external partners. It’s about co-operation and how to effectively collaborate with big tech firms, who themselves could be a competitor. You must determine where it makes sense to collaborate and where the lines need to be drawn.