1-12 Identify the problem described in this case study. What management, organization, and technology factors contributed to this problem? 

1-13 What was the role of information technology at Deutsche Bank? How was IT related to the bank’s operational efficiency, decision-making capability, and business strategy? 

1-14 Was Deutsche Bank using technology effectively to pursue its business strategy? Explain your answer. 

1-15 What solution for Deutsche Bank was proposed? How effective do you think it will be? Explain your answer

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36 Part One Organizations, Management, and the Nerworked Enterprise Did Information Systems Cause Deutsche Bank to Stumble? CASE STUDY D asset classes for approximately five days. Deutsche Bank's subsequent efforts to end the system outage repeatedly exacerbated existing reporting problems and led to the discovery and creation of new report- ing problems. For example, Deutsche Bank's swap data reported before and after the system outage revealed persistent problems with the integrity of certain data ficlds, including numerous invalid legal entity identifiers. (A legal entity identifier [LEI] is an identification code to uniquely iden- tify all legal entities that are parties to financial transactions.) The CFTC complaint alleged that a number of these reporting problems persist today, affecting market data that is made avail- able to the public as well as data that is used by the CFTC to evaluate systemic risk throughout the swaps markets. The CFTC complaint also alleged that Deutsche Bank's system outage and subse- quent reporting problems occurred in part because Deutsche Bank failed to have an adequate business continuity and disaster recovery plan and other appropriate supervisory systems in place. In addition to incurring high costs associated with coping with regulators and paying fines, Deutsche Bank was a very unwieldy and expensive bank to operate. U.S. regulators have identified Deutsche eutsche Bank AG, founded in 1870, is one of the world's top financial companies, with 2,425 branches worldwide. It offers a range of financial products and services, including retail and commercial banking, foreign exchange, and services for mergers and acquisitions. The bank provides products for mortgages, consumer finance, credit cards, life insurance, and corporate pension plans; financing for international trade; and customized wealth management services for wealthy private clients. Deutsche Bank is also the largest bank in Germany, and plays a central role in German economic life. In many ways, Deutsche Bank is the embodiment of the global financial system. Deutsche Bank has the world's largest portfolio of derivatives, valued at about $46 trillion. A finan- cial derivative is a contract between two or more partics whose valuc is dependent upon or derived from one or more underlying assets, such as stocks, bonds, commodities, currencies, and interest rates. Although Deutsche Bank had survived the 2008 banking crisis, which was parly triggered by flawed derivatives, it is now struggling with seismic changes in the banking industry, including recent regulatory change. The bank was forced to pay $7.2 billion to resolve U.S. regulator complaints about its sale of toxic mortgage sccuritics that contributed to the 2008 Bank's antiquated technology as one reason why financial crisis. In addition, the Commodity Futures Trading Commission (CFTC) charged that Deutsche Bank submitted incomplete and untimely credit default swap data, failed to properly supervise employees responsible for swap data reporting, and lacked an adequate business continuity and disaster recov- ery plan. (A credit default swap is a type of credit insurance contract in which an insurer promises to compensate an insured party [such as a bank] for losses incurred when a debtor [such as a corpora- tion] defaults on a debt and that can be purchased or sold by either party on the financial market. Credit default swaps are very complex financial instruments.) The CFTC complained that on April 16, 2016, Deutsche Bank's swap data reporting system expe- rienced a system outage that prevented Deutsche Bank from reporting any swap data for multiple the bank was not always able to provide the correct information for running its business properly and responding to regulators. Poor information systems may have even contributed to the 2008 financial cri- sis. Banks often had trouble untangling the complex financial products they had bought and sold to deter- mine their underlying value. Banks, including Deutsche Bank, are intensive users of information technology, and they rely on technology to spot misconduct. If Deutsche Bank was such an important player in the German and world financial systems, why were its systems not up to the job? It turns out that Deutsche Bank, like other leading global financial companies, had undergone decades of mergers and expansion. When these banks merged or acquired other financial companics, they often did not make the requisite (and often far-reaching) changes to integrate their information systems with 36 Part One Organizations, Management, and the Nerworked Enterprise Did Information Systems Cause Deutsche Bank to Stumble? CASE STUDY D asset classes for approximately five days. Deutsche Bank's subsequent efforts to end the system outage repeatedly exacerbated existing reporting problems and led to the discovery and creation of new report- ing problems. For example, Deutsche Bank's swap data reported before and after the system outage revealed persistent problems with the integrity of certain data ficlds, including numerous invalid legal entity identifiers. (A legal entity identifier [LEI] is an identification code to uniquely iden- tify all legal entities that are parties to financial transactions.) The CFTC complaint alleged that a number of these reporting problems persist today, affecting market data that is made avail- able to the public as well as data that is used by the CFTC to evaluate systemic risk throughout the swaps markets. The CFTC complaint also alleged that Deutsche Bank's system outage and subse- quent reporting problems occurred in part because Deutsche Bank failed to have an adequate business continuity and disaster recovery plan and other appropriate supervisory systems in place. In addition to incurring high costs associated with coping with regulators and paying fines, Deutsche Bank was a very unwieldy and expensive bank to operate. U.S. regulators have identified Deutsche eutsche Bank AG, founded in 1870, is one of the world's top financial companies, with 2,425 branches worldwide. It offers a range of financial products and services, including retail and commercial banking, foreign exchange, and services for mergers and acquisitions. The bank provides products for mortgages, consumer finance, credit cards, life insurance, and corporate pension plans; financing for international trade; and customized wealth management services for wealthy private clients. Deutsche Bank is also the largest bank in Germany, and plays a central role in German economic life. In many ways, Deutsche Bank is the embodiment of the global financial system. Deutsche Bank has the world's largest portfolio of derivatives, valued at about $46 trillion. A finan- cial derivative is a contract between two or more partics whose valuc is dependent upon or derived from one or more underlying assets, such as stocks, bonds, commodities, currencies, and interest rates. Although Deutsche Bank had survived the 2008 banking crisis, which was parly triggered by flawed derivatives, it is now struggling with seismic changes in the banking industry, including recent regulatory change. The bank was forced to pay $7.2 billion to resolve U.S. regulator complaints about its sale of toxic mortgage sccuritics that contributed to the 2008 Bank's antiquated technology as one reason why financial crisis. In addition, the Commodity Futures Trading Commission (CFTC) charged that Deutsche Bank submitted incomplete and untimely credit default swap data, failed to properly supervise employees responsible for swap data reporting, and lacked an adequate business continuity and disaster recov- ery plan. (A credit default swap is a type of credit insurance contract in which an insurer promises to compensate an insured party [such as a bank] for losses incurred when a debtor [such as a corpora- tion] defaults on a debt and that can be purchased or sold by either party on the financial market. Credit default swaps are very complex financial instruments.) The CFTC complained that on April 16, 2016, Deutsche Bank's swap data reporting system expe- rienced a system outage that prevented Deutsche Bank from reporting any swap data for multiple the bank was not always able to provide the correct information for running its business properly and responding to regulators. Poor information systems may have even contributed to the 2008 financial cri- sis. Banks often had trouble untangling the complex financial products they had bought and sold to deter- mine their underlying value. Banks, including Deutsche Bank, are intensive users of information technology, and they rely on technology to spot misconduct. If Deutsche Bank was such an important player in the German and world financial systems, why were its systems not up to the job? It turns out that Deutsche Bank, like other leading global financial companies, had undergone decades of mergers and expansion. When these banks merged or acquired other financial companics, they often did not make the requisite (and often far-reaching) changes to integrate their information systems with

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