Written by Bloomberg
Deutsche Bank AG beefed up its digital banking operations again with a second investment in a fintech startup within four months, a move that points to a slow revolution at one of its most important divisions.
The German lender, which has been shrinking staff and operations internationally, agreed to buy an unspecified stake in Dallas-based startup ModoPayments, aiming to bolster its Global Transaction Bank and tap into the fast-growing channels outside of traditional banking.
While Deutsche Bank has fallen out of favor with investors, the valuations of companies more focused on the global trend toward mobile and digital payments have rocketed. Earlier this month, Germany’s largest bank by assets was overtaken in market value by Wirecard AG, a Munich-based startup with only 5 percent of its revenue.
The move expands the lender’s existing digital payments business which sends funds between companies and consumers. Deutsche Bank said the deal will help it connect to platforms run by Jack Ma’s Alipay, Tencent Holdings Ltd.’s WeChat, PayPal Holdings Inc. and M-Pesa.
The investment in Modo follows the acquisition of Indian-based Quantiguous Solutions in May. Terms weren’t disclosed for either deal. Modo had raised a total of $11.3 million over eight years before Deutsche Bank’s investment, according to startup monitor Crunchbase.
“Modo’s technology will allow us to provide new transaction services and payment alternatives for the rapidly growing digital economy,” Michael Spiegel, Deutsche Bank’s head of cash management, said in a statement.