Deutsche Bank’s investment in mobile payments firm Modo

Sarah Kerver/Getty Images for
Samsung

• Deutsche Bank is taking an undisclosed stake in
  payments technology company ModoPayments.
• The technology makes it easier for businesses to send
  money to each other and to consumers via mobile. 
• 
  More consumers, and particularly those in
  emerging markets, are electing to skip bank accounts and hold
  their cash in so-called e-wallets. 
  

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Imagine the CFO of a Fortune 500 company sitting in a New York
skyscraper is able to send a multi-million dollar payment to a
supplier in South Africa that he receives on his mobile
phone.  

That’s the promise of a new investment Deutsche Bank has made
into ModoPayments, a Richardson, Texas-based startup that makes
it easier for businesses to send money to one another
electronically. 

Deutsche declined to give the size of the investment, which is
being made out of the German lender’s transaction banking and
cash management units. 

Currently, large transaction banks like Deutsche Bank can arrange
to have their corporate clients make payments via their mobile
phones, but it’s often expensive and time-consuming since many of
these payment systems are built on old technology. 

Modo improves this process by reducing friction between payment
systems. This enables Deutsche and its customers to send payments
through a host of applications where consumers are increasingly
holding their money, like Kenya’s mobile-phone based system
M-Pesa and China’s WeChat. 

“It’s something we could do and have looked at in the past
but it’s very complex, expensive, and bilateral. Their technology
allows us to be agnostic and faster to market,” Deutsche’s global
head of digital cash products for global transaction
banking David Watson said in an interview. “By
partnering with Modo, we deal directly with them and they take on
the responsibility of the extension into the likes of M-Pesa,
WeChat or Alipay, and other e-Wallet providers.”

That brings scale to the firm’s transaction banking business just
as more consumers — and particularly those in emerging markets —
are electing to skip bank accounts and hold their cash in
so-called e-wallets. Think of an insurance company that’s paying
out large-scale claims to consumers without bank accounts, or
software developers who prefer to have their money deposited
directly into an online wallet. 

“You want to make sure you pay them in a way that makes it
easy for them,” Watson said. “Many of our client’s customers or
providers don’t have traditional bank accounts like you and I
might have in the US right now, where we open an e-wallet linked
to a credit card or debit card. And there are places
where it has jumped from cash to e-wallets. In those locations,
you don’t want to mail them checks or cash; you want to deposit
it right into an e-wallet.”

Later this year, or early in 2019, Deutsche Bank expects to
unveil products it’s been developing in concert with strategic
clients and Modo, Watson said. He declined to name the clients or
describe the product. 

The investment in Modo is the latest fintech investment for
Deutsche Bank. In May, the bank bought India-based software
developer Quantiguous Solutions to help accelerate its
application programming interface program.