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  • @fintechna 12:07 pm on October 5, 2016 Permalink | Reply
    Tags: , , , , transformation   

    Google´s Larry Page buys a “major global bank” 


    Can you imagine the reaction of a bank employee if one morning he reads this headline? 

    In the spring of 2010 I polled the students of the Master of Finance about how many of them would rather work for Google instead of a bank. Survey results: 5%. Last Friday I have made the same question for the current group. Survey results: 96%.

    Despite the efforts to adapt traditional business to the rapidly changing world, the truth of the matter is that dominant players today are mostly new ones: Apple and Spotify control the music distribution versus Sony and Virgin; Amazon Kindle and Apple iBooks control book distribution; Uber controls taxi industry; Skype and WeChat control phone calls market; Amazon and Alibaba control retail vs Walmart or Best Buy; WhatsApp controls messaging space vs AT&T or Telefonica.

    1. Can there really be a new dominant player in financial services?

    Not so well-known as the above, Yu´e Bao, the money market fund of Alipay (Alibaba) is the largest fund (USD 100 billion approx) in its category in China vs Commercial Bank of China (ICBC), China Construction Bank or Bank of China. In fact, Yu´e Bao can be considered as the most successful mobile product in the world. There is no minimum amount, and customers can withdraw their cash anytime. Yu’e Bao now has more investors than China’s equity markets.

    This is only the tip of the iceberg regarding changes in the financial services industry.

    2. Why is so difficult for traditional business to make the transformation?

    The hardest thing to change in a corporation is not the tech system but its . The technical side is relative easy to solve: hire a full Silicon Valley team and make it from scratch. But how easy it is to change the culture of +100k employees?

    Executives underestimate how hard it can be to drive people out of their comfort zones.

    The real issue is the status quo of the current employees. What does a successful digital banking mean? It means that in two years you will not need 50-70% of the employees, nor todays countless committees. And what is the conclusion if you have an unsatisfactory digital banking transformation? Probably the bank will be closed in five-ten years and you will have to fire 90% of the employees. So, for the 50-70% of the current employees, the best option is the status quo, as probably they will maintain their comfort zone for their next working years.

    3. How does the culture need to change?

    • Risk Building/ Failure tolerance.

    • Pilot projects rather than large initiatives.

    • Hire for culture fit ahead of tech fit.

    • Drive scalable learning.

    Citigroup has invested in Betterment, Santander in Ripple, BBVA in Simple, etc. In an acquisition the buyer transmits the culture to the acquired company. Even more when the buyer has +100k employees and the acquired has less than 300. If you want to take advantage of the culture, you need a process to quickly infuse the cultureof the acquired company into the main operation. If not, at the end of the day what will probably happen is that 300 employees adopt the bank culture, or end up leaving the company.

    4. How to infuse the fintech culture into a major bank?

    Basically there are three tools for the digital transformation: the People, the Strategy and the Execution.

    4.1. People

    • Adopt a talent replenishment model.
    • Rethink traditional models of working (employee/employer models, more partners).
    • Balance soft and tech skills in all company levels.
    • Educate the ones that might be transformed. In my experience more than you think.
    • Above of all you need transformative leaders.

    It´s rare that originality comes from insiders, especially when they are as entrenched and comfortable as the financial services industry.

    Just a reflection about how to attract talent at scale: Would you go to Silicon Valley? What is the replacement cost there competing with Google, Apple, etc.? What would be that cost in places like Mexico or Colombia? I can ensure that Mexican and Colombian engineers have the same or even better knowledge than their neighbors. Some tech funds are moving from India to Bogota! Yes you read correctly, Bogota!

    4.2. Strategy

    Any of the employees should know to answer two simple questions:

    • Where does the company want to go with the digital transformation? Where do I want to go? (Objectives).
    • How will I know I am getting there? (Key results to ensure progress is made).

    4.3. Execution

    First of all, you need to make everybody feel uncomfortable with the status quo. That does not mean a general employment reduction, nor to maintain every employee.

    Success in your digital transformation requires addressing three areas:

    • Diagnosis (Why?)
    • What to do – initiatives in the short and long term-?
    • How to do it?

    Then bring passion for execution for all the crew; this is a heroic trip, you will invent the future of banking. You and your team will not want to work in Google but become the “Google Bank”.

    can play a defensive or an attack digital transformation strategy. The ones that play a defensive game will be probably bid by Google´s Larry Page…at distressed levels…


    *Headline names have been chosen randomly, with no other intention than drawing the attention.

    Note: This is a third article about Digital Banking Transformation. For further details:

    Digital Banking Transformation: BBVA vs. Banco Santander

    Disruptive Mentality in Banking

    is Entrepreneur. Investor. Professor. Transformation Catalyst


  • @fintechna 10:00 am on August 4, 2016 Permalink | Reply
    Tags: , , , , , , , transformation   

    Digital Banking Transformation: BBVA vs. Banco Santander 


    In the following 5 years may lose 50% of their business.

    I don’t think I’m exaggerating when I say in 5 years banks will lose 50% of their business. I am pretty sure that the major banks handle this scenario. If not, why announce so insistently their strategy to shift to a digital ?

    In a low interest rate scenario, with low margins and high regulation there were only two ways to go: innovation or market expansion where margins were still high (such as Africa which was very risky and non competitive for banks such as or Banco ).

    It seems that digital transformation is the correct approach. But now they have to start. Entrepreneurs who believe that the idea is worth something, I’m sorry to disappoint you:  the idea has a value of 1%, the execution has 99%.

    But how do you transform a traditional bank into a digital bank? There are three ways you can follow or rather a combination of these:

    1. Purchasing and integrating existing companies.
    2. Develop projects internally.
    3. Creating a platform where others offer their products and the bank becomes a middleman of the generated value. A financial iTunes.


    10 variables to be analyzed in the digital transformation

     After studying many cases and opinions by hundred business leaders from business schools around the world[i], I’ll analyze the 10 variables that can determine who will win between BBVA and Banco Santander in the digital transformation.

    1. ENTREPRENEURIAL CULTURE. Having a very disciplined culture is a handicap for any innovation transformation. The employees must challenge the obvious, question and debate everything, innovate. Even ask themselves why you’re my boss? Why am I not your boss?

    Can you imagine a bank manager persuading customers not to buy bank shares because the crash of their values in the last five years (-40% BBVA and -60% Banco Santander)? I mean, can you imagine it without his name being mentioned on the next employment reduction list?

     2. CULTURAL CHANGE. The hardest thing to change in an institution is its culture. Both banks exceed the one hundred thousand employees (BBVA 135,000 and Banco Santander 193,000 approximately); Employees used to traditional banking culture. How many of these will serve to implement the digital strategy? I don’t think more than 5%.

    Banks are making great digital campaigns on their digital tools. For example BBVA Wallet. But if you go to a branch office and ask employees if anyone knows how it works, no one will know exactly. It’s not what you say you are, but is how the rest perceive you!

    3. ATTRACTING TALENT. Is not only that they have more than enough personnel, but is possible they may need 5-6 thousand digital employees who now work for Google and other similar companies that have no intention to change to BBVA or Banco Santander.

    10 years ago the brightest students of business schools ended up working for banks. Today the brightest students want to start their own fintech or work for companies like Google, Apple, etc.

    4. STRUCTURE TRANSFORMATION. They should flatten the organization to boost improvisation. It is true that both institutions have announced in press releases this kind of restructuring. But, “the words do not tell you anything, the facts will.”

    Anyone that has had to negotiate with a bank can see that each time the deal maker is newer and with less rank than the previous one.

    5. IMPLEMENTATION CAPACITY. A project that takes too long to start can only show you what can go wrong, not what it can be transformative and impactful.

    Both in USA and the UK and even in Spain, there has been successful -advisor developed in just 12 months. None of the surveyed had heard of a BBVA or Banco Santander’s robo-advisor, even after 10 years announcing leading digital transformation!

    6. CHAOS  vs ORDER. In the recent entrepreneurial culture of innovation is often put as an example of success the case of Israel. Among other reasons it is often argued that the military training of Israeli society has been one of the pillars of this entrepreneurial culture. This training is characterized by certain “chaos” versus the typical military order of other nations. “Challenging the boss” is one of the commands for all young Israeli soldiers. Any technology that reaches the army of Israel from the USA, is in five minutes modified to find another use of it.

    Both banks are using their platforms for different tasks such as risk management, internal training or products assessment. These platforms were bought many years ago and are not flexible to allow any modification by the employee. However, in the market these systems have been improved substantially in the last 3-4 years and most of them use now open sources. Being “managed” by closed and obsolete systems prevents that the innovation process exists.

    7. EMPLOYEE PROFILE. Following our example of Israel. One of the successes of Israel in terms of innovation is based on the large number of engineers and doctors that came from the Soviet Union. If a bank wants to innovate, it would be logical to think that they should have a high percentage of highly qualified engineers and doctors.

    Silicon Valley companies hire the best engineers and doctors even if they don’t need them. Having them is the best barrier to prevent the competition of qualified personnel. And is not only capturing them but keeping them and create a network-effect that lures those professionals to working with them today.

    8. PROCEDURES. When I see all the procedures that today bank employees must follow, I wonder how the hell they will innovate something? How many times will you know what a competitor or a customer plan? It’s like saying in the trade stocks market you’ll buy shares regardless what happens because it’s in the procedure.

    I recently attended a conference in which three responsible managers of innovation of BBVA, Banco Santander and Bankia participated. Almost the three of them said the same of how they were going to innovate the financial sector, which surprise me. The three mentioned the importance of procedures in their institutions. I wonder, Can they really invent the future of banking following a procedure?

    9. ABILITY TO BUY AND INTEGRATION. Is not only buying innovative companies. It is integrating them into the bank. To succeed in the transformation via purchasing you should be able to buy the best and especially to integrate the projects.

    In recent years I have met four entrepreneurs which BBVA bought their innovative companies and incorporated them. None of the four lasted more than 24 months in the bank. Moreover it strikes me that they all had the same reason to leave the bank, “before I used to innovate, since I entered the bank I can’t make any kind of innovation.” In the case of Banco Santander I haven’t had a chance to meet entrepreneurs who had integrated to the bank. However I’ve met at least three ex-Santander that left the bank and have been quite successful creating digital businesses.

    10. DISRUPTIVE MENTALITY. To create a style of iTunes platform you have to accept disruptive ideas. At MIT they use two very appropriate concepts to innovate. One is “Irreverent Creativity “. The other is the GSD (“Get this shit done”). But above all, any entrepreneur has forbidden to say “this is impossible”. If banks want to innovate they should start by banning from their managers “this is impossible”.

    How can they deal with “Google Bank”?

    At least one of these three things they must do better than “Google Bank”: either buy or develop or be disruptive in the platform. Google bought Android for approximately US 50MM, a ridiculous amount compared to what BBVA or Banco Santander are spending on recent acquisitions. Google has been able to integrate and reach 82% of the smartphone global market creating also a totally disruptive platform.

    Maybe my initial idea of a 50% business loss for traditional banks in 5 years is a bit short.


    [i] This article is based on the opinions of 100 leaders with the following profile:

    • Entrepreneurs, suppliers and customers of BBVA and Banco Santander, colleagues from Harvard Business School and the MIT.
    • Master’s IEB students, from the UNED, Finance Business School and the Tecnológico de Monterrey.
    • Countries: USA, México, Colombia, Chile, Brazil, Peru, UK and Spain.
    • None of them work for the BBVA or Banco Santander.

    is Entrepreneur. Investor. Professor. Transformation Catalyst and this article was originally published on linkedin.

  • @fintechna 12:18 am on May 29, 2016 Permalink | Reply
    Tags: , , , , interviews, , , , transformation   

    What we learned about the transformation of Consumer Banking from 5 Pirates with Ties interviews 

    One of the things that makes this job so much fun is the ability to talk to the really smart people in a dynamic market. Doing a startup is hard;  we are entrepreneurs ourselves so we get that. However we want to counter the myth that all innovation comes VC fundedRead More
    Bank Innovation

  • @fintechna 11:43 pm on May 12, 2016 Permalink | Reply
    Tags: , , , , technologydriven, transformation,   

    The technology-driven transformation of wealth management 

    binarymoney In today&;s digital world, everyday functions such as making dinner reservations or hailing a taxi are done at the touch of a button. Similarly, other, more complex and esoteric functions, such as , are also moving toward automation. This evolution is enabled by the creation of state-of-the-art software, which has helped make wealth management more consumer-friendly&; Read More

    fintech techcrunch

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