I’m often asked about how to implement a digital bank? What are the top tips?
My response is that every company is different, with no two banks the same. Some are evolutionary and try to tinker with the current company structure; some are revolutionary, like mBank, and radically reorganise the current structure; whilst some are transformational, like BNP Paribas and Hello!, where the only way to create the new structure is through the launch of a new bank.
Whichever strategy is being followed, the most critical piece in all of this is leadership, as I’ve said before. This is where it gets more difficult as most banks are structured like monkey trees.
The monkey tree organisation has a lot of primates running up and down the limbs of the tree. The monkey at the top of the tree looks down and sees a lot of smiling faces.
The monkey’s climbing up the tree just see a bunch of assholes.
It’s an easy joke to make, and gets a big laugh at many of the conferences I attend, but that is because it rings true. Bear in mind that most banks have several hundred thousand employees and their culture is ingrained through years of hiring like-minded people who fit into the bank’s culture. Equally, most bank CEOs are selected on the basis of being the best internal candidate who has been in the bank for many years. This results in someone who thinks like the bank, has grown up within the bank, now running the bank and the last thing they are going to do is cut off the branch that they’re now sitting on. After all, the higher up the tree you get, the bigger the fall if you drop off.
Not only this, but most are career bankers who have grown up with branches and desk operations with little experience of technology operations. There are very few CEOs who have been a CIO or COO. So it’s a big ask for a bank CEO to invest in reformation of the bank to be digital. Far safer is evolution or transformation (launch a new bank).
Having said that, some are doing it as they are passionate about differentiation and are good leaders. It doesn’t matter if you’re not a CIO by background, if you can see the need to reform for digital and have passion and leadership, it doesn’t matter. That is the most critical factor – engendering change through leadership.
Now good leaders are hard to find. I would name names, but it would be unfair as I’m not familiar with every bank out there, but what tends to happen is that a rising call for change grows within the bank and the incumbent or new CEO eventually listens. Often it’s because his or her direct reports are shouting that digital is important or, more often than not, the customers are demanding change or competitors are doing things that you have to follow (this is what happened with mBank).
Where you have a noise that gets so loud it cannot be stopped, the CEO eventually has to respond and, if they are a good leader, they respond with absolute passion and commitment. They make it clear what has to change and why. They invest 100% into the change program and make it happen. It’s all about leadership (as I’ve said before).
Just for completeness, here’s the profile a few major bank leaders:
Antonio Horta-Osario, CEO, Lloyds is a career banker who started his career with Goldman Sachs and Citi before joining Santander in 1993, rising to UK CEO in 2006 before joining Lloyds in 2011.
Antony Jenkins, CEO, Barclays is a career Barclays banker, having started as a graduate recruit at the bank's South Kensington branch almost 30 years ago.
Ross McEwan, CEO, RBS is seen as a carbon copy of Antony Jenkins, and is a career banker with experience of banking and insurance in Australia before joining RBS in 2012.
Stuart Gulliver, CEO, HSBC is a career HSBC banker, and joined HSBC in 1980 with key roles in the Group’s operations worldwide, including postings in London, Hong Kong, Tokyo, Kuala Lumpur and the United Arab Emirates.
Ana Botin, Chair, Santander is a career banker joining JPMorgan in Madrid immediately after college before starting with Santander in 1988.
Brian Moynihan, CEO, Bank of America as agraduate of Brown University and the University of Notre Dame Law School, Moynihan joined FleetBoston in April 1993 as deputy general counsel, and came to Bank of America following its acquisition of FleetBoston.
Jamie Dimon, CEO, JPMorgan Chase has been a COO and began his career at Goldman Sachs in 1978 before becoming Chief Administrative Officer at Smith Barney in 1990 which was acquired by Citigroup when he moved to Bank One in 2000, which was acquired by JPMorgan in 2004.
John Stumpf, CEO, Wells Fargo is a 33-year veteran of the company having joined the former Norwest Corporation (predecessor of Wells Fargo) in 1982 in the loan administration department.
Michael Corbat, CEO, Citigroup has been at Citi and its predecessor companies since his graduation from Harvard University with a bachelor's degree in economics in 1983.