Digital banking
the right expertise, financial institutions have colossal opportunities, whether in terms of helping customers, making life easier for staff, or simply saving money. That, at any rate, is the strategy being pursued by UniCredit. Even more than some of its competitors in the field, the Italian institution is embracing digitalisation comprehensively. Scooping up economists and data scientists, investors and government officials, its work heralds a digital world that touches every aspect of the banking process – with lessons for banks far beyond its Milan headquarters.
Tech a seat
Over two decades ago, when she first entered the world of banking, Finja Carolin Kütz remembers just how personal so much of it felt. On the financial desk at Oliver Wyman, a New York management consulting firm, she recalls seeing traditional trading floors, and how so much of the buying and selling was done through phone calls and hand signals. It was “like you were in some old Wall Street movies”, recalls Kütz, since 2018 the group chief transformation officer at UniCredit (she’s also UniCredit’s deputy COO). More recently, of course, everything is different, especially in trading. “Nowadays,” she explains, “complex algorithms are driving significant trading volumes, post-trade processes are largely automated and simpler products have been mostly moved on to digital platforms that we use to engage with and support our customers.” Expert advisors, for their part, normally only step in when the transactions are too complicated for the computers to handle.
All the same, if floor trading threw off its shabby Gordon Gekko reputation years ago, retail banking has been slower to adapt. This may seem surprising given how much attention it’s recently enjoyed, but look at the statistics and this inertia begins to make sense. First, there’s the question of what customers are comfortable with. Even today, 82% of people say they visit a brick-and-mortar bank at least once every six months, and 65% feel reassured knowing their bank manager is in a real office on the high street. With those kinds of numbers, convincing customers to do all their banking online has traditionally been tough. An arguably even larger challenge, especially within the European Union, is regulation. Until PSD2, an EU regulation promulgated in 2018, banks weren’t under any obligation to share customer data with third parties, even if the customer themselves demanded it. It goes without saying that giving all that power to established banks stymied innovation, just as an entire fintech ecosystem was sweeping the US. Yet as the arrival of PSD2 implies, things are changing. As Kütz puts it: “It means open banking and a new level of competition based on higher transparency.” She has a point. Dozens of European banks are now embracing the digital revolution, from BBVA in Bilbao to
Future Banking /
www.nsbanking.com
Commerzbank in Frankfurt. It’s unsurprising, then, that by the end of 2019, investments in European fintech companies had reached a mammoth $5.1bn. Of course, all this would be impossible if customers
weren’t willing to take the plunge. But here, too, things are changing. Prodded along by better technology – making it simple to check an account or make a payment – European consumers finally seem keen to embrace new technology.
“Complex algorithms are driving signifi cant trading volumes, post-trade processes are largely automated and simpler products have been mostly moved on to digital platforms.”
A case in point comes from UniCredit, which is partnering with a fintech firm called Meniga. “Thanks to this collaboration,” explains Kütz, “we can offer our customers, as an integrated part of their mobile banking app, the ability to aggregate banking accounts from all their banks and have the transparency on their financial situation in one place.” A good start. But Kütz and her colleagues at UniCredit clearly have bigger plans than just sponsoring yet another fintech enterprise. Rather, they seem determined to totally transform their operations across their business.
Milan with a plan UniCredit’s headquarters do not resemble the cityscape they dominate. A glass and steel cheeseboard of a building, flanked by an even taller spire, it looms incongruously over the grumbling trams and 19th-century palaces of central Milan. Architecturally, the tallest building in Italy has received its fair share of criticism – one Italian writer compared it to Stalinist Moscow. Beyond the aesthetics of the place, though, the sheer newness of the
Finja Carolin Kütz notices how differently people bank now, and recognises the need to adapt.
51% Global Web Index 25
More than half of us now watch more shows on streaming services like Netfl ix – coronavirus has signifi cantly changed our digital habits.
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