RBA F CUS
| 6
The Skill Set of a Modern Retail Banker : The DARWIN Model
By David Gyori
Banks are under increasing and multi-faceted pressure since 2008 , amidst shaken public confidence , growing regulatory pressure , permanently low interest-rates , thousands of innovative fintech companies and a new generation of millennial customers . This complex pressure is amplified by the heavy legacy of often outdated IT systems and crisis-induced pain-points still present on many balance-sheets . Banks all over the world are struggling to find the right answers to these mounting challenges .
But when we talk about ‘ banks “ as an abstract mass of institutions , we miss the most obvious and most important element of solving the equation : the bankers themselves facing and tackling these challenges in every hour of every banking-day . Yes , banks can have multimillion dollar innovation labs , accelerators , incubators , hackathons , hubs , awards and new positions like ‘ Head of Simplification and Innovation Department ’. These are all ok . But the real force of change can only be the ‘ army ’ of bankers in the frontline of everyday business . Survival can only happen with them : ‘ The Modern Retail Bankers ’.
Dual Role : The Modern Retail Banker has two jobs . One is the normal one , for example ‘ Mortgage Specialist ’ or ‘ Head of Mortgage Department ’. The other is the innovator of that very position .
Three facts about the Dual Role Innovation Model :
– It has been discovered and fully implemented by Toyota . – Some banks have already recognised its importance ; for example , HSBC in Turkey uses it . – Banks try different ideas such as Intrapreneurship , the Phase-Gate Model or the TRIZ Model to tap into their employees ’ innovative potential , but the Dual Role Model is known to provide the most comprehensive results .
Ability to Manage Coopetition : In the old paradigm of 20th Century Industrial Capitalism an entity is either competitor or partner . Another actor of the marketplace is either a friend or a foe . Yet , in the 21st Century paradigm of Post-Industrial Capitalism these crystal clear lines of division are blurred , shadowed , disrupted and trailed off . The buzzwords of the fintech age are ‘ Coopetition ’ and ‘ Frenemies ’. Clear and simple lines such as competition or cooperation are relatively
easy to manage , but blurry and complex ones such as coopetition require extra skills from retail bankers .
Three examples of the Ability to Manage Coopetition :
– Remittance services – such as TransferWise , CurrencyFair , Azimo and hundreds of others – are hard to compete with . They transfer money across borders quicker and cheaper than bricks-and-mortar incumbent banks do . Some banks – instead of struggling to cut their margins – have introduced the services of major remittance services . They made their own competition available to their clients . Is this a delicate relationship to manage ? Indeed , but one that a Modern Retail Banker has to be ready to do . – The executive chairman of Santander Group – Ana Botin – often brags about its extensive cooperation with Funding Circle ( one of the largest crowdfunding companies ). Santander not only made some funds available for Funding Circle , but also refers certain SME clients to them for funding . Which clients to send to Funding Circle ? This is a fine line to balance with the professionalism of a Modern Retail Banker . – Telecom is widely considered as an industry ( at least ) one step ahead of banking in implementing digital solutions . This advantage – and the similarities between the two sectors – triggers telcos to cross over to the world of financial services with growing frequency and intensity . Telecom companies are just as much perfect partners as potential competitors for the bank of the future .
Robo and Advisor : We hear a lot about bankers potentially losing their jobs to Roboadvisors . Yet , research and empiric evidence both clearly show that the most efficient model is the so-called ‘ Robo-and- Advisor ’ hybrid model as opposed to the clear machine-only ‘ Roboadvisor ’ or the old style human-only one .
Three facts about the Robo-and-Advisor Hybrid Model :
– Roboadvisors are posing an intense challenge for old style , high margin wealth management services . – Some banks are piloting Robo-and-Advisor solutions in their Premium- and Privatebanking divisions . The combination of the best Big Data , Machine Learning , Artificial Intelligence algorithms (‘ Robo- ‘) with the fine sensitivity , wisdom and superior service of the best bankers (‘ and-Advisor ’) proves to be powerful indeed . – The United Kingdom is the home of some of the finest and most high-tech Roboadvisory companies . These companies are usually open towards cooperation with banks .
Wisdom of Remaining Conservative :
Fintech and banking innovation experts are sometimes inclined to get carried away by the beauty and dynamism of the digital age . A Modern Retail Banker however has to remain sober and vigilant in the age of ApplePay , M-Pesa , BitCoin , PayPal , P2P lending , Moven , APIs , XS2A of PSD2 and all the challenger- and neo-banks .
The three “ R ” s of Conservative Banking :
– Risks : The Modern Retail Banker has to remain sober , because no matter how much transition and no matter how much innovation , banks will always be ‘ the nuclear plants of the financial sector ’. Banks will always be the nuclear plants of the financial sector because they have enormous balance sheets . ( Total assets of the circa 25,000 active banks globally top $ 150 trillion , that is twice the total global annual dollar-denominated nominal GDP – circa $ 75 trillion .) Banks have enormous balance sheets because they operate with inherently large leverage . They operate with inherently large leverage because they transform customer deposits ( from the liability side of their balance-sheets ) into customer loans ( to the asset side of their balance-sheets ) and , therefore , the vast majority of their balance sheet is made up of value that originates from and belongs to third parties . The size and the leverage of the balance sheet are factors which have always made and will always make banks highly risky environments , where caution , care and a conservative approach will be factors of survival and security . This even the Modern Retail Bankers have to obey . – Regulations : AML , KYC , CTF and literally hundreds of other regulations will always have to be followed by banks . We hear bankers complain about over-regulation . And yes , indeed , there is regulatory arbitrage and regulatory gap between banks versus fintech companies ( Fintech companies sometimes even operate in a regulatory vacuum ) and , yes , this is unjust . But in the long run , being the best supervised and best regulated sector will have to overall benefit banks . Being fully and unconditionally compliant with no exceptions and no “ backstairs ” is an absolute imperative for all Modern Retail Bankers . – Reputation : Innovation is important and www . retailbanking-academy . org
FOLLOW RBA
RETAIL BANKING
ACADEMY ®