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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 This complex pressure is amplified by the heavy legacy of often outdated IT systems and crisis-induced pain-points still present on many balance-sheets.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
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