The Finanser: The bank, based in Milan Italy has been recognized on many occasions as an innovator from flagship futuristic branches to award-winning banking apps such as WOW! What makes innovation in the Italian markets any different to most markets? Roberto explains.
What does innovation mean at such an exciting historic moment?
Everyone is talking about innovation these days. The hardest thing is to manage the technology in order to provide new, simple solutions to clients. Innovation is a means, not an end. As Leonardo da Vinci said: “Simplicity is the highest level of sophistication”. Never forget that. One can claim to have truly changed the market when one’s innovative solutions are adopted by the masses of clients, thus modifying the dynamics of the system itself. So, it takes a lot of intuition, speed, vision and a sense of priorities. It must be the customer experience that one wants to develop, neither compliance nor technology.
What does innovation mean for the banking and finance sector?
It is a huge challenge because the sector is hyper-regulated, and in Italy even more so. But, at the same time, it is an adventure because the sector truly lives on schemes, services models, and infrastructures that are decades old, inadequate for digitalization. Therefore, it may be more difficult when compared to other markets that have already been transformed (music, publishing, travel come to mind) but this does not mean that it is any less intriguing. It is necessary to have more strength and decision in challenging the status quo and not be stopped by the first objection “this can’t be done”. If one tries hard enough there is always a way to change things. Always.
CheBanca! is a startup: what goal did it start with?
We can define CheBanca! as a Fintech Bank, a new bank. It began in 2008, precisely when Italy was reaching its historic record for number of bank teller windows (!). It had another vision, to change the model of bank retailing in Italy and to position itself where the market would be heading. It is a native multichannel bank, focused increasingly more on its digital affluent. It acts strategically as a funding arm of our shareholder Mediobanca, guaranteeing the parent company direct access to collecting. But it does so in a disruptive manner in respect to the market, challenging from the inside the various status quo and consolidated business models. We have done it with physical retailing, with customer service, products, and we are doing it with payments and investment advisory. It may be a long path but with a very clear vision. We have over 500,000 clients and we have 13 billion in overall collections, even having passed through the darkest phase of the country’s economic and financial crisis. For years now we have been the best online bank for customer satisfaction. I’d say that’s quite a success. But we won’t stop here.
Thinking in general of the startup ecosystem, is it a resource or a threat for traditional banking?
Startups are the lifeblood of every sector. Challenging the market, bringing innovation, forcing incumbents to move, nourishing the competition and, thus, in the final analysis, favoring the improvement of the ecosystem. If someone sees them as a threat they are making a mistake. Those who wall themselves in are destined for extinction, it is just a question of time. We work with Fintech startups, we develop services. It is very good for us. And we help them grow and get stronger.
What is the most explosive idea that you have seen in recent months?
The one that most impressed me is IMPS, a real time mobile payments project in India. Just during the month of December in 2014, it registered over 9.5 million real time transactions, mainly via mobile – not necessarily smartphones –, surpassing by a good 5 times over its results from the preceding year. It has a user park of over 70 million digital account holders. A boom, and it is just the beginning. To sum it up, it managed to apply the success of a scheme like that of m-Pesa to a population of over 1.2 billion individuals. This is something that is truly breaking the mold and changing the game. True innovation is measured by the number of people whose lives it can truly improve. We tend to look towards the West, primarily the US, but I have the impression that innovation in the world of banking and finance will increasingly come from the south and east. There are many other examples in Africa, China, Australia, Korea…
And the external actors, like Facebook and Apple, who are making space in their sectors: what role will they have?
They will have the role of challenger, very strong because based on economies of scale and on client bases that are unattainable for any bank in the world. But I don’t think they will become banks in the true sense of the word. It is much more probable that they will concentrate on the most mass market and easiest to manage parts internationally, like with payments. It will not be easy to get out of the US. It will be a long path, just like it was for PayPal. I wouldn’t underestimate Amazon and Google. The first one already manages payments globally, the second has such a mass that it can do what it wants. There will surely be great disruptions from them as well. The wave is long, it started with PayPal, which was born in 1998.
Bitcoin is having yet another delicate moment: are we at the end of its trajectory or in a transformation phase? What future do you see?
Bitcoin is the second attempt at real time global digital currency outside of the control schemes of the central banks. With this, other virtual currencies were created just about everywhere. In my opinion, though, Bitcoin is still not a true currency and suffers from the same mechanisms that brought about its success one year ago: too much volatility and zero regulations. A year ago, it registered a positive value and, so, everyone was enthusiastic. Now, no, it seems like a failure. Because Bitcoin is perceived speculatively, as an investment, and not as an exchange value. The history of money teaches that exchange rates and values cannot be too volatile. This is the limitation of Bitcoin, though I don’t think it’s impossible to resolve. But, above and beyond its future, whether it will be successful or not – and this will definitely take years and years – Bitcoin is a sign that the current banking and transaction system on a global scale must confront digitalization. Currently, it is too old, obsolete. A different transnational system is necessary, that functions like the digital economy: real time on a global level, and, inevitably, with some form of transparent governance. Because, without trust, a currency does not exist. This is its true message.
ABOUT ROBERTO FERRARI
Roberto Ferrari is the General Manager of CheBanca! and Board Member of Mediobanca Innovation Services, the IT and Operations service company of Mediobanca Group in Milan. He’s highly qualified in an international contexts in Marketing and digital channels field: since his degree in Economics and Business Administration, he spent his career in a very large enterprises as is Procter&Gamble in Rome, where he led sales development of franchising network and product marketing. In 2006 he entered in Mediobanca Group as Marketing & Partnership VP in Compass, the consumer finance and payment company of the financial Group, where he was in charge of marketing, product and business development activity.
The Italian CheBanca! is the retail bank of the Mediobanca Group. Born in May 2008, CheBanca! was the first financial institution in Italy to enter the market with a multi-channel distribution model that includes website, customer service and innovative branches.
Many are the initiatives CheBanca! promoted to support (fintech) innovation in Italy. In few years in fact CheBanca! created new sources of information as blogs, journals and databases, contests supporting and rewarding the most original and innovative Italian fintech start-ups, and a unique fintech community in Italy that acts as a catalyst for innovation.