Transaction banking engages intelligent design

Bankers from around the globe gathered beneath Oxford’s dreaming spires, eager to be challenged, absorb new ideas and swap notes on their experiences working in global transaction banking. In this first-of-its kind school, sessions were led by an impressive array of keynote speakers from across banking, fintech, consultancies and academia.

Founded by Ted Roosevelt Malloch – Senior Fellow in Management Practice at Saïd Business School, University of Oxford, and chief executive officer (CEO) of the Roosevelt Group – together with financial technology provider iGTB, the school was set up as a global platform for thought leadership and innovation in transaction banking.

Examining banks’ design frameworks and business models, this initial immersive three-day course covered each element required to build a successful transaction banking franchise and compete in today’s regulatory, financial and digital environment.

Siting the school at the heart of one the world’s oldest seats of learning fittingly encapsulates the mixture of old and new that characterises global transaction banking today. It counts among its services some of the oldest-ever devised by bankers, yet it now also needs to engage powerful technology, led by design-thinking, to keep ahead of market, financial and regulatory changes. Particularly on the corporate banking side, future services will need to be delivered that are more innovative and customer-centric than ever before.

iGTB’s CEO Manish Maakan set the stage, explaining that a key driver for founding the school was to help transaction bankers compete in today’s challenge-laden marketplace. In what aims to become a hothouse of cutting-edge thought and future-gazing technology, students will learn from a variety of sources: leading business thinkers – both conventional and disruptive, fintechs, customers and from each other. Underlying all this, he believes that transaction banking’s design frameworks will be instrumental in moving it forward from where it is today, to where it needs to be for taking advantage of the rich opportunities – and avoiding the considerable pitfalls – of a radically changed future.

Conceptual framework

The course combines highly conceptual work, challenging students to reframe the way they perceive what their banks are doing and what makes them succeed or fail, with first-hand narratives of major real-life projects undertaken by global transaction banks told by those responsible for implementing them.

In addition, students shared their rich knowledge and swapped their varied experiences in interactive sessions and workshops. Having representatives from a wide range of banks of different sizes, types and geographical provenance made for a lively interchange.

On the theoretical side, iGTB’s head of strategy, Andrew England – leveraging his past experience at Lloyds, UniCredit, Deutsche Bank and McKinsey – designed the course’s curriculum to cover elements essential to building a successful transaction banking franchise, including the tools and goals needed to manage profit and loss.

He identified six practical “design levers” underpinning the transaction banking business: diagnostics, organisation, competency, culture, measurement, and simplicity. Speaking on each of these in detail, England underlined the importance of carefully delineating your key markets, and building-up credible core competencies. He explained the application of these design levers at each stage of a transaction bank’s maturity (one: advocacy, growth and innovation; two: managing to performance; and three: conflict, disruption and stakeholder management).

Anand Pande, CEO of Singapore-based advisory firm the Growth Paradigm Partnership, underlined the crucial importance of both winning and retaining key stakeholder and C-suite support, in every circle of influence.

Real-life banking stories

This high-level theoretical work was fleshed out in a series of real-life case studies from leading global banks. Borna Ljubicic, global head, cash innovation, corporate and investment Banking at UniCredit attributed the Italian bank’s success in doubling its market share in Eastern Europe to having a clear design framework. This included focusing on a captive client base; prioritising organisation, competency and measurability/execution as design principles; and identifying key success factors beyond products – in this case human resources and cross-selling.

Founder and CEO of innovation consultancy Business Mix, David Page, shared his experience at Barclays and co-founding the Visa Europe Collaboration, by taking participants through the design, implementation, operation and overseas expansion of a payment card hub – elucidating the design framework underlying that process. He also highlighted the following as essential trends for organisations operating in the global transaction banking space to watch: universal banking, authentication methods, big data, the blockchain, the Internet of Things (IoT), and the changing face of the retail journey.

Describing his bank’s journey to transaction banking competence and competitiveness, Eric Modave, chief operating officer (COO) of Amman, Jordan-based Arab Bank, stressed that design had to be sufficiently agile and flexible to readily adapt to a bank’s customers’ specific needs. He explained how compliance and risk burdens could be eased by technology – either bought in, built, or established in partnership, but in any event, reusable.

In narrating their bank’s journey, speakers did not shrink from sharing with participants the challenges they had come up against. Brian Webb, general manager, transaction banking liquidity and cash solutions at South Africa’s Nedbank set out those encountered in building a successful domestic and international corporate cash and trade franchise, which ranged from customer onboarding, through trust and stickiness and the distribution network, to false assumptions and regulatory pressures skewing the bank’s view of the nature and profitability of transaction banking business.

Design-thinking as the way forward

Throughout the course, the emphasis was on design thinking and technology. Herber De Ruijter, head of digital, iGTB, offered insights on how the two relate to each other: design must lead innovation, and not the other way around. He illustrated his thinking with real examples including Kabbage (loans), Atom Bank and Oscar (insurance). Products had to be what he dubbed ‘simplex’, customer-centric and fit-for-purpose – and those designing them had to understand the users’ context around their interaction with vendors; for example, the increasing dominance of the mobile platform.

Huy Nguyen Trieu, CEO of tech blog Disruptive Finance, spoke of the future of innovation, and serving the corporate customer. He stressed that although disruptive thinking is harder than incremental thinking – which comes naturally to most of us – it is crucial to practice it if the object is stealing a march on competitors in each sector, who can be in their hundreds.

From the human to the global

Surprisingly, the course highlighted the importance of the human element just as much as those of design and technology. For example, Olof Pripp, vice chairman of board and CEO services, EMEA, at human resources consultant Korn Ferry, posed the question of why we still need talent in a digital world, where many jobs will be carried out by robots. As fast as technology wipes out certain job functions, others evolve requiring a high level of the “human touch” across many sectors.

This means that hiring the right human resources will remain as important in future transaction banking as it is today. However, the process will change, as the next generation of “digital natives” has an entirely different approach to work, expecting – even preferring – a series of portfolio jobs on specific projects to the old concept of a job for life, and some valuing balance and purpose over remuneration. This will change the way organisations attract and incentivise talent.

Malloch spoke about a sea change in the CEO’s role, the paradox of leadership, and the power of doubt in accepting the unknowable. Coping with the scope and significance of accelerating change is often now done – at least in part – by using “ripple intelligence”, which includes increasingly accurate mapping, forecasting, trend analysis, matrixing, and so forth. Increased mindfulness, and balancing competing responsibilities rather than choosing one over the other, are two further trends noted.

Finally, wider changes within banking and global macroeconomic patterns were discussed. John Casanova, partner, co-head, EU financial services regulatory group at international business law firm Sidley Austin, outlined the new regulatory regime for banking, tracing its causes to the dual drivers of the financial crisis and the explosion of e-commerce.

Roadmap to success

In the course’s final keynote speech, Matt Lobner, chief of staff and head of strategy and planning, Europe, HSBC, painted a vision of global transaction banking today, which is a long way from being the “jack-of-all-trades” it once was.

He believes that global transaction bankers should specialise, choosing the markets that matter to them and investing in the technology and networks required to serve them. That way, they will be free to concentrate on making their services as innovative, seamless, and outstandingly excellent as possible.

We look forward to seeing how this forum for learning – continued virtually, between courses, on a dedicated website – will continue to expand the dialogue around and understanding of this core bank business. What is certain is that the iGTB Oxford School of Transaction Banking has made a good start in offering insights applicable to transaction banking here and now, in pursuit of a more competent, innovative and competitive future.

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