| www.fintech.finance Summer 201662

DATA

“Thirty years ago the then chairman of a major international bank said: ‘Money is information on the move.’ He got it right. But no one back then could have imagined the bandwidth and processing capability that market participants

most of the information at the bank’s disposal in order to serve clients with the most modern cash management and trade finance services available.

Far from playing catch-up with the new challenger banks and financial service providers, Stein’s of the view that banks

Information: The challenge for banks

and customers is working out how best to use it

have these days,” says George Stein, the recently appointed head of global transaction banking for UniCredit in the UK.

With UniCredit having pledged to spend 1.2 billion euros on digital innovation by 2018, Stein is looking for ways to make the

The big daddies of

BIG DATAGlobal banks aren’t late to the digital party, according to George Stein, UniCredit’s head of global transaction banking for the UK. They were managing big data when fintech was still in nappies. They’re just figuring out what next to do with it

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were the true innovators in this field – the big big daddies of big data and information exchange. Their challenge is not so much mastering big data as figuring out how best to use it to create value for their clients.

“Big data is a new name for something we’ve always dealt with. We’re banks. How many transactions do we process a day? We already do big data,” he says.

“I would argue that since we started using computers, banks have been in the digital business. We’ve digitised the money transfer industry. If you think about the preponderance of cashless payments right now, and in my area, wholesale banking, we have become highly automated.

“It’s a bit of a cliché, but straight through processing (STP), is still, in my view, entirely appropriate to use as a goal, both on the bank side and on the client side. On the bank side, by making our processes more efficient, we save cost and we can pass that efficiency on to our customers. On the customer side, well, what do the customers want? They want information and reporting, which is digitalisation in my mind. They want information reporting from us that enables them to process transactions on their side as straight through as possible, therefore achieving efficiencies. Every single business in the world wants to be more efficient and, through digitalisation, banks have been helping customers do that and we will continue to do that.”

A new landscapeThe question, now that the financial ecosystem has changed, is how.

Blockchain, the payment system underlying bitcoin exchange, which is based on a decentralised ledger that in theory could encroach on part of banks’ role as a trusted third party intermediary, is one area of intense scrutiny. The technology’s potential to reduce risk and transaction costs and to improve speed and transparency in capital markets has persuaded some of the biggest banks to collaborate to harness this particular digital beast.

“Blockchain is an interesting new technology, and it’s one where I think the banking market, in particular, is trying to work out exactly where it’s applicable,”

Big data is a new name for something we’ve always dealt

with. We’re banks. How many transactions do we process a day?around is a huge challenge. Customers are traditionally used to receiving data from their banks about their activities, but sitting down with customers and working out exactly how to use all the additional data that they’re maybe not used to looking at – things that go beyond daily reporting and balance and transaction reporting– that’s a challenge for our customers as well as for us. How do you use all this data? What is there that is relevant for me? What’s relevant for one client may not be relevant for another client. The challenge is for customers to understand what’s available and how they think they can use it, and our challenge is to follow our customers in that endeavour.”

That’s why UniCredit met clients at last year’s SIBOS conference in Singapore with a joint delegation, including both bankers and IT specialists, to discuss the possibilities.

Customer-first banking"Getting our technology colleagues together directly with customers is an important way for everyone to get a

Summer 2016 www.fintech.finance |

better understanding of what the other’s needs are and what the other’s capabilities are, and in the end, we think we can deliver a better service to our customers that way.

“It’s easy to believe that transaction banking is purely a technology business. Fundamentally, I believe it’s a people business, like every other business. In bringing our technology colleagues together with our clients, we think it makes it that much easier for us to get a better understanding across all areas of the bank of what our customers want to do,” says Stein.

“At UniCredit in London right now we’re investing to build our capability and our capacity to serve customers in this market, so the continuous process of understanding what your customers want from you and then putting the investment

says Stein. “UniCredit has teams working on the concept, as do other banks. Trade finance is a very important business for UniCredit. Our strategy is to do a lot more with our customers and a lot more with other banks, including in London, so we are building up our capability and our capacity. Whether Blockchain becomes a part of that… I definitely think we’ll find out in the next few years.”

Meanwhile, he sees a more immediate challenge in sifting and interrogating big data for the bank’s own and ultimately the customers’ benefit.

“We have an amazing wealth of knowledge about our customers that we use to do things like we’re doing in London to develop new products and new capabilities to serve our clients better. On the customer side, to turn that equation

behind it, is absolutely vital to us remaining competitive and succeeding in the market. "

The pace of change in banking is only going to accelerate, says Stein.

“We have a huge network of customers and we have a very large geographic footprint in some of the strongest economies in the world and the UK, as an important financial market, is vital for us, because our customers want us to follow them here.

"So, we’re investing to meet our customers’ needs here as part of keeping up with the change and the efficiency pressures that we see in the business. A good example of that is on the trade finance side where UniCredit has been actively working with customers to make use of the bank payment obligation (BPO) instrument in trade finance, which combines the safety of a letter of credit with the efficiency of open account trading.

“Going forward, there will be continued pressure to manage costs, but deliver more capability with advances in technology. I think we can do that.”