Fernando Fischmann

Creating An Innovation Culture At Brazil’s Banking Giant Itaú

29 June, 2018 / Articles

Banking tends to be a reference for any technology decision maker seeking the digital transformation holy grail. But sector organizations are now saying that the success of these projects is a lot less to do with buying tech and much more related to the people working on these initiatives.

This message was highlighted by a senior executive at Itaú, Brazil’s biggest private bank and Latin America’s largest by market capitalization, which began to respond to demands from an extremely connected client base about four years ago. This is when digital director Rubens Fogli had to start a department focused on injecting innovation into the company’s products from scratch.

“We have a population of over 200 million, 58 of which are connected to the Internet. We rank second in the world in terms of social networking usage, with over 267 million smartphones being used. So we had to act to keep up with these advances,” Fogli told delegates at a sector event last week, where he joined an executive at government-owned bank Caixa on stage to talk about the joys and sorrows of digital transformation.

“For a bank to last, it can’t just keep on doing what it has always done. The success [banks] had yesterday is definitely not what is going to guarantee our survival tomorrow,” he pointed out. Fogli himself was a “digital newbie” back when the Itaú transformation started, having held senior roles elsewhere in banking.

One of the key issues of such change projects mentioned by the executive is around tackling the organizational and cultural complexities that arise from doing things innovatively. That, Fogli said, can be challenging – especially when traditional thinking still prevails.

“The main challenge in doing digital is nothing to do with tech and innovation – rather it is about the cultural shift for staff and customers. As you change things inside the bank you also start to touch on silos and egos,” the executive said.

“Then you have to understand how to promote transformation without disrupting the status quo too much,” he added.

Despite these challenges digital projects were no longer optional and started to get internal buy-in. What started as a small multidisciplinary group of 12 people leading digital projects then expanded into a much larger department – and not without certain growing pains.

“Projects started to become more complex and barriers started to appear, with longer lead times, restricted autonomy and more friction.”

Some 60 percent of Itaú’s digital team belongs to the Generation Y, Fogli said. While the prevalence of people born in the 1980s and 1990s can bring a lot of fresh ideas to the organization, the executive highlighted the need to keep their expectations in check.

“[Millenials] dictate a lot of the new world dynamics and bring a different take on things. But you have to set their expectations from the start and let them know they are not going to change the world or create a product of exponential reach in a month’s time,” the executive pointed out.

While Fogli accepts that the bank is competing with fintechs for the skills it needs for its own transformation, the executive also wants to “keep it real” and say that the professional opportunities in these two environments are rather different.

“You can’t really compare banks with fintechs when it comes to digital transformation. We have other types of concern regarding risk, we are a lot more bureaucratic because of our size and the responsibility with have with our customers,” Fogli said.

“Regarding people, what is clear from the start of our recruitment processes is that they will be working on a digital transformation project and not in a an organization that is digitally native,” he added.

“You need to be interested in changing things and understand the difference between starting digital and actually living the transformation.”

Itaú has learned a few lessons since it started to place more efforts into innovation. According to Fogli, the bank now focuses a great deal on value creation and fast delivery, releasing two to three new launches and innovations around digital per month:

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