" class="no-js "lang="en-US"> EXCLUSIVE: "Change on the Inside" - Raphael Barisaac, UniCredit in 'The Fintech Magazine'
Friday, December 09, 2022

EXCLUSIVE: “Change on the Inside” – Raphael Barisaac, UniCredit in ‘The Fintech Magazine’

UniCredit recognised that it had to transform how the organisation functioned if it was to make the most of digital progress. Raphael Barisaac, its SVP Global Head of Cash Management, explains what impact that’s had on his business division

Evolve or die’ is a much-used maxim, adopted by many organisations going through digital transformation. But that evolution itself can be painful.

That was acknowledged last year by Andrea Orcel, the then-new boss of international banking group UniCredit, when he restructured its management team and put a newly created digital division in place, streamlining reporting procedures to create a more agile, innovative organisation that could take full advantage of the technology that the bank planned to invest €2.8billion in over the next few years. Having listened to the frustrations of staff struggling to reconcile new tech with old ways of thinking and doing, Orcel said the creation of the dedicated division would send ‘a clear message as to the critical importance of this area for the future of our business.

No longer an add-on, this division will drive and input into every decision we take’. Nowhere has the impact of change and competition in financial services been felt more keenly by incumbents than in their payments and transactions businesses.

That’s not just because of the rapid change in customer expectation and the availability of alternative payment providers and technology, but also because the infrastructure around payments – the very means by which transactions are enabled which, until recently, had been pretty much the exclusive domain of banks, particularly those serving SMEs and corporate enterprises – is also shifting.The democratisation of payments means that almost any individual, virtually instantly, can set up a business, perhaps a virtual shop, and connect it to a payment wallet or PayPal, leaving ‘mainstream’ legacy banks out of the loop. When it comes to corporates and larger entities, the pressure on banks to facilitate faster and more transparent payments is just as pressing – and the problems bigger.

“Large and multinational corporates are talking about bulk payments, massive files, tens of thousands of payments coming in one file instantly – huge amounts,” says Raphael Barisaac, SVP global head of cash management at UniCredit. “Therefore, you need to make sure the process is running smoothly, without any type of noise because if there is a hiccup then you really, really feel the impact. We need to make sure that our systems are bulletproof, to streamline these types of mass payments so that the value chain runs smoothly. This is very important for us, at the same time as developing any new type of initiative with customers.”UniCredit is a founder member of the bank-owned payment infrastructure SWIFT, which carries more than five billion financial messages a year, and which, from this year, migrates to the ISO 20022 global messaging standard. It will provide consistent, rich and structured data that can be used for every kind of transaction, and its adoption should revolutionise cross-border payments.

“This is a landmark in the payments world because it’s the first time that, by creating a standard, you can think about having more close-to-real-time, value-added services for the client, which also brings benefits internally for the bank,” says Barisaac.“When you have a standard, you can start to think about building data-driven products faster, for example, with APIs. At the same time, we must remember that it’s only by looking at the end-to-end value chain that you can eventually extract high value from having a standard.”

In 2017, SWIFT gpi was created as a faster way to make large corporate cross-border payments and, last year, SWIFT Go was introduced to do the same for low-value transactions.

“In most cases, the big change that you have to focus on, apart from implementing the technical and process tools, is the HR, the cultural change, the people”

It is in the latter area that traditional banks’ dominance has been eroded most by fintech newcomers. And it’s where Barisaac believes partnerships can help banks maintain a presence in the market, because fintechs are often best-placed to identify gaps in client services and create new solutions at speed, built around the user. UniCredit is already deploying third-party solutions that use artificial intelligence and machine learning, and are data-driven, for different types of transaction flows.It’s also focussed on bringing its corporate clients and SME businesses up to speed, often by leveraging the trust its customers have in the bank to introduce them to its fintech partners and their services. In fact, Barisaac has been quoted as saying that if banks globally do not commit to open banking, they may find that fintechs end up providing solutions that cut them out of processes.

“Today, fintech innovation is already helping to resolve some of the pain points associated with international payments, including foreign exchange conversion,” he says. “This is perhaps just the tip of the iceberg in terms of what bank-fintech collaboration can achieve in the payments space – and the appetite for more collaboration is high.

“Valuing the pace and innovative mindset of fintechs is key for banks, and partnering with them – in the right way – will be critical for the industry if it is to realise the benefits of modern regulations and technologies.”

He’d place open banking high on that list of opportunities that banks threaten to squander. So, when he says ‘understanding the technology by itself, with the technical solution by itself, will not serve its purpose unless you are able to transform the people that are using it’, he’s probably referring as much to customers outside the bank as staff inside it.

“We have been placing quite a lot of investment in ensuring that we have the right tools, in order to secure the end-to-end value chain transformation. Meaning it is not just about one part,” he says. “If you look only at one part, without looking at the entire value chain, eventually you will have hiccups in the process flow. We have to make sure that, when we talk about a payment, we talk about not just the channel in which the client is ordering something, but how, at the end, it will work through the entire process, through the booking, and the different types of bookings.“It’s here that we are diligently looking into how to streamline and automate. We are also capturing an internal KPI – to have straight-through processing of payments for cross-border. We are closely monitoring the way we improve that.”

Technology adoption, he stresses, is not about immediately generating business, or a panacea for all ills, in all organisations. But it is an enabler of change, a route to generating new ideas that can, in time, transform a financial institution.“The fact that you have a technology that is available for you doesn’t mean that tomorrow you are going to change what you are doing,” he adds. “It means that you have new opportunities to look how to create or change your business model, in order to use this new technology to do something differently, better, faster, or open a new area that before you didn’t think was possible.“The technology is an enabler that allows you to do something maybe better, faster, to do more with the same [number of] people.”It’s this human aspect of transformation that UniCredit is clearly trying to come to terms with. Hearts and minds are an essential part of the mix.

Barisaac says: “What we encounter is that, in most cases, the big change that you have to focus on, apart from implementing the technical and process tools, is the HR angle, the cultural change, the people. “It’s to explain to the people that are working in operations, with different types of value chains, that it is not about substituting someone with a machine tomorrow morning; it is more about facilitating and enabling that individual to do more. I put as much emphasis on the HR angle as I do on the technical implementation. It is not about technology alone.”


 

This article was published in The Fintech Magazine Issue 25, Page 87-88

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