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- [00:01]
A
Hi, everybody. Tune in to this short version of the podcast, which we do every Friday. For the long version, tune in on Wednesdays. Hi, everybody and welcome to In Good Company. And today I'm in particularly good company because I'm here with Andrea Osel, who is also called the Ronaldo of banking. Now, Andrea has really left his mark on the European banking industry, is now the helm of UniCredit and just so many exciting things going on in your business and in your life. So warm welcome.
- [00:33]
B
Thank you very much. I'm very happy to be here.
- [00:35]
A
What is the biggest challenge that the European banking industry is facing just now?
- [00:40]
B
Scale and transformation. I think they combine scale because without scale, you don't have enough innovation, you don't have enough ability to invest in technology and in all the things that you should invest to then transform and transformation. Because we tended to look at legacy banks on one side, fintech on the other side. We looked at them, we didn't consider them, but if you take the next five years, five, seven years, they're going to converge. And therefore you need to ask yourself, can I offer the same level of client journey, the same level of client experience with the same level of efficiency and beat them on what they don't have, which is the clients that we start with, primary clients. And secondly, the ability to deal with multiple products and complexity.
- [01:36]
A
Do we need stronger banks in Europe to make Europe more competitive?
- [01:40]
B
Look, the parallel I always use is if industry, which we always talk about, is the engine, financial services, banks and capital markets of the gasoline. So now Europe has two things. One, it is trying to transform itself because we have never been faced with such a challenge in terms of the structure of our industry, the leadership of our products. I mean, if you go, if you travel to Spain today or if you travel to Italy, I would say in Spain, it's an extreme. Most car dealership from European producers are empty and most car dealers from Chinese producers are full. And so this for us is a shock as European because we had the leadership in that. And there are other industry where Germany or Italy or France had the leadership before that we don't have anymore. We need to transform that. In addition to that, if you take Europe in the last 15 years, we've been always lagging growth of US and China and we need that growth. So in order to do those two things, you need new policies and then you need to finance them. And I think some countries feel that they can finance them as they have done so far through government budgets, but government budgets are not enough. They need the leverage of banks and capital markets and other investors to be able to do that transformation and that financing. And I do think that at the moment, the environment, the regulation, the framework in which we operate does not allow us to do that.
- [03:25]
A
Andrea, not many people work with what they studied at university. At university you wrote your thesis on hostile takeovers.
- [03:38]
B
Yes, I did.
- [03:39]
A
And in September 24, you acquired a big stake in Commerzbank. What was the thinking behind that?
- [03:46]
B
The working for all this time in the same thing? Maybe I'm not as creative as people think. I. I am one of those very lucky individuals that identified earlier what they love to do. And no, I would say, well, at the beginning, for sure, I used to say that if I wanted to be a bean counter, I would have gone in management. And now I am in management. But at university, I was reading so much about hostile takeovers and the attacks on airgr, Nabisco or all of these things that I wanted to do the same thing. I convinced a professor who was awesome to let me do a thesis on something that in Italy was not even understood. And then I got myself through doing exactly what I wanted. I never regretted it. But in life, you evolve and then your job evolves. And that's where I am now.
- [04:47]
A
How will AI change this further?
- [04:49]
B
Well, AI changes that, accelerating things. So number one, what AI does, and this is what everybody's focused on, is it reduces cost massively. So I'll give you one example, but.
- [05:03]
A
Are you seeing that already or is.
- [05:05]
B
It still to come? I think what I would say, honestly, certainly for Europe, I'm not in the U.S. most banks, with very, very, very few exceptions, if any, if you ask that question at the end of 24, they would tell you something about AI. But the reality is, it was a curiosity. If you ask them today or at the end of 25, they all talk about it, they all know it's a big, big critical item. But now the question is, how do we harness it? The first reaction that you see in many cases is, and I read it all the time, I gave copilot to every one of my employees, I sent everybody to a course, I did this. But that AI, while it will make the life of your employee easier, is that changing the way you work? And is that transforming and extracting synergies? No, that's what I wanted to say. So now some banks and some are ahead of us, but we're trying to catch up quickly. So if you look at a credit file, very simple, you're a big company, you Want to loan from us? I need to gather information from your accounts, from the Internet, from a number of sources, create a credit file, all of the data, reclassify it into my spreadsheets and then apply my metrics and tell you if you fit or if you don't. I'm simplifying, but that's that. Usually it takes six weeks for one experienced credit officer to do that. From zero to the end, if all the data is available. We did a pilot together with one of our partners. We developed an AI engine to do the same. It took us one week to develop the engine and they could do on one where we had taken six weeks to prepare the fire. They could do it in 14 minutes with 98% accuracy. And this is the first trial. It will become 100% very, very quickly.
- [07:15]
A
Another technology change we are seeing is of course stablecoins, blockchain and so on. Just where how is that going to fit into your business?
- [07:24]
B
Well, you know, if you had asked me three years ago, I would have said you. I don't really know Today, I think we are. I think it is a priority. I think if you look at the modernization of markets, is it bonds, is it equity, is it contracts for mortgages, is it this? It's just a change in technology, eliminating intermediaries, blockchain, that's what it is. You need to be at it. And the other thing is, if you're on blockchain, you need to meet some payment and it's either a cryptocurrency, which we only get involved to the extent that our clients want to do it, because we think it's too speculative for a commercial bank like us. So we support it, but we're not using it. Stablecoin is fundamental because it is a lot more stable. That's why we joined a consortium of banks in Europe, Kivalis, to launch stablecoin based on Euros. Because that's another threat for Europe at the moment. If you look at stablecoin, only US dollar. So that would mean that if you go on blockchain and you need a means of payment, you're risking to be completely disintermediated by US dollar. And the Americans love stablecoin because what is backing them is the dollar and US Treasuries.
- [08:51]
A
And when will we have a European stablecoin?
- [08:55]
B
We are aiming to be out with a first stable coin, meaning that it's working by the third quarter of this year.
- [09:04]
A
How have you redesigned the copiculture?
- [09:11]
B
Because I believe that culture is the linchpin out of everything, everything. You have the right culture. Eventually you're going to win.
- [09:24]
A
So when you came in the first day and you sat down and talked to people, what part of the corporate culture do you think, wow, I think we need to change this.
- [09:32]
B
What I did when I arrived is I spent nine months contributing with a small team to interviewing directly, indirectly, about 20,000 people, 30,000 people. Of the 80,000 that we had tried to determine, what were the principle and values that made them tick. Very interesting. Integrity. Very many people. I would say an organization that doesn't talk to you about integrity, not very likely. Second, already, ownership for Commercial bank is quite a lot. And thirdly, care coming from investment banking, I didn't expect that to be there. It was the first most voted tenant that they wanted to have.