Digital transformation in the Italian banking and insurance industry

The digital transformation and tech-intensity of the Italian banking and insurance industry. We held the first Armundia Talkinn event in Milan on October 10th 2019. During the event we discussed scientific topics and content representing the state of the art of an epochal transformative process.

Top-notch keynote speakers enriched the cultural salon with their contributions,  across three round tables on “The digital transformation in the Italian banking and insurance industry”. During a very pleasant afternoon, they have been sharing valuable ideas and opinions together with the participants.

In the banking and insurance sector, the digital transformation is much more than just digitalization.

It is a very complex transition process due to the triggering drivers that are as complex as the evolving social and behavioural aspects, regulation and global market competitiveness. The digital transformation is a process that can develop quickly or slowly. It depends on whether First Movers or Followers implement it. 

Nevertheless, it is primarily an horizontal process involving different sectors of business organisations, which must have adequate resources and skills to control it. How do the Italian banking and insurance sectors today embrace the drive for innovation, the so-called Tech-Intensity? If the demand for change includes the capability to “press the digital accelerator to create opportunities, business and growth”, what are the strategies introduced? What goals have been achieved to date?

Banking

Gianluca Berghella, President and CEO of Armundia Group kicked off the event.

“Armundia was born 12 years ago with clear objectives: we wanted to bring innovation to the banking and insurance world, relying on our 15 years of experience in the field. We started with the paramount idea that banking and insurance would converge, and we got there.

Thus we were eager to innovate the IT tools of banks and insurance companies by easing the infrastructure. Today technology can optimize processes because it is truly a tool for growth” – Gianluca Berghella said during the institutional greetings. “Why TalkInn? Because we want to talk while observing the concept of harmony by working together. Because we firmly believe in exchanging views and building community. We always start from the person and the meeting to then grow in the innovation”.

The introduction was followed by the first of three round tables entitled “Old banks and new banks: evolution of models of interaction with customers”. It was attended by Carlo Alberto Carnevale Maffè, Professor at SDA Bocconi, Flavio Valeri, Chief Country Officer of Deutsche Bank Italia and Claudia Vassena, Head of Buddybank, the new bank via App of Unicredit.

“Where is the banking model heading? Surely the banks are going through a transition phase” – Valeri commented. “The big banks are spending 10% of their revenues in information technology. Therefore the European banks that are emerging on the market are making great investments in technology to try to keep up. But the change is not idle: in order to make an effective transformation the bank must understand what services to offer and which customers to turn to”.

Vassena then took the floor: “Speaking of young people, Unicredit is multi-channel and therefore all-embracing. We have noticed the new generations do not go to the branch. They have different needs we must try to meet. Hence it is necessary to make strategic choices such as developing an app that allows you to reach even the youngest groups. Next year we will also focus on open banking to support investment services dedicated to a more mature clientele”.

Then Professor Carnevale Maffè stated that the concept of banking arises from the relationship between bank and people. Thus the real object of attention must be the exchange of information. We must work on the interaction and the dialogue: the object then must shift from money to data. Today more than ever, the data expresses the relationship with the customer. Thanks to Artificial Intelligence and Machine Learning, it is actually possible to assert that the future of the bank will be to “lull” the service and the customer, rather than focusing only on the financial product.

Technology - Digital TransformationIT Director of Armundia Group, Alessandro De Leonardis took advantage of the networking sessions between the interventions, by presenting Armundia’s new technologies. In particular, a project we developed in collaboration with the University of L’Aquila, a long-standing Armundia’s partner. It aimed at those who offer advisory services. The project utilizes technology to create an ad hoc environment where the user can interact with a 3D environment, wearing VR goggles.

The second round table “Converging innovation: Bancassurance and new service models for 360° advisory” featured Gianluca Berghella, Chairman and CEO of the Armundia Group, Emilio Franco, CEO of Mediobanca SGR and Riccardo Renna, Chief Operating Officer of Banca Generali.

Berghella started the session by picking up from what has been said at the beginning “How is technology changing the business models? Technology represents a commodity available to those who want to innovate and create a new advisory model”.

He then gave the floor to Renna: “Technology is important, but always in relation to the individual. Our bank puts mankind at the centre. The relationship between consultant and client is certainly behind our way of thinking. Our business model has changed in recent years. We launched the first big wave of digitization exclusively to support the financial advisor. Thus we developed an IT platform that replicates what, in our opinion, is the correct business process. Therefore we created an open system both from the point of view of services and products”.

“Technology can cut costs and allow us to improve our offers, but the human factor is fundamental” Franco continues. “The clients’ objectives dictate the rules. Technology is not the panacea, but it is certainly a valid tool. It will create great opportunities in our world if we overcome the resistance to change. Innovation not only allows us to do faster and better, but also to rethink processes hence to cut costs. We just need to have the audacity to take up this challenge”.

“Bancassurance could be the ideal testing ground to assess how far the technology can go. Hence we have focused on the convergence of these two services from the outset . We can no longer use old approaches. We need to develop the interactions of banks and insurance companies together with the skills. Today’s legislature, technology and information allow us to put the customer at the centre to create a service that is as suitable as possible for them and their needs”.

This is how Gianluca Berghella concluded, before leaving time for the third and final round table of the TalkInn. “Native digital innovation: processes, business organization, levels of expertise”. With Moreno Ferrario, Sales Manager LinkedIn Italy, Leopoldo Gasbarro, Director of Wall Street Italy and Vincenzo Tortorici, Senior Partner Boston Consulting Group.

Ferrario began: “Thanks to the digital transformation, the demand for profiles related to finance is also evolving. One in two professionals has a personal profile on the platform. It is clear that innovation is bringing great changes within the business. Hence this reflects on the people who must have certain skills to join banks and insurance companies, in order to be able to lead the digital transformation. We talk about technology and systems which is essential. Nevertheless, in our analysis we noticed even CEOs recognize and state that people bring the real innovation that differentiates successful companies. If we focus on the finance sector, research is increasingly shifting to digital skills related to data such as the ability to read and transform it into information and then into business. But it’s hard to find them”.

“The consultant is a key figure and the technological revolution depends on him too” – Tortorici continues. “What is evolving, slowly, falls on resources. The digital transformation is certainly changing the consumer’s behaviour, but it facile to say that branches are empty. Despite the change, the customer always requires a real interaction with the bank. Therefore in this context, we need to address the reduction of costs that has become a requirement for the companies. From a morphological point of view, surely we are heading in a direction where we need to study cost optimization programs. Firstly eliminating paper and manual work reduce the risk factor as much as possible. We are witnessing the evolution of consultants, who are able to analyse data and who are able to make the most out of technology by developing effective solutions. Indeed, banks would like to hire professionals who are capable of digitizing the customer journey and are able to read the customer’s needs. But they find them with great difficulty”.

Gasbarro took the floor saying “Our last issue was dedicated to the evolution of banks and those who work there. If people’s skills do not evolve, the risk is very high. We talked to presidents and CEOs and we had different answers: there is not a clear model for everyone.

The dynamics are evolving and technology needs to improve, but the human relationship becomes indispensable. It is unwise to think that the work of the bankers is the same as before. But we cannot say that the banker of tomorrow will be a technician.

In fact, our editorial staff carried out a recent research showing that certification does not matter for the client. What matters is the ability to relate and explain with simplicity. The client must take financial expertise for granted. Nevertheless they need a person with whom to create a relationship of great trust. We must clarify the world is changing radically and it is necessary to communicate this digital transformation without technicalities. Hence it will only be possible by improving the level of competence of those who work with people”.

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