Confession of a Banker

by Steven van Groningen on 22 November, 2010

In have a confession to make, nothing juicy, nothing to do with the crisis, not even with OUG 50. It is just that I realized I don’t seem to be living up to some of the expectations about a banker. Too often do I hear that “all banks care about is to make short term profit”. Maybe some do. Well, I confess that I don’t get out of bed in the morning with the thought of making lots of money, not even to “maximize shareholders value“. No, I go to the bank every day to work together with a group of talented people with similar values as I have. We try to solve problems, to find solutions, to improve products, to redesign processes, to create better systems, to try to create more value for our clients. We analyze and manage risk. We meet with colleagues and clients.

A Better Bank

In other words, we try to make our bank a better bank, every day a little bit. It is hard work and sometimes frustrating. A better bank means a better place to work for our staff, a better place to do business for our clients, a better place to go to when you are looking for a solution to a financial problem. A better bank is also bank in which shareholders want to invest. So, what we do has to make sense to all stakeholders otherwise we will not be able to justify what we are doing, at least not for long. It is a process that will newer end.

A Larger Bank?

This is not so easy. For a long time in Romania, a better bank meant a larger bank. Success was measured in size and market share. Simple, one indicator and that is it. I am always surprised at the need for a lot of people to reduce complex things to banalities. How many megapixels has that camera? How expensive was that painting/car/watch? How fast is that car? Except that many things are not that simple. A legendary photographer once said once something like ” Photography would be a lot less complex if the industry didn’t try to make it simple”.

Focus on market share made banking more complicated, it was not even simple to start with. Because, if market share is what you are going to be measured on, you cannot ignore it. Some banks even mistook the means for the end and made gaining market share a scope in itself, losing money in the process. As we have seen there are many more factors that are important.

Does that mean that market share and profit  are not important ? No, of course they are important, but a good banker understands that they follow as the logical result of becoming a better bank.

Good Execution Leads To Success

This principle is not only valid in banking. I believe that many people that are successful are not always preoccupied with becoming (more) successful. They like what they are doing and are good at it. Because they are good, they are appreciated and make money. This is also the case with many successful athletes. A lot of people might think that they are motived by beating others but this is not (always) the case and I believe that few of them are exclusively motivated by this. When I speak with my wife, for many years at the absolute top in rowing, about the “good old days” we speak about the beauty of the sport, the feel of the boat, the sensation to be out on the water early in the morning, technical perfection, the hard work and the camaraderie. Of course we also have fond memories of races, maybe not only because we managed to win but also because they were good races.

Often it is people that have few achievements themselves that believe the best way to become successful is to try to win (to make money, to increase market share) everyday. I keep that in mind every time someone tells me that “all I am interested in is making short term profit”.

{ 14 comments… read them below or add one }

eRadical November 22, 2010 at 23:41

This is a nice post… in software development there is a current movement called “Software Craftsmanship” that expresses all what you said… (http://manifesto.softwarecraftsmanship.org/) … maybe you need a similar kind of movement in the banking system.

One thing that I remember with not that good enthusiasm is a potential “double-standard” in agencies.

It happened to somebody I know… he went to am agency and didn’t get the loan. He walked a little to his mother’s house when he saw another agency of the same bank… there he got the loan.
I believed him… because I know him… but I wasn’t convinced till it happened to me… I’m sure you really know what bank I’m talking about.
After registering for a credit card on one of your websites I got called and they’re told me that I can go to any agency with a list of documents and I can get the credit card. The first agency… well/long ago established “You do not fulfill the the required criteria! I don’t know who called you!”. The second agency 3 – 6 months after opening it “Of course… I see you have all the papers! All right then! Here is the contract!”

Can you explain the differences ?
Aren’t all agencies alike?
Don’t they share rules & regulations?

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SvG November 22, 2010 at 23:56

That is why it is better to try to improve things. The problem is never to know what needs to be done, that is the easy part. To implement and to make sure that standards are understood and maintained, in other words, to make sure that change is fully absorbed is the challenge. When the ambition is to try to do too many things at the same time an organization may reach the limits of its capacity (to change). To make sure you don’t overstretch too much is a constant concern. In a centralized organization like ours all branches share the same procedures and systems and have access to the same information Still it is people that make the real difference at the end of the day and difference between branches might be unavoidable (but still undesirable) in the rapidly changing environment. If we focus on constant improvement these differences will also disappear.

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Calin November 23, 2010 at 10:01

Ok, you hit a sweetspot with me with this post. :)

I know what you mean by market share and expansion at any cost. That’s the mantra of the most businessmen and businesses and unfortunately a benchmark which is overused. Look at the top of 200 companies in Biz magazine where they are all classified by turnover which in my opinion does not give us an accurate idea about the quality of that business. There are many thing to say here but I will stop.

I had an internal revolution 2 years ago when I read a book by Seth Godin about small businesses. I lived under the same pressure of getting bigger and deep down inside I realized that I am not made for this, but on the other hand I was frustrated by not being motivated of raising the bar for me and following that bar. So Seth, made it very clear that it is ok to be small, as long as you are really profitable and offer a great experience to the customers which sets the path for future and profitable business along with happy customers.
Also in that period I read an online book written by some “crazy” guys from 37 signals, a Chicago software based company: http://gettingreal.37signals.com/toc.php
After that, I really embraced the idea that small is beautiful, and started to focus more in customer relationships, wow experiences and so on.

You are right, good execution leads to success but it ain’t easy :) to do such an execution. E.g. yesterday I was in your of your branches to make a small deposit in the company’s account and the lady asked me for the small paper card with the account no. I did not have it and will never have it with me, but the unspoken message I got from the lady was that having her to look for my account via the company name was a bit uncomfortable for her so it was easier to ask me for that card. Maybe I was wring but that was the perception.
Anyway, in big organizations like yours is very complicated and even painful to make a turnaround in customer experience as that may lead to some lay offs. I know you took over Banca Agricola so probably you inherited a lot of unchangeable people from there. Again, many things to be said here and books like From Good to Great and First Break all the Rules are a great help in understanding what needs to be done in terms of people to deliver such a good customer experience.

Finally, I do agree that big does not mean better, but being excellent at what you do/deliver ultimately brings market share.

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SvG November 23, 2010 at 16:09

Thanks for sharing Calin, indeed we need to do things that make sense for customers. If we don’t create value, we will not resist in the long run. IN a big organization it is often difficult to make the link between individual actions on the work floor and value for the client. Anyway, improving is a process that never ends.

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Alex November 23, 2010 at 14:02

I think this is a great post. My feeling is that we are living in the “today” world, when most of the people are impatient, want things handled fast and want fast results. Everybody wants a salary raise today, wants the car/ plasma TV/ home he desired today, wants an increase in its company shares today, nobody has patience anymore and in achieving this matters they forget the basic principles and try to cut the corners. I think that passionate sustained work will pay off, will bring desire results, but the aggressive way others are handling things drives us do the same thing. If everybody is fighting aggressively for its share today, is it worthy to fight back? Can you stay in the game if you don’t? (e.g. most banks fight for market share, open new representatives and are aggressive in loaning, should you do the same, even though you don’t feel it fits your long term objectives?)

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SvG November 23, 2010 at 16:22

Indeed that is the question, Alex. Banking is a good example, there are banks that didn’t play along and that were taken over because their “weak” performance by banks with “better” short term results that could attract the funds to finance such a take over. I also remember being criticized in the press because we didn’t grow as fast as some other banks 3 years ago. Sometimes it helps to ask the question ” What decision would I take if I would be the owner?” You would care less about short term and more about long term.

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yndy November 27, 2010 at 07:00

In the first example are you talking about ABN AMRO – RBS?

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SvG November 27, 2010 at 09:37

This might very well also have been the case with the ABN AMRO take over. I don’t know enough about this. I wonder what has become of the “activist shareholders” though.

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eRadical November 29, 2010 at 10:41

I think you post should be nuanced…

I work in web-development where things happen extremely fast.
The methodology (maybe you’ve heard of it – SCRUM) brings the team in a hyper-productive state.
We can develop new functionality so fast… management and/or marketing can’t hold their breath. We have enough informations gathered from our customers that we can do it even better in 2 weeks.

My feelings are that we all have to gain from this:
– The team wins – because we develop so many good/nice/useful things the morale of the team is very high,
– The clients win – because we are so fast in responding to customer needs they’re also hyper-satisfied :),
– The company wins – many happy customers brings more customers, the happier the customer – more he wants to buy from you

Yes… the appearance is that we’re all more impatient… but I believe this is because we all strive to deliver more… even more… faster… better… cheaper…

About the aggressive fighting for market share: I believe you should start with clear objectives but you must be careful and validate those objectives in the market. If the market does not validate your plan… dump it… change it…

I suggest you a video… http://www.youtube.com/watch?v=cL9Wu2kWwSY (Did You Know? – we live in exponential times) it may tell you why things are so fast these days and keep in mind one thing (from the video): «The top 10 in-demand jobs in 2010… did not even exist in 2004!»

After watching that video… please answer one simple question:
– Do you afford to be patient?

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Luminita November 25, 2010 at 19:40

Am citit cu multa atentie comentariul dvs.! Cunoasteti motivul! Prin urmare, iata replica mea: sunteti un idealist si va invidiez pt felul cum ganditi! V-ati nascut sub o stea norocoasa si intr-o tara care v-a oferit toate sansele pe care le merita un om de valoarea dvs.! Dar ati nimerit in Romania si sunteti contrariat de felul nostru de a vedea lucrurile! Aici e groapa cu lei sau lumea reala (reiese din comentariile celorlalti). Aici nu au loc oamenii valorosi,domnule van Groningen! Intrebati-o pe sotia dvs care e situatia actuala a sportivilor valorosi ai generatiei sale? Cati dintre ei au mai ramas in tara,sau mai bine spus cati isi urmeaza visele din perioada de glorie? Intrebati-i pe oamenii valorosi din jurul dv despre compromisurile pe care le-au facut ca sa ajunga la acest nivel. Cunosc multi oameni care lucreaza in banci, unii sclipitori,altii vai de capul lor (intelegeti ce vreau sa spun?). You know what? Ultimii au fost promovati!asa ca,dati-mi voie sa ma indoiesc ca toti cei care fac parte din staff isi merita locul. Imi propusesem sa abordez comentariul dv glumind, dar am cazut in butoiul cu melancolie!

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Luminita November 25, 2010 at 19:50

Pozele de pe blog sunt superbe!

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SvG November 27, 2010 at 09:43

Multumesc. Le fac de placere dar nu am facut niciodata nimic cu ei. Blogul mi a parut un loc potrivit sa le arat.

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Luminita November 28, 2010 at 12:52

Imi place ideea dvs de a personaliza fiecare postare cu o fotografie! Si mai imi place un lucru, anume ca nu va ascundeti in spatele unui limbaj corporatist si incurajati abordarile,chiar daca nu va convin. Dar am o nedumerire, de ce trebuie ca blogging-ul sa insemne doar text? Podcasting-ul sau videoblogging-ul sunt metode noi si sofisticate de comunicare. Asteptam din partea dvs niste link-uri interesante spre albumele foto,creatii personale. Mult succes!

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Luminita November 29, 2010 at 19:31

@eRadical – excelent comentariul tau! O lectie de management foarte utila pt mine! Multumesc

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