Lessons Learned in Building a Data-Driven Bank
"What I've learned is to listen to the big drum, which is like boom, boom, boom, and to keep the drum of progress going so that the bank and its teams go forward and care less about the annoyance of the little music that is happening in the technology if you'd like", explained Jo Coutuer, Chief Data Officer (CDO) at BNP Paribas Fortis on June 23 during The Banking Scene Afterwork.
"When you come to the right moment in your song, like when the boom goes down, you need to pick the right technology. I cannot get excited about all the things that the technology industry makes up all the time because then we would have a nervous breakdown."
This excellent quote was part of his answer on how a CDO should explain all the tech developments of today to gain the buy-in of his colleagues in the Executive Committee to move forward with new innovations.
The topic of the day was "Building a Data-Driven Bank". In 1 hour, Jo explained what it took to transform BNP Paribas Fortis into a (more) data-driven organisation and what the challenges are today to realise improvements tomorrow.
Four pillars to make a bank data-driven
Over the 6 years that Jo worked at the bank as a CDO, he detected 4 fundaments, 4 building blocks, to make a bank data-driven:
- Security and risk: money is nothing but data, so make sure you build a solid and professional framework to protect people's money and data;
- Operational excellence: retail banking is a business with margins under pressure, so optimise your processes and make them more cost-efficient with the smart use of data;
- New business development: a bank needs to grow and innovate, and combining existing data to do more is a tremendous opportunity to achieve that;
- Compliance: with more than 500 regulatory reports, a bank cannot be called data-driven if it does not fulfil its reporting duties.
"To me, building a data-driven bank is managing to put your resources in those four buckets in a way that makes sense, and that responds to the need of society, your customers and your shareholders in a balanced way", explained Jo.
Balancing resources in building the data-driven bank
Structure is the basis of everything. To achieve an objective balancing exercise to define the right priorities, a bank needs documentation and a relentless drive to make people responsible for the systems they manage or the data they generate and consume, explained Jo.
With structure and documentation, knowing what you have and where to find it also comes definition setting. For example, what are the different possible definitions of a seemingly obvious word like ”revenue”? With the many stakeholders in a big organisation like BNP Paribas Fortis or any other incumbent bank, the time this takes should not be underestimated.
Today, BNP Paribas Fortis has about 2.000 critical business terms identified and defined, which all require permanent maintenance to avoid a loss of data quality. Jo: "I see that usually, governance activities are the (necessary) bottleneck of technology. Most of the time, technology is waiting for the definitions, the sources, access management, etcetera."
Even with a mature governance model, it is not always easy to set the right priorities, as Jo rightfully noted: "You cannot do everything at the same time in the most excellent way. And by the way, some of these objectives are also contradictory. You can protect yourself up to the heels against cyber or do everything to improve data privacy, after which you might not have a banking app anymore or not be doing any targeted marketing anymore. The most challenging thing to me is to find the right balance."
In that respect, one of the most important lessons he learned during his years as the CDO was to build a business case for every change on the roadmap. According to Jo, people should not rest on their laurels with a set of intangible benefits when defending their business case.
Jo: "Just saying that it's intangible is often an excuse of more technologically trained people, myself included, that don't make sufficient intellectual effort to make it tangible. There is literature and documentation that explains what generates shareholder value in different industries, also banks. With a more profound intellectual effort, you can get a more tangible business case from intangible benefits."
This message resonates very well with another session on making finance a business partner in strategic changes (with David Stemberger of Crelan). If you want the entire organisation to support your change roadmap, make sure to include finance as well.
Jo: "If you say that you will make more money by having cleaner data, also do the intellectual effort of detailing that and agreeing with your organisation, including your finance department."
For a business to recognise the value, people in the data team need to understand, they need to breathe the "why". They need to understand the strategic direction of the organisation and the nightmares that business entities are facing that can be resolved with the smart use of data. Only then the data team should start thinking about which technology to use to avoid running wild in the jungle of (Fin)Tech solutions.
I expected a talk on customer experience, data insights and seamless banking, and I am happy this wasn't the case. Jo taught me what it means to build a data-driven bank, which is challenging on so many different levels. Incumbents face this continuous evolution today, and surviving challengers of today will face it tomorrow.
We spoke about a lot more, like briefly AI and Ethics, on which Jo was relatively short, saying: "The whole debate of ethics is today too much linked to AI. And that's shortsighted. It starts from the assumption that before automation, when people were deciding, they were being fair, which they were not. Ethical use of technology deserves a much broader view and approach."
Nonetheless, Jo explicitly recognised the importance of ethical AI, as it is crucial for people to work ethically: "Our tagline is to be a trusted banker. So the element of trust is of the utmost importance."
Only a few people have the courage to be very open on these topics, the “behind the scene”, and I am glad I found one in Jo.