S1E5 - Curating Innovation for FinTech Success - Alessandro Hatami
I've known Alessandro Hattami for over a decade. It's been incredible to watch his journey of leaving a mark on the fintech ecosystem. From being one of the original members of the PayPal mafia, so to speak, to his days as a banker at Lloyds Bank with many other interesting stops in between, which he does mention in this conversation, Alessandro has always been driven by a need to create real impact. Today, he's a major force in the European innovation ecosystem, if you wish. He's working with start ups, fintechs, and established banks to shape the future of finance.
Duena:His deep understanding of both traditional banking and cutting edge finance, combined with his genuine care for people, makes Khatami an inspiring leader and a key voice in reimagining where our financial services in the modern world are going. Give this a listen and then of course find him online and join him in creating better ecosystems for innovation and financial growth. Hello, everyone, and welcome back to Tails from the FinTech Crypt. You heard the amazing introduction, so I won't say any of that ever again. I will just ask Alessandro to say hello and thank him so much for being here.
Duena:Thank you for accepting my invite.
Alessandro:Thank you, Duena. Great to be here. Good to see you again. It's a pleasure. We
Duena:have known each other for, I would say, fifteen years now, fourteen, fifteen years now probably. And we met in exactly the conversation and the situation that I would like you to tell people about, because what our trajectory was like is what you've then lived a 100,000,000 other times with other software providers. No secret that you have probably at this point spoken to everyone who is in the FinTech industry in the vast majority of at least, I would say The UK and Europe, would you say you focus on other markets as well, you said?
Alessandro:It starts off, I'm very big in The UK, obviously. Know my network is very big here, but I also have a pretty good presence in Europe and by definition that leads to engaging with American companies. I've studied in The States, so I have quite a bit of network there. I've worked for American companies for most of my life. And what's interesting, what I'm seeing, obviously Asia has going on its own trajectory, but Africa and what is happening in the developing world, I think it's really, really exciting because they are start they're jump starting some of the mistakes that we made in Europe and going directly So to find the right very, yeah.
Alessandro:I Global
Duena:think because of that, you get a much better view of exactly that, how the wheel of innovation turns around the world, if you wish, how some people can leapfrog, just as who was it that was leapfrogging back in the day? Was it the Eastern European countries that were going slightly faster than The UK and The Nordics, even when they finally came to the, remember those days when Poland was arriving on the banking scene, the big launches of financial digital markets were interesting in those days. So ten, fifteen years ago, when buzz about fintech started, where was Alessandro Fattavi at the time? Tell our listeners.
Alessandro:Well, fifteen years ago, where was it? I was just leaving PayPal. So I was leaving GE, sorry. I was leaving GE Capital and I joined PayPal. I was employee 11 in The UK.
Alessandro:I started a merchant services activity there. UK PayPal To be interesting Mafia, and understanding some of the skills that, yes, the UK PayPal Mafia, which unfortunately I also met the US Mafia. So the PayPal Mafia is a real thing, guys. Be afraid, be very afraid. And, but the it was very early days and some of the concepts that today are normal, these those days were considered strange.
Alessandro:So, you know, paying, paying, not having to go to your card or not to get a check or sending cash was edgy, was cool. You know, right now it's So that was that. So I built a merchant services for The UK. I got to meet some amazing people, including some that are in the news today. So sold PayPal to Harrods for a while.
Alessandro:And I got to meet the CEO there who was a very unpleasant guy in some situations. Then we developed that and we built a team. No, all the others were amazing. They're all amazing. Yeah.
Alessandro:Everybody was nice. I have a business, Duena. Come on. So after PayPal, I became the CEO of paypoint.net, which is a payment business, entirely digital. They were doing about 5% of The UK e commerce at the time, which was interesting.
Alessandro:I then did a bit of private equity stuff on my own, not private equity, but venture capital stuff on my own. I tried to acquire a business, which is now a multibillion dollar platform. We tried to pay 50,000,000. I think they're worth now 5,000,000,000. So it was was didn't happen.
Alessandro:And then I joined Lloyd's as the CEO of Digital Bank.
Duena:One of those. All have, like when I sold my Apple shares.
Alessandro:No. I've done if I if oh, totally. So if I tell you the list of stuff that I've missed, I think you'd be, so I was in Seattle in the eighties and I turned down a job from Microsoft. Okay. Just to start off with that.
Alessandro:Going forward, I think we, I joined Lloyd's and in Lloyd's, I got the other side of the equation, if you want, because I was always on the kind of the challenge, the incumbent and going from the incumbent inside the incumbent was really interesting to see the challenges that they're going through. They interestingly enough, they have similar objectives. It's serving their customer, having a product, having longevity, profitability, all these things, but they were doing it in a very different way. So I think understanding the language of both sides led me to kind of leave Lloyd's quite some time ago and set up my own firm Pacemakers, because I realized that the future of innovation in the financial services is the collaboration between the challenger and the incumbent. And they both know this, but the approach is that they have, the way they engage with each other is very haphazard.
Alessandro:So we said, why don't we create a system, an organization that actually operates as an intermediary between the two? And we said that we should be, so I do it, I split myself into two if you want. One, we have this business Pacemakers who works with large corporates. So we ask the large corporates what they're trying to achieve. We help them map the whole market and all the trends and activities and type of innovation that is affecting that sector.
Alessandro:We then give them a long list of all the companies that operate in that sector from IBM or Accenture and One Extreme to the Indian startup with four employees. And then we say, and these are the 300 companies or 20 companies, or depending on what segment it is that are really big. These are the five that we think you should be speaking to. And then we hold their hands and engaging and talking and hopefully signing them up. So we've had some good successes.
Alessandro:And it's quite a reasonable approach because if you've realized a lot of collaboration between startup, sorry, challenger and incumbent are happening, but they're not doing it in a professional way. So they're not choosing the best incumbent for that specific scale up. Incumbents are not high, they don't have really a process to do that. They go to a conference and they meet someone or they're friendly investment banker suggested you should speak to these guys or a big consulting firm says the same thing. And I think understanding the market as a whole is a fundamental thing before you actually make a big decision.
Duena:And so
Alessandro:that's what we do. So that was half of me. And the other half is I do, I mentor startups. I mentor early stage companies because I find that it's to give something back if you want.
Duena:Know that we were both think we both were startup mentors in Techstars together at one point or even Startup Bookcamp, one of them. And we had quite a part of the same trajectory if you wish. Most of the people I talked to have been through the same things. I've not been a banker, but I've been inside the big beast before. I shan't name them.
Duena:That would be a 10 ks they'll But never send we've all been through kind of understanding that innovation needs a much more intelligent approach than what was happening at the very beginning of financial services, of course, when kind of this gold rush of let's just invent new projects and products for the digital space kind of started happening. And what people are looking at today, and I don't know if our listeners are quite as clear on this or not is much more intelligently segmented market, if you wish, and a lot more clarity on knowledge. When we started in FinTech, there were maybe two or three reports out there that existed ever. I can count them on one hand, people talking about digital banking coming. And these days, of course, people are drowning with information.
Duena:So there's the opposite of that. When we came in, it was easy to kind of grow with it and understand what's what to a degree, but that's not the possibility for anyone coming in today where there's the FinTech bubble that I still talk about sometimes is still there to a degree. And the good quality products are much harder to get to unless you have a guide such as pacemaker. So in your very amazing journey, what have you found in terms of willingness to be honest with need for innovation? And that sounds like a theoretical question, it's not.
Duena:It's a very genuine, hard hitting question. How easy is it to keep a corporate honest to what they're attempting to do in a mission statement? And how easy is it to keep them going when they accumulate more and more of what I call human debt, which is this organizational debt of miscommunication and people changing and lack of care and so on. So how do you get to the truth of what they really want and keep them honest to wanting it some more?
Alessandro:Very interesting question. I think what is happening is that there's many different realities overlapping. So I think the individuals that you speak to in a large organizations are aware that society has changed, are aware that they have to do things differently, that their business model is antiquated and it's not exactly right. But they're also seeing themselves as an element, as a component of a bigger organization. And they are remunerated and support and rewarded not for being transformational, but for being sustained and stable.
Alessandro:That goes against the innovation dimension. And what happens is that you see a lot of these people that were very much against transforming, changing, keeping the things moving on because they realize that the benefits of this transformation would come after the next pay cycle. Okay. So it is not impossible that they actually will not underperform in the next few months, but then they will perform lately. So what's happening, nobody's looking at transformational, everybody's looking at evolutionary innovation.
Alessandro:And I think that would work well if we were able to actually say, okay, the infrastructure of the organizations of today is able to operate in a way that will meet the needs of the future. And that we know that's not the case. So there will have to be a place that you can go beyond the adapting and evolving what you're doing when you want to transform what you're doing, because the market expectations has transformed, a lot of these organizations struggle. So what they do is they try to stick as much as possible to keeping the old core banking system in place, for example, or let's maintain the branch centric perspective, or let make sure the app sounds very much like the conversation that we have in the branch. So it's all an evolution, you know, let's do that.
Alessandro:Instead of thinking, okay, what is it that I'm about as an organization? What is it that I need to deliver? And a lot of organizations think, what I need to deliver is selling these five, ten, 2,200 products in a certain way. And that is very much true, obviously, because that's how they're rewarded. In reality, who are you really serving?
Alessandro:And what are the outcomes that you want to deliver? So if I look at banking, for example, we always think about bankers selling loans, selling credit cards, saying overdrafts, saying pension plans, pensions, investments, all these things. These are all products and they're all treated as separate silos of P and L, etc. In reality, what banks are selling are the ability for the end user to achieve their goals. Okay.
Alessandro:And my goals can be as simple as I want to be able to buy that refrigerator or I want to be able to afford my kids school when they go to school or I want to be able to pay my good friend across the other side of the world instantly, etc. Or I want to be able to be receive payments from somebody who's far away from me and so on. So ultimately it's three things. I want to pay, I want to borrow and I want to protect what I have. And all of this, I want a secure entity in the middle that advises me on it.
Alessandro:But banks are doing that, but they're doing it in a very kind of fragmented fashion. So the average bank, I am not Alessandro, but I am Alessandro the cardholder, Alessandro the current account holder, Alessandro and there's different Alessandro's that come together in one place. Nobody's thinking what I really, really want. So I think the future will be something that is hyper personalized financial service. For someone who wrote emotional banking and
Duena:was finally arriving ten years later.
Alessandro:Well, emotions and data are just emotion is just one of the variables that I operate on as a human. Okay? So I look about I can be incredibly kind of like a Vulcan on Star Trek, just thinking about all the exactly what I want them to be purely logistical about it, or I can be truly emotional about it. But all of these things represent me. I am not different beings.
Alessandro:I'm one being. So my behavior, my rational and emotional behavior are driven by data all the same. Okay. So, and driven by my past behavior and so on. So in a Fadi sort of way, even AI that doesn't have any emotions could look at my past behaviors and predict what I'm doing there embedding in that the emotional dimension, not just the logical.
Alessandro:So a could understand exactly what is going to make Alessandro happy. And if I'm happy, I will remain with the bank and I will continue working with them and I am retained because that is a fundamental benefits that banks are realizing. The biggest value add that we have for a bank is our retention. So keeping us in place is the most valuable thing. And the startups coming in and taking us the slice of the more profitable people with products that are more cool are actually diminishing the banks, not by creating alternative revenue streams, by making us less trusting of the bank and remaining with the bank.
Alessandro:In the past, I opened a bank account with the bank, I stayed there for the rest of my life. Today is no longer the case. Right. And the banks I missed out on that. So going back to that.
Duena:Carry on. No, no, no. I
Alessandro:just wanna get
Duena:to, I could clean this, but it wouldn't flow as well. We are just getting very passionate about it because I really wanted to hear in that, much has that changed? Because when I left fintech, quote unquote, when I took
Alessandro:a break from
Duena:fintech, banks were finally starting to get terrified about this reality that they will use market share. Are they still terrified? Or what I've heard from some bankers these days was that was a false alarm, nothing much happened.
Alessandro:Yeah. Well, it's not true that nothing much happened because what they asked them, were you banking? Are selling the same way that you were doing before? And the answer is obviously not. Okay.
Alessandro:So what happened is that they adopted some of the changes on that. And what happens is like, what can I say? If you asked Sears robots in The States, after the .com crash, did .com succeed in taking your business away? They would say, no, we won the battle, etcetera. There's no Sears anymore that Amazon dominates the market.
Alessandro:Okay. So what's happening right now is that we are still in that evolution. The evolution is not a straight line, it ups and downs, but it's the trend is in that direction. Okay. So banking as we want it, it may not be the vision that Revolut has, but it's not the vision that a, I don't know, my old home Lloyd's had ten years ago.
Alessandro:Okay. So they both are going in a different direction. The evolution of banking is the more dependent on making satisfying me, the customer, satisfying you, the customer to remain with products that are all the good things, you know, either what I want, they're viable, they're reliable, they are safe. They're secure, etcetera, etcetera. And in order to do this, there will always be competition thinking, bringing new things to the market.
Alessandro:And I will have to, player adapt to that. At one point, though, these things could be very new, so new that against my structure and the way I'm organized, so I have to rethink myself. So we mentioned before that the banks are thinking of themselves as product silos and they still do. And there's a top guy that is responsible or there's a woman who's responsible for mortgages and she's very important because she generates this much profit for the company. If somebody went to that and said, okay, you know what, you products, you mortgage person, you credit card person, you current account person are no longer relevant.
Alessandro:You're serving a segment person that goes across all of them. And this person has the P and L, you guys are just service providers. It requires a transformation of the organization, which many organizations intellectually may say, that makes sense. But in reality saying, you know, how am I getting my bonus next year? Okay.
Alessandro:Would you
Duena:say that this has improved much over the last years or it has gone backwards? And the reason I'm not trying to point fingers, I don't actually know the actual real answers to this. But what I have seen is that the way that banks look at the two variables that I think are making this harder, which are one of them, this human debt I've talked about. And the other one is practically the thick debt that has resulted from the human debt. There are only two kinds that we could wrap up and then we would be in a better position.
Duena:I feel like banks are looking at these two elements in a much less intense way than other industries to put it very elegantly in the sense that if you have this conversation about what is your genuine purpose, sit down, throw everything out and ask your whys with your team and then start from tabula rasa, you get different answers in logistics, in pharma, in places mattered that they moved fast because the industry was much faster around them than I got in banking. Do you the same limitation and do you think that that's gotten slightly better over the last ten years?
Alessandro:I think that right now there is no leader of a bank that doesn't realize that their future is digital. Okay? That is a known fact. Okay? It's just a question of how to get there.
Alessandro:Just a question of trajectory. It's not a question of destination. Destination is that. That purpose, there will be people that will make decisions that will be right and some people will make decisions that will be wrong. So the future of financial services will have three players in them.
Alessandro:There will be some incumbents, there'll be some challenges and there'll be some that are not there yet. Okay. Some completely new ones that we don't know. That is doubt. There is no doubt about that.
Alessandro:Will the banks be wiped out in twenty years time? No. Will they be like today? No. Okay.
Alessandro:Will FinTech dominate the banking world? Absolutely. Will they be run by startups? No. Okay.
Alessandro:They will be a combination of things. So what we see is that it's an industry that has changed. So remember that financial services is the ideal digital industry because there's no real physical goods being changing hands really. So music and financial services are the ideal digital businesses. So what we already think about right now is what does the future look like?
Alessandro:What does the Spotify or banking look like? Okay. And I'm not sure that it looks like a FinTech. I don't know. Don't think it looks like an incumbent bank, but it looks as something different.
Alessandro:Would it be built by one of these two? I think so. But it's possible that it's not that somebody else comes in. So I think we're in the middle of this road. The road is not finished.
Alessandro:There's no real destination and there's no real destination for anything we do in life. You never get to a point. You get to the next peak and then there's another one next right afterwards that you have to go for. So at some point, let the banks enjoy the peak they're on right now because there's a reduction in funding in fintechs that they seem to think that they have it all. Give it a few months.
Duena:Is this driven you think about, you know, when we were doing this fifteen years ago, there was a very, almost as often as we would hear the phrase about the amount of toothbrushes, we would also hear the fact that it doesn't really matter who you have in the board in banks these days, because that's the old guard that's, you know, two bonuses away from retirement after which we're going to kind of have this inflection of new blood that will completely change. And I think to my mind and what I've observed, and I want your opinion on that, that was naive because obviously once you inject new people in an organisation that already has human debt and tech debt, it will come to the same place in a sense. So non generative organisations don't overnight transform because you've gotten some new blood in. Are those boards the same or have the boards changed entirely like we were hoping back then?
Alessandro:The boards are changing. And I think I was on a board of a bank until a few months ago. Mindset and it's always a combination I was the more digital guy there until I left and I'm not a young guy,
Duena:okay, so
Alessandro:I'm not a FinTech startup start guy. Thank you. You're very kind. So, you know, I think what's happening right now, I think we'll see more and more the emergence in people in banks, boards that are kind of like me. You don't want to really bring a completely disruptive individual in the bank because that generates good dialogue between the bank.
Alessandro:And you don't want to bring somebody who is the representative of the past. Okay. You would like to bring somebody that is a bridge. And I think I feel, I see myself as a bridge. I think you're a bridge also because you have seen the past, you see the future.
Alessandro:And I think you know how to speak to a startup, you know how to speak to scale up and so on. You can see some of the trends and some of the stereotypes or the kind of, what's the right word, resistance or reluctance to transformation that is there. But you can also see the opportunity and potential of change. Now, sometimes if you're a very digital individual, the way you express this to the incumbent is very dramatic. See, it's obvious that this is the right answer.
Alessandro:Okay. Instead, you need somebody like us that actually comes in and explains, okay, look, you're trying to do this. These guys are doing that. This is the benefit that you get by working with each other. You could do this with that.
Alessandro:So helping see the future in terms of the past and seeing the past in the terms of the future, I think is what are translators for lack of a better word. I use the word bridge, translator could be a better one even. So translating
Duena:bridge, I think you appreciate the
Alessandro:So I think what we see in boards is that we'll see more people that have operated along boards
Duena:that don't are feel like I am the elegant bridge that anyone would say that I could ever be, because unfortunately, I've been, over my lifetime, I've been way too disruptive to way too many places. So, with that said, I know exactly what you mean. I remember looking up to yourself when I met you and many other of the people that were at that time bankers and thinking what these amazing people have, Roberto as well, Michel Panowitz, that's a blast from the past, I forgot he existed until now, bless him. But all these people that have built banking at the time and the word inside, to my mind, were going through a lot harder of challenges than I ever would have done. Because surviving internal politics, which is something I found out in The Bury of the Abyss later on is intensely hard.
Duena:And trying to make that change from the inside, we don't say this enough on all these podcasts, seem to be talking to the outside people and to the industry and to Fintech. But what realistically, there are hundreds of thousands of people that are inside organisations who would understand the scope of change, they could potentially be the president of the world and make that change overnight if that were the case, but they are stuck in positions where it's almost impossible to much effect transformation.
Alessandro:Well, you're totally right. When I had a trick, I had a gimmick that I used to use that was very helpful in trying to be the promoter of change. So at the beginning of the year, we would speak to all the players in the organizations outside the digital division. And we try to get all the projects in. We would price them, prioritize them, look at the return that they would generate and go back to the board and say, we're going to invest the 150,000,000 that we were investing.
Alessandro:And over five years, the return is going to be this much. Our target is 350% return. Okay. And next year is going to be three twenty two based on the forecast that we have with these projects. So very much focusing on return.
Alessandro:What we did there was several things. One is that we looked at every digital project and we assessed boundaries for it and very direct objectives. These objective was then bought in by the company, by the parts of the organization that were receiving it. So digital was paying for the transformation, but then less so credit cards benefited from that transformation. In order to get that, they would have to guarantee that we, they would have to forecast a return that this benefit, that this new proposition would do.
Alessandro:And that will be built in into their numbers. Okay. So that would say we are supporting digital to build this credit card capability and they will generate 3% more sales. And we put that in our numbers. Okay.
Alessandro:So they were committed in supporting us. They were also committed in having us and making sure that the rest of the organization knew that this benefit was coming because they've generated a lot of things. We had this roadmap of things that we were delivering and we have faced three different things when you build something new. You have the supporters, which are these people I mentioned to you. Then you have the gatekeepers, the neutral ones, legal or compliance, etcetera, that can be swayed either way, supporting or not supporting.
Alessandro:And having somebody with a big P and L that is interested in you succeeding is the way that you actually achieve this in a bigger organization. So you have to be able to have this champion supporting you. And then the third, have the people who don't want you to do it, who see threatened by what you're doing. And again, a big candidate that supports you is really helpful. So having this ROI, yes, well, thing is they have good intentions.
Alessandro:They're not evil, but they're saying, okay, how is this going to impact the future? I have a vision of, sometimes I have a vision issue. Sometimes they're thinking that this is going to diminish their role and so on and so forth. So a variety of things. So having an ROI focus from the beginning is the best way to clean up because you're translating something that is complex into something that is understandable.
Alessandro:Okay. And also what's interesting is that you also avoid disruption because when you have a portfolio, say I have these 22 propositions and generating 375% return over five years. If somebody comes in and says, build this other thing for me, you have to do this and that. Say, sure, fine. How much is the ROI?
Alessandro:I don't care about the ROI. Okay, so zero. Let's go to the board and explain why we have to do this zero ROI thing and not do this other one that had whatever ROI you want. And interestingly enough, projects all became ROI centric. We were at the innovation, the digital team became an important component because that benefit generated also was ours.
Alessandro:So we could say we are generating value right away. So it wasn't a neutral, we got to do this because we got to do this, we got to do this because it generates benefit. And I think bringing down a complex product into something simple like ROI, etcetera, a really good way of getting your job Let's done
Duena:Just get clear ROI and ensure that the person whose P and L burns the most is invested. I think that's a really good takeaway for anyone listening, because it's not as evident as that both internally and externally that those things are important. And I think we like to ignore politics, we like to ignore human debt, we like to think it's not happening. But realistically, unless you kind of understand both these levers of numbers that make a difference to someone's position, you're not going to get anywhere in any of these. So that's really great advice.
Alessandro:Yeah, because companies are ultimately there to do that. Now, the ROI is obviously super simplistic. It's not the only way of doing this. So a manager of a portfolio, you want to have things in there also that if you are able to get ROI guaranteed for a portfolio, you're able to squeeze things in there that have a lower ROI that allow you to build for the future, Okay. So if I have to create an AI engine to be able to drive my future, I'll pay for this by creating a credit card onboarding system that is cheaper.
Alessandro:Okay. So you become a bit of the owner of process if you have this ROI, because once you can guarantee a return for the bank, the banks or large organizations, they treat you with detachment and support. I say, okay, they know what they're doing. Yes, I don't understand exactly what's going on, but they've delivered numbers in the past, they'll deliver numbers again. So I think that's like an important
Duena:that framing a lot. Even as a maker of software, we had to come down from our very big social ambitions of everyone at work should be doing work on their emotions to how do we show that directly in the bottom line. And unfortunately, that's a very quick connection for most companies and a very complicated one to understand, but a very quick one to show on paper when people have to be productive and engaged, otherwise they won't be making your technology. But again, it took me a long, long while to understand that. And I think the fact that you're translating that to the two parties, and you do that through your role is kind of where the magic of what you're doing stands.
Duena:When you look at the market today versus the market, I don't know, before the big changes of open banking, before, you know, kind of we started doing digital money, I think those were probably seminal just as AI is going to now probably make big change. Do you think that the amount of valuable proposition is more solid and greater today? And I think there's, is there more confidence in these propositions these days than there was ages ago or has that not necessarily went that way?
Alessandro:I think what happened when you lived in something for so long, you look backwards and you look at it with rosy eyes. It wasn't rosy lenses. It wasn't that great in the past. So nobody believed that mobile was going to be bigger than branch. Okay.
Alessandro:When that happened, it was kind of, let's see, let's do it. Okay. You put something on the mobile phone. What, you want to do an app for banking? Are you crazy?
Alessandro:How many apps are we going to have? Super app, all this stuff disappeared. So I think what we're seeing right now, there's an evolution of innovation that is coming our way. Everybody's skeptical about it. One is AI innovation that we talk about.
Alessandro:Now we're going through a super hype of AI. So it's going to crash at some point and then it's going to grow in a very reasonable way because AI is over promised. A lot of people that don't know what they're talking about are selling it. And I think, sorry, more people that don't know what they're talking about are buying.
Duena:It's even worse. That's really good point. Yeah.
Alessandro:Okay. So I think another area that we need to think about is the whole crypto space. I think if a CBDC is created, a digital Euro or digital dollar is created, a Brit coin is created, it would transform payments in a way that is incredibly profound. And all the stuff they tell you, well, they're not secure, your privacy is gone. So what is your privacy when you use PayPal?
Alessandro:Is there any privacy there? So digital payments already have no privacy. So crypto will have no privacy all the same. So I think the future, some of the trends that we're seeing are those. Challenges we have is going to be regulatory, frankly, because that's where we're hitting the barriers.
Alessandro:And that we're realizing that regulation is inadequate and the capabilities of some of the new capabilities, the propositions that we're putting in place. Crypto will have no value if it's not regulated. AI is incredibly dangerous if it's not regulated. These are the two trends in my mind that we're seeing coming forward. The adoption of digital is not slowing down.
Alessandro:In fact, it's accelerating. Financial services are getting increasingly embedded everywhere. Open banking is something that is getting increasingly demanded, regulated and supervised. Cybersecurity is going to be a huge problem because as we go digital, also people trying to attack it will be there. That's not going to go away.
Alessandro:It's not gonna be destroying the business, but it definitely can create. And I would be, I wouldn't be, I hope it doesn't happen, but I wouldn't be surprised if some catastrophic failure somewhere because of cyber, because we are being a bit, be we a bit more scared than what we are these days. And ultimately, I think the big change is going to be the right regulation. The right regulation will change the industry. It's like with the automobile, you know, when there was no regulation, when there's extreme regulation, we had a car, yeah, there's a guy with a red flag that went in front that wasn't going to transform the world of transportation is the stop sign and the speed limits and the people giving you tickets for parking in the wrong place that did.
Alessandro:So the same will have to happen for innovation.
Duena:Let me ask
Alessandro:you an
Duena:almost differently formulated question. As someone who's been looking at how the regulator played into the financial services for the last fifteen years, I was super hopeful for a while because some of the things that the regulator were underlining were not being touched by some banks. So some of the innovation I've seen internally, in particular looking at their processes, looking at their people, looking at the back end has been sometimes driven by a fear of the regulator asking for those things. With that said, just very recently, I've conducted a campaign with my team on the recommendations regarding psychological safety for employees in technology and banking that the regulator has put in place. And to my shock, the industry, let me put it elegantly, has found ways to go around that regulation and not respond to the spirit of it.
Duena:So now the question I have in the sense of shockingly, no one has fallen over backwards to go by the spirit of it and change the way people feel internally and then make sure that's happening. So the fear or the question I have is, is this a founded fear that there will be going, that the regulator cannot even be a catalyst for innovation if people don't quite respond to what it's trying to achieve?
Alessandro:I think the regulator, the reason why that regulation was not followed is that there was no repercussion if you didn't. Okay. So that wasn't because regulation was too strict. Was regulation wasn't strict enough, wasn't clear enough of what that is. Okay.
Alessandro:So if you think about why is GDPR being followed is because there's a repercussion if you don't. Okay. And what has that achieved? That has changed the way we look at our data, we look at who we are and so on. Is that a bad thing?
Alessandro:Yes, we're all annoyed about saying, oh, another cookie thing. But then you realize that, woah, all these guys are stealing who I am and that they know more about me. So I say no, no, no, every time, right? So I think regulation, the regulation you described, if it didn't have any repercussion for the people who are breaking it, that's not regulation. That's just words that are being shared.
Alessandro:Ultimately regulation has to have a purpose and it has to have a structure and it has to be enforceable. So if it's not enforceable or it can be doubtful if it's enforced, etcetera. There's any ambiguity- The
Duena:certification until the compliance department is afraid of it.
Alessandro:Right. CEO is afraid
Duena:of it. CEOs being afraid is an interesting topic. I think. I write a lot about and think a lot about the element of fear when it comes to people looking at new things. Obviously, it's there and something that most visionaries are able to push through.
Duena:But the capability of doing that in a bad economy, or the capability of doing that when you have investors and shareholders breathing down your neck is not exactly an easy thing to do. All know that. With that said, and hard as it is, the ability of people to be a lot more real and vulnerable and honest and raw, do you see, like I see that that has changed even internally in places?
Alessandro:Interesting. I think there's a more awareness in large organizations that the state of the employees, the employees are not just a cog in a big machinery. They are a component, a very important component. And I think if you look at what the company is, the company is coming together of infrastructure, regulation capital, but also people. And I think until recently, so in our generation, the previous generations, I think there was an unspoken rule between the company and the employee that the company was going to take care of the employee.
Alessandro:And the employee was, yes, you're going put up with some shit, but then you have a long term job. They're going to be there for you. You join this company, stay for fifty years. And then at the end, you get a thank you, a pension and a gold watch. Okay.
Alessandro:That is now gone because companies are saying, okay, when the staff is gone, when I don't need this thing, I'm going to let them go. I'll give them a severance, but smaller as possible, etcetera, etcetera. So right now, this happens, we just realized that the outcome of that is that the younger generations that come after us are realizing that if their parents got laid off because this company is not going to take care of them, I could be laid off too. So why am I working? Okay.
Alessandro:So I am working because I love the company, because it pays me, because it's teaching me something and it's making me more valuable. So ultimately what companies are becoming, they're becoming platforms for their employees. They're becoming Ubers for the employees. So the employee wants to have a certain things guaranteed. So it's funny when you hear these old employers talking about, oh, people now they think about quality of life.
Alessandro:They think about all these other things that we never thought about, you know, they should be feeling and doing the job. Well, what are you giving them in exchange except salary? So you're not giving them security, you're not giving them training, you're not giving all of that. So all of this has to happen. So employers today are realizing, or CEOs are realizing that one big challenge I have is retention.
Alessandro:And retention is not just based on salary, it's based on a variety of other things. So understanding what your team needs and what your team wants is a big component for you to be able to preact on situations where it forces you losing the right talent to somebody else. Okay. So I think regulation is important because of the protection of people who are vulnerable, especially in manufacturing in different countries. Think you see that a lot, but you see it also in service organizations in the West.
Alessandro:But ultimately the composition of the elements that our CEO is looking at include the profitability and sustainability of the product, include the product market fit, obviously diversion that we have there, the investors and how the investors are perceiving, but also the employees. And also this because of the digital world, this is now completely transparent. It's not like twenty years ago that you didn't know what was happening inside a big corporation. Right now everything's open, everything's clear. So if there's an abuse, if there's a mistreatment, there's a wrong behavior, eventually it will emerge.
Alessandro:So CEOs have to realize that the well-being of their employees is not a nice to have, but it's I a nice
Duena:like that hopeful message. I think that's obviously
Alessandro:a lot. But let me also say the CEOs want to do this, by the way, you're not being forced. No CEO wants to run a company where everybody is unhappy or uncomfortable. They want to do this. But the thing is they would have to provide them with the means, you have to provide them with an incentive, you have to create a whole thing.
Alessandro:So organizations that help them do better and actually engaging, interacting, reacting to their employees' needs, I think would be very valuable in the future.
Duena:Question, what kind of an organization they are?
Alessandro:All the time.
Duena:In earnest, not all
Alessandro:All time, especially, and you think that you think it's a, I think it's the CEOs that are thinking about it, you know, yeah, we're thinking about doing it, but I think it's the every employee. When I go to, when I'm a new hire and I go and I realize that my firm is not doing something ethical, I'm not happy. Okay. Yes, I want to be paid. Yes, I can tell myself, I'm getting paid.
Alessandro:I don't really care that these guys are abusing manufacturing people in developing world, etcetera. But I'm not happy. If I get a job that does the same things and it doesn't do that, I'll change. Okay. So it grows across the organization and we are under underestimating Focusing the impact
Duena:of on the humans and the individual perspective that the response to whatever we're attempting to put on the market is obviously something that thankfully boards are looking at these days. In terms of for them to get from A to Z and feel like any incumbent or any of the big corporates you're working with has completed a transformational cycle. What would you say are the steps for them to start now and end where they want to be? What are the stages, if you wish, they should go through?
Alessandro:Okay. I think like with any journey, want to decide a destination and you also with the recognition that this destination is probably going to be an intermediate destination, there will be others going forward. So you want to say, okay, what is it that I want to achieve? Is it internal rating scores, scores from outside, my own feeling as a CEO that I'm doing the right thing? You know, what the metrics that I want to achieve?
Alessandro:Then go and analyze my existing situation and see how I stand, rates myself, measure myself, etc. And then based on what I get from feedback, create a whole series of situations where I can actually improve on those scores. So I'm a similar I'm an engineer by training. Okay. So I see things in very pragmatic, if A, then B kind of thing.
Alessandro:So you have to think about the end design of what you're achieving, you have to put together where are you standing? Where are you right now? Okay. And then you define the steps to get you from where you are to your destination in intermediate steps. Organizations that help me understand where I am right now are very important.
Alessandro:And also organizations that allow me put together a pathway or a design to get me to that endpoint that I want to get to are important. And the endpoint is not necessarily a beautiful structure. It's also a perception in the market. It's a turnover number. It's a combination of variety of variables that were in there.
Alessandro:And to go from there, from where we are to that is something that, you know, companies should really be looking forward for help.
Duena:I think we
Alessandro:should absolutely
Duena:remind people that they should talk to you. This was not an infomercial, but I think just by you guys hearing what incredible tapestry of a journey that Alessandro has had. You realise that he's set on a lot of knowledge. If there's anyone that can kind of help through a genuine innovation and transformation journey, that would be Alessandro. So get in contact.
Duena:I'll make sure that I get all of your data And in the obviously, I'd like to get you back because there's a lot more that we got to dig into. I love how we left it on. They are doing the right things, but we should question that once or twice more. So I'd love to have you back on the podcast. Thank you so much for coming over to them and giving us a glimpse of the beginnings of it all.
Duena:And let's hope that by the time we talk again, we'll have such amazing news about the market. And thank you again, Alessandro, for your presence today. Same to
Alessandro:Thank you, Duena. Was a pleasure to be here.