Tuesday, 7 October 2014


Recently, I gave a talk on  above subject at a European CFO seminar in London.  Here’s the gist of my talk!

Generally when Finance professionals get innovative it’s usually followed by an accounting scandal! Well, I am not talking about that kind of Innovation here!

We usually associate innovation with Consumer Electronics, Mobile Phones, Automobiles etc. where newer models pop up with alarming frequency.

Banking is usually not known for innovation, at least not at a pace that other industries have been accustomed to. 

Let’s look at a few examples of technology changing our world in recent history.

1.      Technology is mercilessly redefining business models.

'Disruptive Innovation' occurs when a product or service takes hold in simple applications at the small end of a market and then rapidly takes over the market by storm and eventually displaces well established players. 

Some examples of disruptive innovation are given below:
  • the music industry with online downloads (iTunes, Spotify etc.) making record company’s bankrupt (HMV, Tower Records);
  • changing customer behaviour leading to the emergence of online shopping (Amazon, eBay etc.) and disruption the high street retail stores;
  • Wikipedia made Encylopaedia Brittanica, a 332 years old print business, extinct;
  • Netflix gobbed up video rentals like Blockbuster;
  • online news channels now ‘erasing’ the print media; inflation adjusted there was less money spent on print ads last year than in the 1950s!;
  • Google erased 85% of the market cap of the top GPS companies after it launched its mobile maps app! and
  • television viewership is dropping as customer behaviour is increasingly moving towards the internet.  For instance there are 4 billion views on YouTube every day!
We have seen yesterday’s big brands like Eastman Kodak, Nokia, Blackberry have all but disappeared as they didn’t keep up with the pace with emerging trends or adapt quickly enough to the shifting customer behaviour driven by the rapidly changing technology.

Eastman Kodak had a dominant of the market share for much of the 20th century and had 90% yet in the 90s ran into difficulties with the advent of digital photography.  It went into bankruptcy and had to sell its patents to emerge as a lean company now focusing on document imaging and personalized digital imaging only.

It took Apple only 5 years to the largest music company in the US and 7 years to be the largest in the world on the back of the launch of their iTunes 99c song downloads!!!

Amazon started as online bookstore and was seen not much of a threat. 

When it launched Kindle and other eBook readers emerged, customer behaviour shifted.   

When Amazon launched Kindle and Apple its iBooks, they killed the demand for physical books substantially.  

Borders, one of the largest retail chain of book stores closed down

Barnes & Noble revenues declined but survived as it had an online presence and had launched its Nook. Borders closed down. 

Incidentally, Borders had outsourced its online operations to Amazon!!!
Amazon today is 2nd largest ecommerce company  as the changing customer behaviour to online shopping and putting high street retail stores out of business; Turnover of $75bn (China’s Alibaba is the biggest at twice the size of Amazon).

2.      Changing customer behaviour driving the pace of innovation
Technology has caused a radical shift in behaviour of people. The arrival of Internet and now with Smartphones and tablets, the pace of change has been phenomenal!

We read on the Kindle or iPad, listen to music on iTunes or Spotify, buy & sell on Amazon/eBay, communicate using WhatsApp, and socialise with people on Facebook, express views through Twitter and catch up our favourite programs on YouTube….

Internet came along in 1994.  If you think about it, anyone under 40 years of age and in employment has always been accustomed to the online world!!!

Internet has become an integral part of our lives and it has been given a massive boost by technology such as Smartphones & Tablets and wearable tech will only boost this further.

The younger generation has been adapting technology like never before! In fact, people want wi-fi more than their coffee!
...but what has all this got to do with banking?

Banking is a highly regulated business and banks should be not impacted by this....right? 


With technology taking over most aspects of our life, there is little to indicate that banking might be an exception to the rule, there’s still enough time for banks to act before it’s too late.  They end up looking at their Living Wills instead!

When was the last time when you went in to a bank? How many of you still use cheque books?

We use ATMs to draw cash, remit using online bank transfers etc. People do not want to spend time at a bank branch. Yet we still see banks spending on upgrading the brick and mortar network...

3.      The emergence of FINTECHs
Disruption is the latest buzzword in the Fintech industry. Young entrepreneurs are transforming traditional industries and everyone wants a piece of the most profitable sector of the past few decades – the financial sector. 

Increased digital disruption led by technological innovation is leading to new market participants in the traditional banking domain.

Financial technology or Fintech start-ups are invading the banking space piece by piece. The first one to fall victim is the payments business.

The hottest space is payments, as evidenced recently; even the mighty Apple wants a piece of the pie.  Square, Stripe, Dwolla, Google wallet, PayPal to name a few have entered the payments business, traditionally a banking domain.

Even companies have started managing their customer’s payments differently. Starbucks, for example, has arguably the most successful mobile payments app

It processes over 6million transactions a week (15% of its total) and is expected to process almost USD1.5bn in 2014. These numbers are growing at over 75% YOY. It recently announced that it will open up their platform for others companies to replicate.

Fast food chain, groceries, pharmacies, gas stations etc. will soon look to replicate this success. 

Mobile payments
Some countries are moving straight from having no bank accounts to mobile payments just like they moved from no phones to mobile phones. Kenya is the prime example where almost half (2014 est) of the country’s GDP (USD 45.9bn 2014 est) moves using mobile payment on a service called MPESA launched by the leading mobile phone operator in the country called Safaricom (owned by UK’s Vodafone).

Globally, over 50% of the population does not have a bank account!! And now mobile service providers are entering this space!

Even the commercial banking strongholds are slowly coming under attack – the likes of Funding Circle, Zopa, MarketInvoice & Bondora are connecting savers to SMEs that want to borrow, thus eliminating the intermediaries – i.e. banks.

This industry has increased 100% YOY for the past three years and is expected to surpass USD 1.6bn by year end. 

IB and Venture funding
We all would have read about startups raising funds on websites like Kickstarter and Crowdcube.  Kickstarter has raised over USD1bn in crowd funding from over 5 million investors!  Crowdcube has raised over £38m from 90,000 investors.

These are small numbers but what’s important to note is that these are growing exponentially!

Even the Investment banking domains are not being spared. Loans are now even beginning to be repackaged in to securities.  Some of you eat burritos at a place called Chillango that is scheduled to raise over GBP 2m in the first ever crowd funded bond offering (called 'Burrito Bond').

Foreign Exchange
How about financial markets? Retail FX is being disrupted by companies such as TransferWise, which claims to offer better rates than all banks – even publishes a comparison on its website. It increased volumes from USD 200m to USD 1.7 billion in just 11 months!

Wealth management
Startup wealth managers like Nutmeg and Wealthfront are also making inroads into the tradition preserve of high heeled bankers.
While these are small numbers but a clear trend is emerging and the rate of growth is exponential. Retail, corporate or investment banking are all under attack. All this will impact bank’s revenues; there are various estimates of this impact - Accenture research estimates about 30%  of the banking revenue pool will shrink, McKinsey puts the same number at ~25%.

What we know for certain is that the bank’s wallet is going to be lighter!

While on the one hand revenue pools are shrinking on the other end operating costs have become higher due increased regulatory burden, causing considerable strain on profitability and returns.

4.      Regulatory overdrive
Ever since the global financial crisis that hit in 2008 with the failure of Lehman Brothers, there has been a torrent of banking regulations.  The suite of regulations (to name a few Basel 3/CRD4, EMIR, Dodd Frank, FATCA, MiFid, RRP,ICB etc.) taken collectively has the effect of knocking off over 25% of the returns.  The regulations seek amongst other things:
  • Higher capital and liquidity buffers;
  • Increased compliance requirements on customer acquisition, remittances and sanctions monitoring;
  • Onerous new tax regulations like FATCA;
  • Higher margining and collateralisation through centralised clearing houses;
  • Recovery and resolution plans; and
  • Bank levy

In addition to the above:
  • Balkanisation of operations is making the business model increasingly expensive;  Each of the regulators, in their desire to keep their jurisdiction insulated, are curtailing the mobility  of liquidity and capital for cross border banks; and
  • Banks are required to maintain higher levels of buffers locally as well.

All of this has pushed the cost of operations for banks while revenues have been under attack from non-traditional players leading a significant squeeze on return on capital for investors in the sector.

The Return on equity of banks has dropped from mid-teens to high single digits. A lethal combination of digitisation, changing customer behaviour and regulatory onslaught will leave the banks like dinosaurs if they fail to innovate!

And how are banks coping with new reality?
So where are banks in this dynamic environment? Banks are not generally known for Innovation. Well not anymore!  Banks very well recognize the threat posed to their business model and have begun to make changes.

In the payments space in the UK, several major banks and building societies have started offering the ability to make payments to mobile numbers (no bank a/c required) using their mobile banking app in a service called PayM.  Barclays is launching Ping it that allows payments just using mobile phone number.

And in the near future banks will help facilitate retail payments through an app called Zapp, which will also attempt to combine loyalty programs of various retailers.

Some banks are recognizing the power of social media; Banque Populaire just announced that it will start offering the ability to make payments via twitter.

Bank Accounts
Movenbank, a start-up bank offers Facebook integration and ability to open initial account by through Facebook.

APPS based Offering

In other geographies, banks such as Commonwealth Bank of Australia have begun offering services, via its mobile app, that provide information on real estate properties based on image from the mobile phone camera of the property.

The bank of the future will aim to help its clients in everyday financial decisions. 

If you wish to buy a house, you would simply open your banking app and view properties in the budget your bank has calculated after analysing your income and payments (of course you would be able to adjust these numbers).

In Asia, Standard Chartered bank offers its clients, through an App, daily discounts from partner retailers. 

The idea of such apps is to make the bank more relevant to its customers on a daily basis.

Car Deals – BBVA
BBVA Compass App provides information on traded price of cars to enable customers to negotiate a better price with their dealers.

Bank of America allows its customers to choose the retailers for their cash back deals (online) for purchases with a BOA debit or credit card.  The cash back you earn is automatically credited to their account next month.

Some banks are taking the M&A route and taking over the innovators as BBVA did in the US through its acquisition of Bank Simple.

I believe that the bank of the future will have to fight hard to make itself relevant to its clients.

Some banks are developing an App that allows customers to query and track spends by category simply by a voice command!  For example, you can ask how much did I spend at restaurants in the last six months and you will get information! 

It has to act like an online financial planner for the client by helping them with their personal financing decisions.  Or else, banks are at risk of becoming a back office transaction processing unit while the front end would be APPS developed by FINTECH companies.

From buying flight tickets to cinema offers, banks have the ability to tie up with their corporate clients to offer the best services to its retail clients. A single app with loyalty offers to all credit cards and debit cards for payments should be offered by the future bank.

The ultimate goal is to be able to offer the customer methods to:
  • save and get value on deals;
  • help manage their personal finance better; and 
  • reduce friction and speed up delivery time of financial services.

Like the iPhone has combined the camera, music player, phone and now credit cards in to a single product, banks have to create the magic app that combines to meet the customer’s personal finance needs!

And finally comes the question - How can Finance drive Innovation?
The traditional role of Finance covering budgeting, external reporting and business performance analysis, though essential will not be enough.

Finance needs to be at front and centre of the innovation agenda and take the lead to create an environment for:
  • digitisation initiatives by creating investment capacity through operational efficiencies;
  • investment to move to a single source for information storage, performance and risk measurement, management, external and regulatory reporting;
  • deployment of tools to the front-end that provide incisive business performance analysis that looks at profitability from multiple viewpoints;
  • monitoring emerging trends and be alert to competition from non traditional sources;
  • reshaping the business to capture the revenue pool shift to non traditional players; and 
  • capital allocation discussions.

I hope this has provided sufficient food for thought to you to put Innovation at the top of your agenda!

Wednesday, 23 July 2014


Don't we all want to be successful and happy? Regardless of our social class, ethnicity, age, location, education or professionour goal in life is to be successful and happyCan one be happy and successful at the same time?  Sometimes we see that the more a person is successful and the more he/she has, the greater is the stress he/she experiences. Success and happiness can mean different things to different people and at times appear mutually exclusive. So, is it possible to achieve success without stress?   

Let’s first look at how success is defined and see if happiness can co-exist with it. Oxford Dictionary defines success as:
1.   The accomplishment of an aim or purpose 
2.   The attainment of fame, wealth, or social status 

Quite often success in life is identified with the latter, i.e. attainment of fame, wealth and social status. However, each person’s definition of success is different, as some may define success in material terms while others may view success as making a difference to the local community or having a harmonious family life or academic/professional achievement of children, attainment spiritual goals or self discovery.  

Success defined: 
“To laugh often and much; to win the respect of intelligent people and the affection of children; to earn the appreciation of honest critics and endure the betrayal of false friends; to appreciate beauty, to find the best in others; to leave the world a little better; whether by a healthy child, a garden patch or a redeemed social condition; to know even one life has breathed easier because you have lived. This is the meaning of success."   - Ralph Waldo Emerson 

The first step in the journey to achieve success (and in turn happiness) is to define your goals and what success looks like to you.  It could be a luxury home, a Ferrari, cash sum, holiday home, lovely spouse, obedient children etc...Of course, we do want everything, don’t we? As we go through our journeyour priorities will change and our outlook to life might change leading to reassessment of our goals. 

Let’s look at some of the essential ingredients to achieving success (and happiness) in life.  The list is by no means exhaustive. 

A.   External Aspects

  1. Define your goals 

The first step in your journey towards success is to know your destination. This will be both material and intrinsic goals.  Happiness is essentially intrinsic while success is extrinsic. 
“If you don’t know where you are going, any road will get you there.” – Lewis Carroll 

So, how to go about defining your goals? It is important to identify your interests and values to help you set goals and give your life a sense of meaning. For starters: 

Think BIG!  

“The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark”. - Michelangelo 

Ask yourself the following questions: 

1.1   What are your subjects of interest? What is it that comes naturally to you that can be seen as talent? What is it that you enjoy doing the most? Explore whether you can commercialise that interest and if yes, pursue it with vigour and passion. 
“If you enjoy what you do, you will never work another day in your life” Confucius 

 “If you can dream it, you can do it.” – Walt Disney 

Dream, by all means as that is a necessary first step. But don’t just keep dreaming!  You have to put actions behind your dreams and work vigorously to give it life! 

1.2   What gives you happinessHappiness is essentially internal to you and is about setting reasonable expectations that gives you contentment.  This does not mean that you need to scale down your professional aspirations and nor does this conflict with your goals. However, contentment will define the intensity of your expectations and will ensure that you set yourself up for sustained happiness in life.  Watch yourself against greed as it will lead to undue stress, burnout and unhappiness due to continued discontentment. 

It’s very important that we delve on contentment a bit more.  Contentment is not about low aspirations or setting low goals, it’s dynamic and not passive. Being content requires: 
  • an attitude of gratitude; Being grateful gives us joy and happiness. The way to improve our life and our relationships, we need to cultivate an attitude of gratitude. 
  • putting in the effort but not getting agitated with the outcome; instead learn to accept the outcome with grace; 
  • Greed’ is NOT good! Despite what Wall Street and Gordon Gekko might have you believe, Greed certainly does not lead to happiness though it may give temporary success. You can witness the ultimate outcome of what such excessive greed and unethical practices end up in! The means are as important as the end to have a peaceful and contented life.  Remember, what goes around comes around!
  • When success is pursued without ethics, it unravels in the most unusual ways.  An example of this is that of Rajat Gupta, CEO of McKinsey having achieved the pinnacle of success in his professional field, succumbed to greed by indulging in insider trading for a few dollars more!!!
  • Set your broader goals that aims to cover both personal and professional life. 
 1.3   What do you want your legacy to be? How would you like to be remembered by others? Is it making the Fortune 100 list of rich and successful people or do you want to be the one who touched many lives? 

1.4     How will you make your community a better place? It’s important to give back to the society.  What goes around comes around. 

2       Make a list of your goals, and what you might do to achieve them. 

  • Be sure to address both short-term and long-term goals;  
  • Try to think beyond financial / career goals. 
  • Set intermediate milestones and timelines to your goals. 
  • Don’t be afraid to refine them, as you learn more about yourself.

3      Observe your actionsand be a Man of action 

In order to achieve success, you will have to observe your actions. You have to constantly evaluate whether your actions are taking you in the directions of your goals; Are they aligned to your purpose or are they veering you off course? 

If it feels like a chore and you find yourself constantly disengaged and are watching the clock for the day to end, it’s time for you to reassess.  You need to ask yourself, do I really want to be in this job? If your heart and mind says no, then it’s time to seek new direction.  In order to be happy and successful, you have to enjoy what you do.

Steve Jobs, Co-founder of Apple Inc.: 
“Have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.” 

Believe in your capacity to succeed and   
Do not be afraid of failure. 

Take your time to plan but don’t stop there, 
Be a man of action. 


Believe in yourself and persevere.

On the plains of hesitation lie the blackened bones of countless millions who at the dawn of victory lay down to rest, and in resting died.

 4     Be a Jack of many trades but Master of at least one! 

In this day and age of rapid innovation, it’s very important to stay abreast with the latest developments.  More importantly, you should broaden your skills as there are seismic shifts in several industries. Having a broad range of skills allows you the flexibility and mobility when required.  

The rapid innovation has turned several thriving business models upside down. Many businesses and business models have become extinct or redundant. Notable amongst several examples of businesses failing to change and falling by the wayside is ‘Kodak’, a pioneer that failed to keep up!  Newspaper, magazines and high street shops have all suffered by failing to keep abreast of the onslaught of internet revolution! 

So, it’s important to be a Jack of many trades but Master of at least ‘ONE’.  Broaden your skills to keep you relevant to the market place. More importantly deepen one of your skills to such an extent that you become the subject matter expert in that chosen area. Learn all that there is to know and be up to date with the latest developments, be active in the environment that furthers that knowledge and skill(s). 

We are significantly impacted by the environment around us.  It plays a huge impact on us at all levels of consciousness (subconscious and unconscious). This includes the place we live in, friends we have, things we read, people we see and so on and so forth. Environment is contagious.  

We can observe that many researchers become successful when working in an environment with great faculty of scholars. Thomas A Edison said he was able to become a successful inventor because he placed himself in the company of people who were smarter than him and he was able to learn from them. We offer most of our thoughts in response to the environment we are subjected to. 

The entities with which we spend most of our time lie in Macro environment. The place you live, the place you work, the colleagues, friends with whom you spend most of the time etc. All these are part of macro environment. Its very important that you put yourself in a macro environment which motivates you constantly to become successful. When alone, observe your thoughts as they define your character and influence your actions. 

5.   Develop a creative mind as ideas leads to success! 

If you have a mentality that is filled with searching for a better idea all the time, you will have innovation around you before long.  You want culture that just promotes ideation and doesn’t care where they come from. Google is a company known to motivate employees to ideate and innovate by allowing time for personal projects. 

The people who take ideas from innovators and take them to new levels are the people you want to have around you. 

6.   Always aim to deliver more than expected and seek feedback

Always Offer Value -  Always do more than you are asked for or expected to deliver. It's a great way to sustain success.

Seek feedback

Seek regular feedback from your stakeholders.  It's a great way of knowing how well you are performing and perceived by them.

This is a wonderful story of a boy who goes to the local shop to call up a lady to offer her gardening services. He calls her and offers her gardening services at half the price of her current gardener.  He even offers to wash the cars free of cost.  The lady politely declines by saying that she is very satisfied with her current gardner. The shopkeeper who overheard the conversation was impressed by the persuasive attitude of the boy and offered him a job.

The boy smiled and said, actually he was already employed as a gardner with the lady and was seeking feedback on the quality of his work!!!

7   Manage your finances prudently

Peace of mind and sound sleep comes from stable financial position.  Hence, it’s important to manage your money in a way that will help ensure your financial stability over time, regardless of your income. Get a clear understanding of your disposable income, net of all taxes. 

Plan your finances and keep track of your expenses. Review your bank statements regularly and notice where you spend your money. This will help you prevent over-spending and ensure that your bank statements are correct. 

Prioritisyour spending. Don’t spend the money you haven’t earned to buy things you don’t need to impress people you don’t like!  Be honest with yourself and differentiate between your basic needs and your luxuries. 

Save money. Have a savings target and set aside sums for emergencies. Every month, you should deposit some of your money into a separate savings account and/or mutual funds 

8.    Manage your time 

Time management is one of the essential elements in achieving success. Procrastinating important tasks until the last minute can cause you unnecessary stress, and increases the likelihood of errors. There is always a tussle between what’s important and what’s urgent.  If you let too many things become urgent, the important tasks will never get done to the required standard! 

Manage your time so that you have enough time to complete a task effectively. Learn to delegate effectively and manage expectations wisely. Under promise and over deliver! 

Learn to be assertive and say No when you have no capacity. Don’t say ‘Yes’ when you have to say ‘No’!  Keep a task list and use task planner and check off each task as you complete it. This will help you stay organised, focussed and motivated. 

Value your time and cherish it. Try to spend your free time wisely as it’s the most precious resource.  Once spent cannot be regained!  So, do things that you enjoy doing, pursue your hobbies, learn new skills, spend time with loved ones, share your knowledge or spend time in community service.  Not everything you do have to be productive, but it should be engaging and enjoyable. 

B.  Internal factors that assist your happiness 

1.   Enjoy the present moment 

If you are constantly dwelling on the past or daydreaming about the future, you are missing out on the present moment. Remember that the past is over and nothing can change about that and the future is simply an illusion, and that real life takes place here and now. 

Start paying attention to negative thoughts so that you can learn to silence them and enjoy the present moment. If a negative thought arises in your head, then acknowledge it, label it a negative thought, and then let it fade away. 

Get in the habit of paying attention to the small details around you. Appreciate the flower bed, the sensation of your feet walking on misty green grass, art around you etc. and appreciate every moment. 

2.   Maintain a positive mental attitude 

Always maintain a positive mental attitude. 
“Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude.” ~Thomas Jefferson 

“No one can make you feel inferior without your consent.” ~Eleanor Roosevelt 

3.   Don't compare your own life to other peoples' lives

Unfortunately, many people measure their own success by comparing it to the success of those around them. If you want to feel accomplished and happy, you will have to stop comparing your life to other peoples' lives. 

Many people have the tendency to compare the low points of their own lives with the high points of other peoples' lives. Remember that no matter how perfect somebody's life may seem, behind closed doors everybody deals with their set of issues, insecurity, and other difficulties. 

If you must compare, then think about all of the people who are homeless, chronically ill, or living in poverty. This will help you appreciate what you have rather than feeling sorry for yourself.

4.   Count your blessings 

No matter how much you achieve in life, you will always feel unhappy if you constantly focus on things you don't have.  Instead, appreciate the things you have and think beyond material things - your loved ones and happy memories. 

"Every day, think as you wake up, today I am fortunate to be alive, I have a precious human life, I am not going to waste it.”  - Dalai Lama 

5.   Take care of your health 

A healthy body supports a healthy mind. Eat a balanced diet and exercise daily for at least 30 minutes. 

When asked what surprised him about humanity the most, the Dalai Lama replied: 

“Man. Because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived.” 

6.   Lead a balanced life.   

Work has become an integral part of our life. We are in a 24/7 access generation and even our vacations are interrupted by work emails.  We need a Life-Life balance as work takes a major part of our life! Many successful people in the business or profession had taken their work far too seriously that they ended up with a bitter family life.  

While there are times when the work may take a higher priority, be sure to recognise the impact it’s having on other aspects of our life so that you can manage the consequences of your choices. 


It is important to engage in careful planning and goal setting including ethical and value goals.  Be action oriented, stay focussed, relevant and at the cutting edge of your chosen field with an awareness of rapid innovation and its implication for your business, and strive to be one step ahead in thinking.  Develop and hone your skills, sharpen the saw and constantly think of new ways of doing things and generate ideas consistently 

Be a man of action and manage time wisely.  Manage your finances prudently and have a target for savings.  Cut your coat according to cloth!   

Enjoy the present and live in the present, maintain a positive mental attitude, count your blessings, take care of your health and lead a balanced life! 

You might think all this is easier said than done! We have to start somewhere and remember - nothing ventured, nothing gained!!! 

Whether it's totally possible to achieve both success and happiness or not we can begin to make a difference by taking some strides towards achieving success and happiness.  

Why wait? There is no better time than now.  Act! Give it a go!!! Good luck!!!