Constantin Mareş has 25 years of experience in the banking system, and in the last 20 years, he has held top and senior management positions. Since 2015, he has been the promoter of cultural change at OTP Bank Romania, a change that has included both the digital transformation and the transformation of the way of working into an agile, collaborative and modern one. He is directly responsible for the success of OTP Bank Romania's Apollo organic growth program, which focuses on improving the customer experience, process efficiency, and developing key portfolio products.
Costi, for somebody who has been in banking for two decades, who then finds themselves as the chief digital officer, I think this must be the most exciting and the scariest role in any bank you could have these days. How did you get here?
It is indeed exciting. And it is also challenging because it's a role that is at the intersection between humanity and technology. I started my experience many years ago in banking, I worked at ING, Millennium Bank, and now OTP Bank, and I moved back and forth between business positions and technology positions.
And I'm now merging these two systems together with the sole purpose of providing a great customer experience and delighting our customers. So it's a challenge because we are talking about clients and usually IT people do not really care about clients; they care about technology. So there is indeed a challenge.
I love this idea of being at the collision point between tech and humanity. Do you believe that the work that you've done in your career, across both business and technology, puts you in a great position to understand where you can get value from technology opportunities, but also help people achieve them?
In all my roles, I put a lot of focus on collaboration, communication, and alignment. Many companies and banks fail to have clear communication between business and IT. Business is talking about business initiatives, and IT is talking about technology and usually, they are not able to understand each other. Fortunately, I was always able to make this bridge.
And because of that, when I was in technology positions, the business loved it. Because they were able to achieve their goals and we could talk the same language. But also, when I was in business positions, the technology people loved it because I understood where they were coming from.
I understand that they are trying to find the best solutions, and we are able to align together, to reach the greater goals of the company.
Business is talking about business initiatives, and IT is talking about technology and usually, they are not able to understand each other. Fortunately, I was always able to make this bridge.
Now, this seems to be a really hot theme right now within banking and financial services. What advice would you have for someone to play such a role? How do they get those extra skills?
So, first of all, you need courage because business people don’t understand technology people because they believe that the technology people are blocking their way to achieving their goals. And the technology people really don’t understand the business people.
And you need to be bold and say, guys enough, let's start from zero, let's trust each other. Let's understand each other's priorities, and let's get the job done. And it’s not easy. Because there is a fundamental lack of trust, but if you don't start from ground zero, from the beginning, it will be difficult.
So if someone wants to be courageous, what's one practical step that they could take to build the bridge with other teams? Do they need to go and shadow people for a week? How do we build more “translators” like yourself?
First of all, I think it's important to have your team on board. The technology people must be on board and be behind you when you do this. And they have to understand that we have common goals.
And then, it’s essential to set the intention of what you need to achieve. To work with stakeholders and work with your peers in the business. And we agreed that to do this, no matter how ugly it might get, we are going to jump in together and start by looking at the backlog. Look at what is not relevant from that backlog.
And then the third step is to really deliver. Deliver on the areas you agreed and discussed together that are important. You need to show that you can build what is important to them.
You need to build it fast and get momentum and keep going. And if these elements align and you start to deliver, the business will gain more trust. And then it's easy. It's moving in the right direction.
The insight that I had pulled out there, COSTI is, it sounds like before committing to the product you're going to build, you have to get everyone to commit to the shared process because if they can't get behind the process and knowing that there's going to be some ups and downs, but we've got to commit to the process before the product.
Otherwise, it's all going to fall apart. That seems to be a big insight.
Yes. Correct. And what’s also important is transparency, because usually, they don’t say clearly and loudly what they will deliver, what they can deliver and what they cannot deliver. They are afraid to admit we cannot do this in this time frame. And when you don't say anything, the expectation of the business is that everything is moving forward; it’s going to happen.
When you talk about digital transformation I think it's important to understand that agility is about delivering fast products to customers, delivering superior customer experience, having close collaboration between units and breaking down the silos within your organization.
And when you break it down into simple concepts, elements like collaboration and communication, practices that are simple, then everything is demystified, understood and then they’re on board. I think you have to start with what is important for us to do, why it is important for the business.
In a world of constant change, it seems all roads lead to digital transformation. It seems you put people and culture at the heart of it. Can you tell me what does that look like?
I think what’s really important is to make it simple and understandable for the people because we use a lot of buzzwords like digital transformation, like agility, and people hear these and they don't really understand what it really is about.
Because change is not easy, we will always get resistance to change. It's normal. It's not easy. So you have to be prepared to absorb a lot of negativity, a lot of fighting, and push back against these new practices.
And you have to be relentless in moving on with practices that make sense and deliver results. We have an agile playbook of 120 pages, but believe me, maybe 1% of our colleagues have read that. And they are probably the people that wrote it.
We talk about what is an MVP (minimum viable product). I think this has key importance. Everyone aims for perfection. Let's create a perfect product with all the options, all the exceptions, so on and so forth. And we do not accept anything less than perfect. And of course, that has a cost of time and the cost of building a complex product.
And in the end, the result is the worst because probably by the time we launch in the market, the product is already obsolete. And then the product is so complex that no one can understand it. So it's something that we really push through the organisation.
We want to launch simple products fast and then go to the next cycle, improving the product. And continuously adjust.
I would choose the one that has to do with the empowerment of people. I think the traditional management style is controlling, sometimes over-controlling, sometimes even micromanaging.
So if I were to choose, it would be to empower the people to make decisions and to encourage them to fail fast.
This approach to failure from the management was also a key blocker in the development of the companies because when you start punishing people for making mistakes has a deep implication on the mindset and behaviour of the company. And if you are able to get rid of this natural tendency of punishment, the rewards will be great because people will be daring. They will try new things; they will innovate.
We are talking about culture. This was one of the things that took the longest to be changed because, previously, there was a strong culture of fear within OTP and within the IT environment. IT is prone to errors; technology fails and fails quite a lot. The difference between winners and losers, especially in technology, is not failing - because at one point technology will fail. How we are able to get things back on track and what we do to prevent it next time. This was the most difficult thing for me to change in the culture of the organization.
The difference will be in how we react when technology fails. How we are able to get things back on track and what we do to prevent it next time.
So when I ask people on the floor, how is it going? What would you do better? People are blocked. They want to say everything is okay, you don't have to worry. We both know that this is not the case. Otherwise, the company would not need us. And now when I have breakfast, I invite a lot of people, about 15 people around the table, we discuss what our interests are and also what we can do better in the organization. And now I hear tons of ideas.
But coming back to the question, this is not the most practical advice that I would give. The most practical advice is to show people that it's okay to make mistakes. And we have a list of mistakes and we talk about them. And in my town hall meetings, I share openly my own mistakes. I'm human. I make mistakes. And of course, I am not proud of them, but I do make mistakes too.
There are some people that prefer the safety of being told what to do. We have some of these people as well. But then my approach is: do we pay you a hefty salary? You are the specialist; you have to tell us what to do. I cannot tell you what to do because I'm not a specialist.
I'm not a programmer. You are the expert. You have to tell us what to do. And this approach was really scary for a lot of people. And we had some back and forth, and this goes hand in hand with this fear approach.
And if something doesn't go perfectly, they are not fired. There are no consequences. They gain more courage and they start to do amazing things. And we then create ideas that we didn't even think about previously.
That's where decisions should be made. The majority should be made in the field, not from the top. We discuss the strategy, the direction, and that's about it.
I have this start, stop, continue feedback framework, and I ask what we should start doing, what we should stop doing and what we do really well? Asking for feedback in this way really was a game-changer.
Costi, we have a McKinsey chart called Traditional Banks Workforce Configuration Limits its Potential. It's basically saying that only 15% of its spending is directed towards transformative change. And a majority of the people who have some sort of engineering role, actually 65%, are either beginners or novices. This is clashing a bit with the ambitions of any modern bank or financial services firm.
What do you think about workforce modeling and mixing, and what roles do we need?
Of course, and I'm very happy to report the different reality that we have in OTP Bank. And let's start with the percentage of the resources allocated to transformation in OTP.
We have about 50% of the people allocated to transformative changes. And of course, we evolved to this situation from a state where the majority of the resources are allocated to IT, technical and regulatory changes. We were very close to 85% that McKinsey reported.
But we then realized that we are spending a lot of money and a lot of resources on a lot of changes that are not producing results, or at least not producing the ambitious results that we want. And then we said, let's adjust our strategy. To increase the market share, the customer experience, employee engagement, and so on, we have to look at resources. Are the resources, both CAPEX and OPEX, allocated along the same strategic lines?
And then, we implemented a simple scoring mechanism in which we could make this transparent. And indeed we were a bit unhappy that the situation was like McKinsey’s chart.
And I said, no, this is not what we want. And we started to prioritize and to have quarterly business reviews to work on the priorities and on the ratings together along with the initiatives. And it's a very powerful exercise.
Is our workforce configured in alignment with our strategy and business needs? I think that's what this really calls out.
Yes, and it's very easy to brag that we are aligned with the business, but is the business aligned with the strategy of the company's overall goals? It's a tough question, and we are very courageous to ask these questions and make decisions to reflect that strategy. And of course, there was resistance from the organization and from people. But as management, we said, look, this is our strategy. These are the initiatives helping us to achieve the strategy. There is no debate about it.
And we managed to allocate more than 50% of the resources to these transformative changes. And actually, in this environment where things are moving very fast in the IT labour market and not only, we know about the great resignation that is happening as well.
So yes, it's a key success factor in having a successful transformation.
My last question for you, Constantin. If people want to find you out on the internet, how do we find you?
So you can find me - Constantin Mareş on LinkedIn.
And I publish a lot of interesting things about what we are doing, building a supercomputer, for example, one of the most powerful in the world for boosting artificial intelligence and being able to better understand our customers and some other interesting initiatives at OTP Bank.
Wonderful. Costi, it's been a pleasure having you on the show. I can't wait to have you back next time.
Thank you so much.
It was a pleasure, Mike, with very interesting questions. And you energised me a lot.
Author: Monica Dumitriu