McKinsey:<\/strong>\u00a0Can you describe how UniCredit\u2019s shared-services journey has evolved?<\/h4>\n<\/div>\nPaolo Cederle:<\/strong>\u00a0UniCredit has grown since the mid-1990s by acquiring other banks, primarily in Italy, Central and Eastern Europe, and later in Germany and Austria. These banks naturally had their own services staff. The first step, at the beginning of the 2000s, was to centralize by country operations and IT services as well as real-estate services and procurement.<\/p>\nThe second step was to create shared-services units across national borders and to form global functions that guaranteed synergies and harmonization of services across countries. For instance, we started a company responsible for the infrastructure, development, and maintenance of all information and communication technology (ICT) applications in all our main countries. We also started a company for back-office activities in these countries. This allowed us to develop banking products such as credit cards and consumer loans in specific \u201cfactories\u201d that served the main and sometimes all the countries in our group. Information and communication technology, back-office functions, and other support services were centralized to locations where we had the best human and other resources for the tasks at hand.<\/p>\n
Building on these moves, we\u2019ve now taken the third and most challenging step\u2014a transformation that rests on six pillars: flexibility, agility, time to market, innovation, transparency, and cost efficiency. The aim is to increase the value we can create for UniCredit Group by reducing costs further and truly integrating the services side to better support the commercial side in the development of solutions that benefit our end customers.<\/p>\n
McKinsey:<\/strong>\u00a0What role did the market environment play in the decision to create UniCredit Business Integrated Solutions?<\/p>\nPaolo Cederle:<\/strong>\u00a0As we all know, since 2008, banking has gone from being a steady business to being a volatile one, especially in Europe, and it\u2019s critical to keep costs down while responding rapidly to market changes. Customer expectations are rising dramatically. In Internet banking, customers expect an ultraconvenient and personalized experience.<\/p>\nMoreover, a cultural change brought on by digitization also affects the physical-banking world. My father and his generation, for example, are not addicted to the Internet, and when my father approaches his local UniCredit branch, he is not looking for Web solutions. However, his expectations are colored by his experience of the choice and convenience of other digital services such as on-demand television. Traditionally, the branch would have shown him a standard catalog of products to choose from, but that\u2019s not what he wants today. He expects a dialogue with a salesperson who considers all the needs of his situation and guides him through the various options the bank can offer so that he can build his own personalized solution. In a sense, he wants an Internet 2.0 approach in the physical world and with a physical interaction.<\/p>\n
Most consumers now expect more from banks, so we need to keep pace with their constantly evolving expectations. To do so, we must find ways to improve our agility and flexibility in interacting with each customer and speed up the time to market of innovative products and services. This, in turn, requires close collaboration among the commercial business lines, IT, operations, and other services staff.<\/p>\n
McKinsey:<\/strong>\u00a0How does the organizational design of UniCredit Business Integrated Solutions help foster business-integrated solutions?<\/p>\nPaolo Cederle:<\/strong>\u00a0In the past, we had to work across silos for operational processes, IT applications, procurement, call centers, and fraud management\u2014to name a few\u2014to define and improve the customer experience. That\u2019s no longer the case. For any group of products and services, our new operating model puts all the service areas involved under a business-focused single point of accountability. One person is responsible for both IT and operations; for managing services delivery, people, and costs; and for driving innovation in an end-to-end value chain. It\u2019s very different from the organization that we had before, where IT and back office were separate legal entities.<\/p>\nMcKinsey:<\/strong>\u00a0Can you give us an example of how it works when the business and services sides work together with a single point of accountability?<\/p>\nPaolo Cederle:<\/strong>\u00a0Developing a new credit-card product typically involves banking service lines such as application development, operations, client support, IT infrastructure, and IT security functions. In our model, the head of the cards unit within the global-products business line (exhibit) is directly responsible for all these functions and acts as a single point of accountability for the UniCredit business division. This way of organizing the work allows us to be part of the business rather than just a support function.<\/p>\n\n
The second step was to create shared-services units across national borders and to form global functions that guaranteed synergies and harmonization of services across countries. For instance, we started a company responsible for the infrastructure, development, and maintenance of all information and communication technology (ICT) applications in all our main countries. We also started a company for back-office activities in these countries. This allowed us to develop banking products such as credit cards and consumer loans in specific \u201cfactories\u201d that served the main and sometimes all the countries in our group. Information and communication technology, back-office functions, and other support services were centralized to locations where we had the best human and other resources for the tasks at hand.<\/p>\n
Building on these moves, we\u2019ve now taken the third and most challenging step\u2014a transformation that rests on six pillars: flexibility, agility, time to market, innovation, transparency, and cost efficiency. The aim is to increase the value we can create for UniCredit Group by reducing costs further and truly integrating the services side to better support the commercial side in the development of solutions that benefit our end customers.<\/p>\n
McKinsey:<\/strong>\u00a0What role did the market environment play in the decision to create UniCredit Business Integrated Solutions?<\/p>\n Paolo Cederle:<\/strong>\u00a0As we all know, since 2008, banking has gone from being a steady business to being a volatile one, especially in Europe, and it\u2019s critical to keep costs down while responding rapidly to market changes. Customer expectations are rising dramatically. In Internet banking, customers expect an ultraconvenient and personalized experience.<\/p>\n Moreover, a cultural change brought on by digitization also affects the physical-banking world. My father and his generation, for example, are not addicted to the Internet, and when my father approaches his local UniCredit branch, he is not looking for Web solutions. However, his expectations are colored by his experience of the choice and convenience of other digital services such as on-demand television. Traditionally, the branch would have shown him a standard catalog of products to choose from, but that\u2019s not what he wants today. He expects a dialogue with a salesperson who considers all the needs of his situation and guides him through the various options the bank can offer so that he can build his own personalized solution. In a sense, he wants an Internet 2.0 approach in the physical world and with a physical interaction.<\/p>\n Most consumers now expect more from banks, so we need to keep pace with their constantly evolving expectations. To do so, we must find ways to improve our agility and flexibility in interacting with each customer and speed up the time to market of innovative products and services. This, in turn, requires close collaboration among the commercial business lines, IT, operations, and other services staff.<\/p>\n McKinsey:<\/strong>\u00a0How does the organizational design of UniCredit Business Integrated Solutions help foster business-integrated solutions?<\/p>\n Paolo Cederle:<\/strong>\u00a0In the past, we had to work across silos for operational processes, IT applications, procurement, call centers, and fraud management\u2014to name a few\u2014to define and improve the customer experience. That\u2019s no longer the case. For any group of products and services, our new operating model puts all the service areas involved under a business-focused single point of accountability. One person is responsible for both IT and operations; for managing services delivery, people, and costs; and for driving innovation in an end-to-end value chain. It\u2019s very different from the organization that we had before, where IT and back office were separate legal entities.<\/p>\n McKinsey:<\/strong>\u00a0Can you give us an example of how it works when the business and services sides work together with a single point of accountability?<\/p>\n Paolo Cederle:<\/strong>\u00a0Developing a new credit-card product typically involves banking service lines such as application development, operations, client support, IT infrastructure, and IT security functions. In our model, the head of the cards unit within the global-products business line (exhibit) is directly responsible for all these functions and acts as a single point of accountability for the UniCredit business division. This way of organizing the work allows us to be part of the business rather than just a support function.<\/p>\n