Roundtable Program
Winning in a World of Accelerating Change Building Profitable Business After The Regulatory Reforms: Trade-offs and Business Challenges New York | 27–28 October 2015
Winning in a World of Accelerating Change 1
Roundtable Program
Roundtable Program
Welcome
Thank you for joining our Global Financial Services Leadership Roundtable in New York City. Past roundtables have very much focused on the beginning, middle, and end of the global financial crisis. Parts of the market have settled and even recovered, with signs of optimism hard to miss. Today’s session focuses on the rapidly changing financial services environment, with a frank assessment of where we are today, insights on the path of disruption, and debate on the imperatives for winning over the next decade. We expect that today will challenge and interest you, so thank you for your participation and for bringing your perspectives on the issues of today and the challenges for tomorrow. We also hope you enjoy the event, find time to catch up with old friends, and take the opportunity to make new ones.
Joe, Teresa, Michael, and Bob
Joe Reifel Teresa Epperson Partner Partner A.T. Kearney A.T. Kearney
Michael Jenkins Bob Hedges Partner Partner A.T. Kearney A.T. Kearney
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Building Profitable Business After The Regulatory Reforms: Trade-offs and Business Challenges
The financial services industry is changing at an accelerating pace—a pace that has earned the increased attention of industry executives who have, until recently, been focused on the fallout from the global financial crisis. With the crisis now mostly behind us, industry leaders are more focused on how to craft the future of their companies amid unprecedented marketplace changes. These changes, as the leaders who attend our Global Financial Services Leadership Roundtable experience daily, are driven by four immutable forces:
• Digitization of almost everything and the technology (including connectivity, real-time processing, mobile, GPS, and robotics) that enables it. Digitization allows customers to shop, pay, finance, and invest from anywhere at any time in a frictionless fashion.
• The tipping point in technology adoption and consumer behavior is here. Across all ages, more consumers are embracing technology to make their daily lives more efficient and convenient. Digital behaviors that until recently have been ascribed to millennials are now more common in the general population, resulting in a new consumer and marketplace reality.
• The era of Internet-powered advocacy and policy is expanding, and it is translating into greater transparency, straightforward pricing, easy-to-use products, and unbundled value chains.
• New disruptive entrants are using technology to better meet consumers’ wants and needs, with hundreds and even thousands of new players seeking to capitalize on the evolving market, magnifying the repercussions, and competing for important parts of the value chain. These forces are triggering an intense and rapid transformational cycle within the financial services industry, much like what the publishing, movie rental, and music industries have already experienced. Together, these forces create market and technological pressures for product simplicity and straightforward pricing, which lead to price competition and margin pressures. The margin pressures then translate into efforts to simplify operating models and eliminate infrastructure as a way to drive down costs and create agility to pursue growth. The pursuit of efficiency further fuels the momentum to digitize the business, in terms of both customer processes and core operations. The result is even more empowered consumers. This cycle—virtuous or vicious, depending on your strategy and capabilities—will affect all sectors of the financial services industry and will not stop anytime soon.
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Today, the debate in the boardroom is not about whether these market and techno- logical forces are short-lived or legitimate. They are acknowledged as this generation’s challenge, and the call to action is clear. However, uncertainty about how to move forward has left many executive teams immobilized and sometimes overwhelmed. Leadership sees an outline of the future, but may not be sure how to chart a course to get there profitably and with the necessary wind in the sails (that is, with growth). Decoding today’s consumer behaviors, while building the technology to address tomorrow’s market requirements, is imperative—and doable. The greatest barriers are to be found in the more profound navigation of the organizational and business model transformation that all leaders face:
• Making digitization concrete, real, and now
• Setting the right tone for and engaging the organization in the change process
• Moving the organization’s culture to what is needed for the future
• Preventing the destabilization of the workforce during the transition
• Finding the immense funding needed for strategic and transformational investments
• Managing internal resources to chart the course forward
• Explaining to investors how the path forward will create value and reduce risk, not the opposite The leading innovative companies are proving that the best way to overcome these barriers is to articulate to the organization and to investors the impact of the change, making clear that the challenges must be resolved, not deferred or avoided. One must prepare for the inevitable future—not a hoped-for, risk-free future that will never occur—and develop a clear plan to create value in this new world. At this year’s Global Financial Services Leadership Roundtable, held in North America for the first time, leaders will discuss and learn more about the rapidly changing financial services environment, the forces altering the industry, and the way forward- thinking businesses are winning in the face of accelerating change. They will also have opportunities to discuss these central topics with peers from across the industry.
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Agenda
Wednesday, 28 October 2015
7:30 a.m. Registration and breakfast | New-York Historical Society
8:30 a.m. Welcome and opening remarks Paul Laudicina, Partner and Chairman Emeritus, A.T. Kearney
9:00 a.m. Panel discussion: Where we are and how we got here Tom Brown, CEO, Second Curve Capital Michael Shepherd, CEO, Bank of the West Jim Hale, Founding Partner, FTV Capital Moderated by Joe Reifel, Partner, A.T. Kearney
10:15 a.m. Panel discussion: Disruption and the next decade Mike Sha, CEO, SigFig Mark Pitchford, Managing Director and Chief Customer Advocate, Esurance Bill Hartnett, Managing Director, Citigroup Nikul Patel, Chief Operating Officer and Chief Product Officer, LendingTree Moderated by Bob Hedges, Partner, A.T. Kearney
11:30 a.m. Break
11:45 a.m. Panel discussion: Imperatives for Winning in a World of Accelerating Change Richard Yorke, Head of International, Wells Fargo Francesco Vanni d’Archirafi, CEO, Citi Holdings Moderated by Michael Jenkins, Partner, A.T. Kearney
1:00 p.m. Lunch
1:30 p.m. Fireside chat: Winning in a World of Accelerating Change Brian Moynihan, CEO, Bank of America
2:30 p.m. Closing remarks Ettore Pastore, Partner, A.T. Kearney
3:00 p.m. Roundtable concludes
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Keynote Speakers
Tom Brown is the founder and CEO of Second Curve Capital, a New York-based hedge fund that invests primarily in financial services companies. Since the firm’s inception in 2000, its funds’ investment results have considerably exceeded that of the S&P 500 and the S&P Financial Index.
Prior to starting Second Curve, Tom spent two years at Tiger Management as head of the North American financial services team. Before that, he worked on the sell side for 15 years, at Donaldson, Lufkin & Jenrette, PaineWebber, and Smith Barney. During that time, Tom was consistently ranked the number one regional bank analyst in the annual Institutional Investor survey of investors.
In addition, Tom is a widely regarded as a financial-services thought leader. Tom Brown His research-oriented website, bankstocks.com, has a large following within Chief Executive Officer, the industry. Second Curve Capital Tom grew up in the Chicago area and holds a B.A. in accounting and finance from Miami University in Oxford, Ohio. Tom began his investment career in 1980 as an equity analyst at Kemper Financial Services.
Brian Moynihan leads a team of more than 200,000 employees dedicated to making financial lives better for people, companies of every size, and institutional investors across the United States and around the world.
In his more than 20 years at Bank of America, Moynihan has run each of the major customer and client businesses: consumer and small business banking, wealth management, and corporate and investment banking.
Under his stewardship as CEO, the company has simplified its operations, built capital and liquidity to its highest levels, and developed a straightforward business model providing core financial services to customers and clients. Bank of America also is consistently recognized as a top employer, including Brian Moynihan by Working Mother magazine, the Human Rights Campaign, and G.I. Jobs Chief Executive Officer, magazine. The company received the 2013 Department of Defense Freedom Bank of America Award for support of employees serving in the National Guard and Reserve.
Moynihan participates in external leadership councils that focus on economic trends and policymaking, including the World Economic Forum International Business Council, the Financial Services Forum, which he chairs, the Business Roundtable, and the Bipartisan Policy Center CEO Council on Health and Innovation. He also chairs the supervisory board of The Clearing House.
Moynihan leads Bank of America’s Global Diversity and Inclusion Council and is a member of the Museum Council for the Smithsonian’s National Museum of African American History and Culture. Moynihan is also a trustee of the Corporation of Brown University. He also holds a law degree from Notre Dame Law School.
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Speakers
Jim Hale has three decades of management experience in the banking and investment industries. Before establishing FTV Capital, Jim served as a senior managing partner at Montgomery Securities, where he founded the financial services corporate finance practice, was responsible for more than 200 financial industry transactions, and co-founded the Montgomery Financial Fund. Prior to Montgomery, Jim was a member of the corporate planning and development group at Bank of America. He currently serves on the boards of directors of the National Venture Capital Association, the San Francisco Venture Capital Forum, and Public Radio International, and is a member of the investment committees of the University of California, Berkeley Foundation and St. Ignatius College Preparatory, and was formerly a member of DUMAC (Duke Jim Hale University Management Company). Jim received a BS from the University of Founding Partner, California, Berkeley and an MBA from Harvard University, and he is a CPA. FTV Capital
Bill Hartnett manages a portfolio of market infrastructure investments for Citigroup’s Markets and Securities Services division. He has nearly 30 years of experience in trading, sales, and e-commerce, including 20+ years with Citi. Hartnett currently sits on the board of directors for Symphony, Tradeweb, Open Exchange, Volbroker, and OTCDerivNet. He is the point person for the Markets and Securities Services team that is currently assessing opportunities in blockchain and distributed ledger technologies.
Previously Hartnett served on the boards of Markit Group and Ipreo. He joined Citi as an FX options trader and then moved into sales to cover asset managers. In 1993 he was given the opportunity to help start up a sales desk in the Bay Area. Covering West Coast asset managers and corporate clients from 1993 Bill Hartnett to 2000 had a great influence on his future career path. It was during this time Managing Director, that it became very clear to him that technology and e-commerce were going Citigroup to have a significant impact on wholesale financial services. In 2000 he moved back to New York when Citi began its G-10 FX e-commerce business. In his initial role he partnered with equities, cash management, and securities services teams to develop new client offerings by embedding electronic FX execution solutions into those businesses. From 2002 to 2005, Hartnett was global sales manager for FX e-commerce running a team of sales people based in London, New York, Japan, and Australia. Just prior to his current role running market infrastructure investments, he ran G-10 FX e-commerce.
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Speakers
Nikul Patel, who manages profit and loss and also leads product innovation and technology at LendingTree, has built his career on transforming online financial services for the benefit of consumers. Prior to joining LendingTree in 2012, Patel served as COO and vice president of products for Home-Account. com, a start-up with an innovative mortgage shopping experience that was later acquired by Bills.com, where he served as president. Patel also co-founded Movoto.com, an online real estate company with the goal of making home shopping easier for borrowers. Prior to that, Patelworked at Intel Corporation for 12 years in a senior management capacity, managing technology products and services for the company. Patel has an MBA with honors in finance from the Wharton School of the University of Pennsylvania. Nikul Patel Chief Operating Officer and Chief Product Officer, LendingTree
Mark Pitchford joined the Esurance senior team in January 2012. He is responsible for providing leadership and strategic direction for Esurance’s customer contact activities, including inbound and outbound sales, customer service, underwriting, and back-office operations, as well as providing overarching customer experience leadership across the company.
Prior to moving to Esurance, Pitchford spent three years leading Allstate’s direct business, including leading Allstate’s 10 call centers directly supporting both customers and Allstate agencies and Allstate’s online sales and service functions. Over his tenure, Allstate’s direct business more than doubled, customer satisfaction and retention both improved, and the overall profitability of the direct business also improved.
Mark Pitchford Prior to joining Allstate, Pitchford spent three years in South Korea as CMO Managing Director for Hanaro Telecom and Hanaro Media. In these roles, Mr. Pitchford led teams and Chief Customer responsible for all of the product management, product development, Advocate, Esurance advertising, CRM, programming, and content sourcing for the entire breadth of products that Hanaro provided to its mass-market customers, including broadband, voice, and IPTV. In addition, Pitchford led the inbound call center operations for Hanaro.
Prior to joining Hanaro, Pitchford spent six years in senior marketing and customer service positions at Qwest Communications and spent more than 15 years in various senior-level marketing, sales and service, product management, engineering, and operations positions at SBC/Pacific Bell.
Pitchford received an MBA from Santa Clara University and a BS in engineering from Harvey Mudd College.
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Speakers
Prior to SigFig, Mike Sha held senior roles at Amazon, where he launched and built the Amazon Visa Card into one of the fastest-growing consumer loyalty cards in history, was one of the original inventors of Amazon’s Prime program, and built sophisticated fraud detection models that leveraged statistical data analysis in preventing online fraud. Mike has a BA in applied math and an MS in computer science from Harvard University.
Mike Sha CEO and Co-founder, SigFig
Michael Shepherd is chairman and chief executive officer of Bank of the West and of BancWest Corporation, the parent company of Bank of the West and First Hawaiian Bank.
Shepherd joined Bank of the West in 2004 and served in a succession of positions, including general counsel, chief administrative officer and president, before becoming CEO in January 2008.
Before joining Bank of the West, Shepherd served as general counsel of The Bank of New York Company, Inc., and of Shawmut National Corporation. He was a partner in the San Francisco law firm of Brobeck, Phleger & Harrison LLP and special counsel to Sullivan & Cromwell. Shepherd also served in Michael Shepherd government as senior deputy comptroller of the currency, associate counsel Chief Executive Officer, to the President of the United States, and deputy assistant attorney general. Bank of the West In addition to serving as chairman of the boards of Bank of the West and BancWest Corporation, Shepherd is also a director of First Hawaiian Bank, Pacific Life Insurance Company, and Promontory Interfinancial Network. He is a member of the advisory board of FTV Capital, the executive committee of the Bay Area Council, the investment and finance committees of the Stanford Hospital and Clinics, the Stanford Athletic Board, and the Council on Foreign Relations.
Shepherd is active in community affairs, including current service as a member of the FDIC Advisory Committee on Economic Inclusion and the Business Executive Council of the University of California and as a director of Operation HOPE. He served as a member and as president of the Federal Advisory Council of the Federal Reserve Board (2012- 2014), and as a director of the Presidio Trust (2008–2012). He received the HOPE Silver Rights Vision Award in 2015 and was the 2013 recipient of the Distinguished Achievement Award of B’nai B’rith International.
Shepherd is a graduate of Stanford University and of the University of Michigan Law School.
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Speakers
Francesco Vanni d’Archirafi is the chief executive officer of Citi Holdings, which comprises Citi’s noncore assets and businesses. Prior to running Citi Holdings, he served as the chief executive officer of Citi Transaction Services (CTS) since April 2009. Prior to being promoted to CEO of CTS, Francesco was the global head for Treasury and Trade Solutions (TTS), a major business division of Citi Transaction Services. He joined CTS in 2003 as the region head for Europe, the Middle East, and Africa.
Vanni D’Archirafi began his career with Citi in 1983 as a management associate in New York before moving to the Corporate Bank in 1984, as a relationship manager in Lima, Peru, where he later took on the role of treasury marketing manager. In 1986, he was appointed country treasurer for Peru, before moving Francesco Vanni to London in 1987 to launch Citibank’s Southern Europe Structured Finance d’Archirafi business. In 1993, he was appointed corporate finance head for Italy, based Chief Executive Officer, in Milan. Three years later, he returned to London as the Global Co-Head for Citi Holdings Mergers and Acquisitions. In 1998, Vanni D’Archirafi was appointed the market manager for Iberia responsible for the Corporate Bank and customer relationships in Spain and Portugal. He was also appointed the country corporate officer of Citigroup for Spain, based in Madrid. In 2001, he was named chairman and CEO of Citibank International plc and the European Customer Group executive for Citigroup’s Corporate Bank, headquartered in London; two years later he was asked to join CTS.
Vanni D’Archirafi is the chairman of Citibank Holdings Ireland Ltd and chair of Citibank Europe plc. He serves on the boards of the Citi Foundation, CitiFinancial Credit Company, Associates First Capital Corporation, Private Export Funding Corporation (PEFCO), Mapfre America S.A., and Business in the Community (BITC), where he is the vice chair of BiTC’s international leadership team. In addition, Vanni D’Archirafi serves on the international advisory board of IESE and the advisory council for The Kogod School of Business at American University. He is the chairman of Junior Achievement Worldwide, a member of its board of governors, and a board member of Junior Achievement-Young Enterprise Europe.
Vanni D’Archirafi is a finance graduate from the American University in Washington, D.C., where he received the Stanley I. Posner Award as the graduating senior with the highest overall academic average. He obtained his MBA in finance and international business from Columbia University in 1983.
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Speakers
Richard Yorke is the executive vice president and head of the Wells Fargo International Group, which provides a wide range of international services to small businesses, corporations, financial institutions, multilateral organizations, and individuals. The group serves the needs of its customers through offices across the United States and more than 30 overseas locations, including branches in Hong Kong, London, Seoul, Shanghai, Singapore, Taipei, Tokyo, and the Cayman Islands. Richard is based in San Francisco.
Prior to joining Wells Fargo, Yorke worked for HSBC for 20 years in various international roles and spent time in Dubai, Hong Kong, Indonesia, the island of Jersey, and the United States. Most recently, he served as the president and CEO of HSBC Bank (China) Company Limited. Yorke also worked at Wells Richard Yorke Fargo on assignment from HSBC from 1992 to 1994, during which time he EVP and Head of completed the Credit Management Training Program and then worked in the International Group, Real Estate Managed Asset Group in Northern California. Wells Fargo & Company Yorke earned a bachelor’s degree with honors in German and economics from the University of St. Andrews in Scotland.
Active in promoting the foreign banking industry in China, Yorke became the first director of the China Banking Association’s Foreign Bank Working Committee in 2007. He was named an “Honorary Citizen of Shanghai” in 2009 for his contributions to developing Shanghai into a financial services center, training local people in the banking industry, and supporting education and social welfare development in the city. He also received the Magnolia Award from the Shanghai Municipal People’s Government. He serves on the boards of Shanghai Commercial Bank, Wells Fargo Bank International, and Wells Fargo International Banking Corp, and also serves on the boards of trustees for the California Academy of Sciences, the World Affairs Council, and the Asia Society of Northern California.
Yorke grew up in Basel, Switzerland, before moving to England to attend secondary school. He is married and has three children.
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Participants
Brett Adams Jim DeBello Global Head, Senior Vice President, Chief Executive Officer Payment Transaction Services Mitek Systems MasterCard Norman DeLuca Rajnish Swadesh Bharadwaj General Manager, Digital Banking & Business Executive Vice President, Head of Cross Solutions Border Governance Group Bottomline Technologies Wells Fargo & Company Matej Falatov Deborah Bianucci Deputy Chief Executive Officer President & Chief Executive Officer Hypo Alpe Adria Bank d.d. BAI Frank Fehrenbach Matthew Blake Managing Director Head of Banking and Capital Markets Deutsche Bank AG World Economic Forum Erik Graber Tom Brown Chief Operating Officer Chief Executive Officer MF Global Holdings Second Curve Capital Jim Hale Mike Butler Founding Partner Chief Executive Officer FTV Capital Radius Bank Bill Hartnett Santiago Castro Managing Director Presidente Citigroup Asobancaria Norito Ikeda David Chubak President Productivity Chief The Corporation for Revitalizing Earthquake- Citigroup Affected Business
Peter Coy João Nuno Jorge Palma Exmo. Senhor Economics Editor Vogal da Comissão Executiva Bloomberg Businessweek Caixa Geral de Depósitos, S.A.
Hayri Çulhacı Gary Kearns Vice Chairman and Executive Board Member Group Executive, Information Services Akbank MasterCard International
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Participants
Edward Kieswetter Nikul Patel Group Chief Executive Chief Operating Officer and Chief Product Alexander Forbes Officer LendingTree Izzet Cemal Kişmir Chief Executive Officer Mark Pitchford BNP Paribas Cardif Managing Director & Chief Customer Advocate Peter Knitzer Esurance Director Regional Management Corp. Andrew Pople President Vas Kodali AHP Partners LLC Executive Vice President and Head of Technology Industry Partnership Tetsuya Sakamoto Development General Manager for the Americas & Chief Wells Fargo & Company Representative Officer, New York Bank of Japan Chris Lown Managing Director, Head of Financial Jeffrey Seltzer Technology Managing Partner Morgan Stanley Pierce Yates Ventures
Seamus McMahon Gabriele Semmelrock-Werzer President Sprecherin des Vorstands McMahon Advisory Kärntner Sparkasse AG
Paul McNamara Cüneyt Sezgin Group Chief Executive Board and Audit Committee Member IFG Group Garanti Bank
Brian Moynihan Mike Sha Chief Executive Officer Chief Executive Officer and Co-founder Bank of America SigFig
Christopher Murphy Michael Shepherd Chairman and Chief Executive Officer Chief Executive Officer 1st Source Bank Bank of the West
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Participants
Manjit Singh Francesco Vanni d’Archirafi Senior Vice President, Chief Financial Officer Chief Executive Officer TD Canada Trust Citi Holdings
Lawrence Spicer Paul Wasinger Vice President and Head, Physical Distribution, Managing Director, Head of Processing Marketing and Channel Strategy and Data Royal Bank of Canada Morgan Stanley
John Sweeney Sheldon Winsor Executive Vice President, Retirement Director and Head, Multi-Channel Strategy, and Investing Strategies Marketing & Channel Strategy Fidelity Investments Institutional Royal Bank of Canada Services Company Richard Yorke Colleen Taylor Executive Vice President and Head Executive Vice President of International Group Capital One Corporation Wells Fargo & Company
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A.T. Kearney Representatives
David Asper Ettore Pastore Partner Partner [email protected] [email protected]
Teresa Epperson Joe Reifel Partner Partner [email protected] [email protected]
Fergus Gordon Arjun Sethi Partner Partner [email protected] [email protected]
Bob Hedges Uday Singh Partner Partner [email protected] [email protected]
Michael Jenkins Ramesh Siromani Partner Partner [email protected] [email protected]
Paul Laudicina Yuji Takei Partner and Chairman Emeritus Partner [email protected] [email protected]
Philippe Menier Contractor [email protected]
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Notes
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Notes
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