A tradition of human capital

19 November 2010 Antonio Vigni

As CIO of TomTom, Christiaan de Backer is responsible for the worldwide IT infrastructure and business applications of TomTom and Tele Atlas. Prior to this, de Backer worked at ITT Bell Telephone.

Retail banking is increasingly being defined by technology. But the way a bank manages its human capital is as important as any IT system in defining its success.

It is a bank’s employees who maintain its values, support its products and help it adapt to meet the demands of changing times. No matter how established a bank may be, the ability to be flexible is the key to maintaining its customer service, and, for Antonio Vigni, CEO of Monte dei Paschi di Siena (MPS), it is the employees who create that flexibility.

"I believe that human capital is more important than any other element," he says. "This will also be true in the future because human capital is vital for good relationships with customers in all territories. The most important thing for us is to work hard on the professional level inside the bank, to invest in our people and then enlarge the community in key areas."

Founded in 1472, MPS is the world’s oldest retail bank. From its roots in Siena’s medieval mercantile community, it is the flagship of the MPS Group, which leads its domestic market in terms of market share.

The bank, which concentrates on retail banking, has a strong customer base among families and small and medium enterprises. These traits define its approach to training, which focuses on the development of professional capability in the areas of credit, savings and managing customer assets.

In line with these drivers, it has worked hard to strengthen its branch network, motivated by the idea that its offering in the market is all about people and personal interactions.

"It is important that we get to know our customers better. This will not be easy," Vigni says. "We need to invest our resources in different territories to be close to them. That will be a key focus of investment in the future."

Building relationships

As a result of its approach to human capital, MPS has become an example to other retail banks looking to achieve continuity and longevity. Vigni typifies the journey many people have made through the bank, and shows that staff loyalty is not a thing of the past in the banking sector.

"The main characteristic of the bank is our knowledge of core activities such as credit and wealth management, which are the main strengths of the people who rise to more senior positions."

He joined the bank at 19, working his way up through many different positions of responsibility, including head of strategic planning and control, and head of the domestic and foreign network, before becoming deputy CEO in 2000. He was appointed CEO four years ago.

Other senior figures in Italy’s banking industry are testament to the quality of the bank’s training. The deputy CEO of Intesa Sanpaolo, Marco Morelli, who is in charge of all the retail activities in the territory, came from MPS. So, too, does the chairman of the Italian Banking Association, Giuseppe Mussari, who is also chairman of MPS.

"That is typical of our bank. People feel closely linked to it, and the relationship between them and the organisation is strong," explains Vigni. "The most important element of my journey is that it demonstrates that feature of the bank, and it is proven by others in top management positions. "For core activities, we invest in training. Although the market for talent in banking is more open, competition for people is increasing. This is a good bank to train in."

The continuity that is afforded to MPS through its training programmes, and the close affinity its employees have for the organisation, have resulted in a board that is, by Italian standards, young and diverse. Mussari is under 50 and Vigni is 54. As a consequence, the tradition of the bank is upheld, but there is a healthy influx of modern and dynamic thinking at the highest level.

The long history of MPS, and its ability to stay flexible, provides a useful model to other European retail banks. It shows that, as in the past, the key to success is to stay close to customers by viewing them as people, not merely numbers. The same people-centric attitude pervades the bank’s approach to staff, and is especially relevant to the retail banking industry while the world recovers from the financial crisis of the last two years.

"We are not an investment bank: we just do commercial and retail banking," says Vigni. "The main characteristic of the bank is our knowledge of core activities such as credit and wealth management, which are the main strengths of the people who rise to more senior positions. There is a natural integration of our credit and commercial activities with our personnel management.

"We ask our heads of territories about their performance in commercial terms, but we also look at how they are encouraging people to assume responsibility, building teams and training their staff. It is important to maintain the values of the bank for the future, so we must invest in managerial skill as well as looking at performance."

The young board, with its focus on human capital, is vital in enabling the bank to move with the times. Its history does not create inertia, but instead proves that longevity results from its willingness to reinvent itself to suit the prevailing conditions of the market.

"The bank is old, but its organisation has always been reshaped. Different times demand different kinds of investment," remarks Vigni. "We are known as the oldest bank in the world, but we must change to meet new environments. We must maintain the capability and flexibility of the group, stay close to the market and invest in new technologies.

"But while there will always be new technology, with all channels steadily becoming more integrated, it’s the people who make the difference. New technologies have a clear impact and affect the level of human contact with the bank, but the contact we have will to become more qualified and personal than in the past.

The diversity of the board, with its young senior executives, allows us to combine the tradition of the bank with the energy of innovation, which is a key area of investment."

The last two years has seen a strong turnaround and growth, partly as a result of merging the banking entities within the MPS Group, but also as a result of the acquisition of Banca Antonveneta from Banco Santander. Human capital has been vital to the integration of 1,000 more branches to MPS network.

"The first step is cultural integration," says Vigni. "It is important how people interact with our customers, so human capital issues are vital to the process of integration. We need to make sure that we communicate the MPS’s values and culture."