A career that began with upending traditional banks has
given Alexander Sion perspective on what they can do to accelerate growth and
innovation.
Sion is the director and co-head of Citibank’s D10X, which
is part of Citigroup’s global consumer bank. Prior to that, he oversaw mobile banking
and mobile channel governance for the consumer and community banking group as general
manager of mobile at JPMorgan Chase & Co.
But before he worked at banks, he attacked them.
Sion co-founded “neobank” Moven in 2011 to focus on the financial wellness of consumers. The mobile bank disruptor has since become a vendor; in March, the company announced it would close retail accounts and pivot completely to enterprise software.
Bank Director recently spoke with Sion about how banks can
create new models that generate growth, even as they face disruption and
challenges. Below is a transcript that has been edited for clarity and length.
BD: How should banks think about innovation as it
relates to their products, services, culture and infrastructure?
AS: Citi Ventures focuses on growth within a dynamic
environment of change. It’s very difficult to achieve, and it’s very different
from core growth with existing customers. But all innovation, particularly at
incumbent firms, has to stem from a desire to grow.
Banks that struggle with growth, or even getting excited
about innovation, need to ask themselves two sets of questions. No. 1: Do you
have a deep desire to grow? Do you have aggressive ambitions to grow? No. 2: Is
that growth going to be coming from new spaces, or spaces that are being
disrupted? Or are you considering growth from existing customers?
If a bank is focused on existing customers, retention and
efficiencies, it’s going to be hard to get excited about innovation.
BD: What’s the difference for banks between investing
in tech and merely consuming it?
AS: They’re very different. If your bank is focused
on growing within its core business, then you would lean more towards consuming
tech. You’re building off of something that already exists and trying to make
it better. You’ve got existing customers on existing platforms and you’re
looking for more efficient ways to serve them, retain them or grow share.
If you’re interested in new growth and exploration — new
segments, new products, new distribution channels — you might be more inclined
to partner in those spaces. You have less to build from, less to leverage, and
you’re naturally trying to figure things out, versus trying to optimize things
that already exist.
BD: What kind of a talent or skills does a bank need
for these types of endeavors? Do people with these skills already work at the
bank?
AS: Existing bank employees know the product, they
know the customer. At Citi, what we do at D10X and Citi Ventures is to try to
expose bank employees to a different way of thinking, expand their mindset to
possibilities outside the constraints of what or where the core model leans towards
and think from a customer-centric view versus a product-centric view of the
world.
The dynamics of customer behaviors are changing so much. There’s
so much redefinition of how customers think about money, payments and their
financial lives. Creating a more customer-centric view in existing employees
that already have the deep knowledge and expertise of not only the product, but
how the bank’s customers have evolved — that’s a very powerful combination.
BD: Why should a bank think about new markets or new
customers if they found great success with their core?
AS: If most banks in the United States were honest
with themselves, I think many would admit that they’re struggling with growth.
America is a very banked place. The banking environment hasn’t changed all that
much, and most banks are established. Their focus has been on existing
customers, efficiency of the model and maybe deepening within that customer
base.
But now, fintechs coming in. These commerce, payments and
technology players are doing two things. No. 1: They are legitimately opening
up new markets of growth and segments that weren’t reachable, or the
traditional model wasn’t really addressing. No. 2, and maybe more important, is
they are widening and changing the perspective on customer behavior. I don’t
think any bank is immune from those two trajectories; your bank can be
defensive or offensive to those two angles, but you’ve got to be one or the
other.
BD: What are some lessons you or Citi has learned
from its testing, refining and launching new solutions?
AS: Venture incubation has to be about learning. There’s a saying that every startup is a product, service or idea in search of a business model. The challenge that every existing incumbent bank will have is that we have existing business models.
Banks need to be able to test ideas very rapidly. It’s easy to test an idea and rapidly iterate when you’re in search of a business model. It’s much more difficult to test new ideas in an already-operating business model. A typical idea is debated internally, watered down significantly and will go through the wringer before the first customer gets to click on anything. In this kind of world, that’s a difficult strategy to win on.
One thing that separates great bankers from their peers is a deep appreciation for the highly cyclical nature of the banking industry.
