The Global Focus Magazine

Strategic Leadership and New Ways of Working to Drive Growth – the UniCredit Approach

Andrew Rutsch

Andrew Rutsch is engaged in research and advisory on how enterprises and ventures become value creation champions. He received his Doctorate from the University of Pennsylvania, US, at the intersection of economic and neuro sciences. He is based in Zurich, Switzerland.

Andrew Rutsch explains how Italian banking group UniCredit turned to strategic leadership and new ways of working in a bid to drive organisational growth.

In today’s fast-paced environment, organisations and even whole industries are challenged with seismic shifts. Companies such as Kodak, Merrill Lynch and General Motors, once industry icons, are now bankrupt, acquired or stumbling.

Against this background, the recent EFMD CLIP Sharing Best Practice Workshop hosted by Italian banking group UniCredit in Turin, Italy, in March at its inspirational UniManagement corporate learning center showcased a variety of approaches and practices that drive development outcomes.

A larger theme emerged during the day-long workshop: the role and impact of strategic leadership and new ways of working in the pursuit of organisational growth. Put more concretely, this focused on how UniCredit’s senior management engages organisational members and clients around shared goals and needs to drive collective development and performance.

Banking is not anymore what it used to be
The banking sector has undergone substantial changes accelerated by the financial and economic crisis of recent years – and is expected to continue doing so. In particular, a number of drivers have affected banking:

  • increasingly strict regulations by governments and transnational bodies
  • greater competition through globalising banks that drive market consolidation
  • socio-demographic changes through the arrival of Generation Y with its new values
  • new technologies that are reshaping how organisations are steered and operated

For example, the World Retail Banking Report 2014 by Capgemini and Efma found (for the first time in three years) a decline in customer experience. This was particularly true among Generation Y members, who comprise up to a third of the population in many markets, who value technology and who represent the largest user base of social media. It is a wakeup call for banks to rethink how they use technology in building a personalised customer relationship.

Given these market shifts, banks have to adapt their value chains to increase their responsiveness. They are reworking services, channels and systems to increase interaction with all value chain partners from suppliers and customers to media and regulatory bodies. Against this background, MIT’s Principal Research Scientist, Andy McAfee, believes that “we haven’t seen anything yet” and that the impact of digital technology will be transformational.

UniCredit responded through a decisive strategy
What actions did UniCredit take to address these issues? In 2010, it shifted its focus to its core business, commercial banking, and thus anticipated a trend gradually spreading across the industry. It has realised its strategy through a set of concerted measures:

  • strategically aligned operations by newly defined customer segments and reinforced regional management around one profit & loss per country;
  • Strengthened relationships with family and business customers and introduced an integrated service model across a wide range of channels
  • Simplified its organisation to drive operational efficiency and faster decisions and enhanced its governance to better respond to regulatory changes.

UniCredit has performed remarkably well in this troubled macroeconomic setting. Today, it is a rock-solid commercial bank with a European network across 17 countries, over 8,900 branches and more than 147,000 employees. In 2013, it posted an operating income of €23,973 million and disposed of a number of legacies such as loan loss provisions, allowing it to focus on increasing its business and profitability.

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