Interview of Jean-Laurent Bonnafé, CEO, BNP Paribas - Paris Fintech Forum 2018 - Full video

Well, BNP Paribas is a kind of global bank, integrated model, well diversified because in banking you need to have a certain level of diversification. You never know your cycles, risk regions, so it's better to have a kind of diversified model integrated while servicing all kind of franchises: retail, financial institutions, corporates. And all those areas were very much, I would say as much as we can at least, the digital way, meaning that most of the term plan we disclosed recently, beginning of that year, is centered at the digital transformation. We're on our way to invest four billion euros for the four years to come down to 2020 to deliver new customer journeys, new approaches to reinvent the organization model of the bank, to try to fine-tune expectations with new approaches, and to grab as far as we can grab those ideas, new comers, new ventures, and try to open the company to fintechs innovation. And we do that both ways internally and externally. We have the so-called 'cotton' trying to ask for solutions when we are enabled to find the solutions for own problems. So we are opening the company to ideas coming from the universe. And through that approach, we started three years ago, we have already closed a number of partnerships. And internally, we are proposing some of our colleagues to be innovators and to become entrepreneurs at home. And when they have relevant ideas, relevant projects, we propose them a kind of very specific approach, that is to say to be given the chance, the opportunity to be 100% dedicated to the idea and given the opportunity to be treated like a FinTech, that is to say being offered the relevant means in an incubator or such approach. So this is basically the philosophy we are in looking at the digital transformation. And I guess that the FinTech Paris FinTech Forum is about digital transformation.

Ideally, to give us solutions we were unable to deliver. Because sometimes you are looking at processes, products after 10, 20 years of a certain vision and you are not strong enough to have a new angle. So the good, very positive thing with fintechs is that they are looking at the finance universe in a very different way. They do really a different approach and they can uncover pieces of the business that can be upgraded in a way that is very different from the regular way a regular bank would look at the situation. We are accustomed to a certain type of banking and sometimes we are able to move and sometimes we are unable to move. When we invested in Kantox at the beginning of last year, basically this is because of a very specific business model and a technology that is intraday. We are up till now unable to deliver for the retail business. So the business model and the technology were, if I may say, beyond our reach. Looking at BNP Paribas, you have to understand that sometimes even if you are in the business for so many years, the ideas, technologies that are beyond your reach result. So basically this is what we are expecting from fintechs: new angles, new ideas, and new ways to deliver a positive bank, a more positive bank than before. So this is very important. It's not only about digitalization, it's also about ability to deliver a positive bank, meaning better service and if possible more competitive service looking at the cost base. And you are present in every country and every vertical. This kind of things you look for in every country or most specifically in some geographies, most specifically in some verticals. When the number of countries, we try to concentrate on a number of key geographies: of course Europe, US, Asia. Your graph is in which who have real franchises on which if we come across a certain technology we can leverage the technology on a certain franchise that has the size, we say the critical mass, so we can bring something and offer the newcomer, the partner, the fintech something that is I would say a valid basis to accelerate and to grow the idea. So this is basically your France, Belgium, Italy, Luxembourg, Spain, most of our countries in Europe where retail were more than 30 million customers in retail in those countries. Globally looking at investment banking, worldwide bank in that respect. And we can grab ideas from Hong Kong, Shanghai, New York, California, continental Europe. It's coming from all over the world. And just the same for anything that is asset management, wealth management. So but ideas can be very close. I mean if you look at the investment we met in the incumbent, the Belgium company, it's only 500 kilometers, it's not that far, but the idea and the business model is really great. So you have to also look closely of what is close to you because ideas, technology, it's not only California or Shanghai, it's all over the place.

For the time being, looking at the technology, you can only deliver intraday if you accept to focus the service in a certain way. If you say for a universal bank 'I want to be intraday', you cannot deliver that because of the technology. Maybe one day it will come, but I talked of it at least you know in the near future. So if you want to move that way, you have to choose a certain service or certain business niche. It's not a niche, it's a certain vision of the market. And Kantox, the beauty of the idea is the way they looked at the market and they said there must be a certain franchise that is those customers that cannot afford to be below zero, they cannot pay for that situation. So the business model, the way they decreed the business model was exactly that idea that you should deliver a service that would prevent any customer to have interest to be paid to the bank because the customer cannot afford that. And honestly, that way to look at the situation couldn't be five years ago. The bank approach, it was beyond reach. This is typically a situation you would not imagine being a regular classical bank. So ways of looking at markets, segments, franchises is also part of the innovation. It's not only the technology, business model that are valid. Our balance in between new technologies and a new way of looking at the franchise of the market.

It's difficult to answer because it's all over the universe. We tend to say that most probably the first wave is in the universe of payments, most probably because if you look at that universe, the regulation is lighter than banking. Banking is something that is slightly more complex. If you look at the regulation, cost of liquidity, cost of equity, regulatory reporting, it's not that easy for a newcomer to become a real global bank. In payments, it's slightly different because legislations, parliaments have created new approaches that are lighter compared to the banking approach, and it's coming that way. First of all, this is my opinion. Then of course you have wealth asset management, in which we are at the beginning of the robo-advisory approach. So this is just the beginning. It's very unclear if yes or not regulators will stay with the present situation. It's highly probable that looking at it, they will add layers of regulation. So you cannot look at that segment of the market believing that the regulation is already done. There must be some layers. And then investment banking, because if you look at investment banking, that industry in less than 30 years emerged very rapidly. And they're usually siloed banks, siloed platforms. There are large vast pieces of the banking universe that are in fact non-banking universe. Banks created platforms that provided for the full business model, but in reality only a part of that universe, in the end of investment bank, belongs really to banking. So most probably newcomers will come and I would say unlock that situation and provide banks with approaches that are more efficient, more fluid, and more efficient. So this is also an area that will move very, very rapidly.

Well, first of all, that part of the franchise of the company, anything that can become a customer of BNP Paribas, so free to knock at the door. I mean, this is the commercial piece. It's a new universe. So it's like I would say pharmaceutical companies 20 years ago and biotech companies. Any pharmaceutical company in DM invested in the biotech universe, sometimes investing and buying companies, newcomers, sometimes should regular standalone approach within the company. So it's exactly my opinion the same process. We have to get closer, we have to interact, we have to understand the both sides, and it's a conversation. So we are moving, you are moving, fintechs are moving. Well, there is a lot of room. The financial industry is a very vast industry, of course sometimes it's a complex industry. There is a lot that can be derived and a lot of value and words that can be derived with that industry if collectively we can deliver, as I said, a positive approach, respectful of customers, ability to move in their best interest, delivering services that are efficient, the relevant level of price, and a good recognition of what are really the needs of those customers. So that new ecosystem is going to be very different but very solid because we need to be all together to deliver that better future looking at service financial services industry. So this is my vision, and so it's just the beginning of a new universe. So cooperation is a key word. Yes, and I said because a minute, and we try day after day to be open and to welcome. And sometimes we go through quite long and complex conversation and we do not get a result, but it's not because we're not satisfied or the proposal is irrelevant. This is just because there is not a kind of a fit in between the two companies, the bank and the fintech. But well, the universe is vast and this is the way we should look at it. And anytime we can find ideas, new ideas, new comers that can provide us with a better service or better approach, I can tell you we are really happy because there are so many things to be delivered. Imagine and don't looking at that, it's really a relief. Thank you very much. Welcome. Thank you so much.