Jean-Laurent Bonnafé, CEO of BNP Paribas “European Banker of the Year”
On Monday 12 November in Frankfurt, Germany, Jean-Laurent Bonnafé has been awarded “European Banker of the Year 2017” by
“The Group of 20+1”
“This award is for “Banker of the Year” but I see it as a collective award. So I accept it on behalf of the 200,000 employees at BNP Paribas. If I’m here tonight, it is thanks to their work over the years to serve our clients, deliver on our commitments, and make the bank a place where we’re proud to work.
And I of course want to thank our clients for their support, trust and confidence.
You might know that this isn’t the first time that BNP Paribas has been honoured with this award. It was first given in 1994, and it was Michel Pébereau, head of BNP at the time, who won the award along with Jurgen Sarrazin of Dresdner.
The world of European banking has of course changed a lot since then. BNP Paribas has been transformed. I’ve been fortunate to witness that transformation, and also to play a role in it.
BNP Paribas, a European bank
At BNP Paribas we have always seen our development as a kind of “European project”. In 1993, when I joined the company, BNP was for the most part a bank serving corporate clients and mainly French retail customers. We had just been privatised. But senior management had a vision and an ambition for the bank to become something much more. A few years later, there was the merger of BNP and Paribas.
That merger was transformational for us. It enabled us to take a decisive step in making our ambition a reality, and it laid the foundations for our growth story. The new, combined bank allowed us to put in place our “integrated-banking” model, which to this day remains one of our strengths.
It’s a diversified — but integrated — model: we serve a full spectrum of clients, with a wide range of services, and in many countries and markets. And it’s also a balanced model: around two-thirds of our revenue has always come from retail banking, and around one-third from our corporate and institutional business.
BNP Paribas, an integrated model
We think this integrated model is the best way we can serve our clients, whether in Europe or internationally. And it’s a model that has helped us build resilience over the business and economic cycles.
Our “European project” has also been a story of European integration, which is a subject that we all care about. A lot of our growth in Europe has been about learning how to navigate different markets, or successfully integrating businesses, but also bringing on board a range of different talents, cultures and people.
I think this ability to integrate and adapt is also one of our key strengths.
As we have grown across Europe, we have always been conscious that each market is unique. Beyond national regulations, each has its own habits and practices. Local banks have their own customs and cultures with regard to how you do business, or how you manage people.
If we make an acquisition, we have always been careful to spend a great deal of time to get to know new colleagues, understand their businesses and clients. We respect their history and identity, and when they join the Group we usually retain their names.
When we acquired BNL in Italy, and later Fortis in Belgium and Luxembourg, I was given the task of managing the integration of these banks into the BNP Paribas family. I spent a great deal of time in Rome and Brussels to get to know our people and work with the local management teams. For me, personally, it was a very enriching experience.
Our pan-European strategy
Today we are a genuine pan-European bank. There are not many of us. What have been the success factors for us? Beyond our business model and the human and cultural dimensions I just mentioned, you need a good understanding of your key franchises: those for which you can really deliver value-added products and make a difference. You need to identify those platforms that will give you an advantage in some countries. Much of our growth has been organic. That has meant investing in these franchises and progressively winning market share. It’s a long-term process. Over the years we have also made selective acquisitions to build scale or fill service gaps. And we have created joint ventures where it has made sense. This has been our strategy. And it has paid off.
We are a bank that today is headquartered in France but we consider that we have in fact “4 domestic markets” in Europe, together with Italy, Belgium and Luxembourg. We also have large operations in other European markets, not least in Germany. Here we offer all the services of a universal bank. We do not operate a physical branch network, yet thanks to digital banking we serve 5 million retail customers. We have ambitious growth plans for Germany because you cannot aspire to be a major bank in Europe without a meaningful presence in its biggest market. We want to do more and we are making good progress. Five years ago we had 3,500 employees. Today we employ 5,300. They work in 13 different business activities, and not only here in Frankfurt but in 15 other cities all over Germany.
Facing new challenges
Our “European project” continues. The bigger task of building an integrated, Europe-wide banking sector is also work-in-progress. There are challenges, some short-term and which I think can be overcome if there is the will. Others are more fundamental and go to the heart of our business models and to the role that banks will play in the future.
The first challenge concerns the unfinished business of building a genuine European market in financial services. We have come a long way, with Banking Union and the Single Supervisory Mechanism. But Europe is still too fragmented. In wholesale banking in particular we need to move forward — and faster — in completing the Capital Markets Union. It will lower the cost of borrowing, diversify risk, and make our financial system safer.
Our second challenge as an industry is to ensure that we reap the benefits of new technologies. We are living a moment of transformational change. These new technologies are all around us and having a profound impact on our lives.
In the world of financial services they are affecting all aspects of our business and challenging how we work. At the same time they offer fantastic opportunities.
Thanks to new technologies such as artificial intelligence and robotics, we can get so much closer to our customers. We can understand and anticipate their needs with much greater precision. We can create solutions that are truly personalised and relevant. It is all about improving what we all call the “customer journey”.
We will need to do this as customer behaviour is changing fast. Technology is allowing millions of people to rate products and services with a “click”, and then to share this information with another click. In the past, if your customers were satisfied, things were OK. Your customers stayed with you. Today we are in a new world. New technology—and especially social-media platforms—has led to continuous and immediate ratings, comments, and the “Not only must the customer be satisfied; they must also recommend you. Between saying “I’m satisfied” and “I recommend that bank” there is a huge gap and a huge challenge.
Beyond getting closer to our customers, these new technologies can help us become far more efficient, drive down costs and process information faster and more intelligently. We can automate tasks and redeploy employees to higher-value tasks. We’re spending nearly €3 billion on technology in our current business plan. That amount includes resources for retraining our people so that they’re equipped for the new ways of working that new technologies will bring.
Some see fintechs and the “gafas” displacing banks. I don’t believe that fintechs are interested in the banking industry. It’s too heavily regulated for them and it has limited returns. But they will pick out the value-added bits of the value chain, for example in payments. At BNP Paribas our approach to fintechs has three elements: first, some fintechs will become large and successful tech firms. We want to be their banker and accompany them on that journey. Second, we partner with fintechs because we can learn from them; they can help us design a new product or streamline how we work. And third, they can simply be a good investment, and sometimes a good acquisition if the fit is right.
The last challenge I’d mention regards what we can broadly summarise as “sustainability”. In recent years, and especially since the financial crisis, we’ve seen economic growth return, but not everyone has benefitted from that growth. There is greater inequality than ten years ago and we are seeing the consequences. There is a disillusion in society. There are new barriers going up. It is sad to see that the world is more sceptical, less open, and less inclusive.
Sustainability is not just about economic growth that is equitable. It also has environmental and social dimensions. There are new expectations in society that companies, especially large ones, contribute to efforts addressing climate change, or public-health issues, or working towards gender equality and poverty-reduction. Governments alone cannot fix these problems. Our customers, shareholders, employees… they are all demanding that we do business differently than before.
For banks, including us at BNP Paribas, it means making decisions about what business we want to finance and the role we play in, for example, reducing carbon emissions or contributing to a growth and prosperity that is more inclusive. It’s also about teaming up much more with organisations such as NGOs, development agencies and governments to be more creative in areas such as project financing.
As part of this process we have had to make some choices about terminating business relationships and exiting certain sectors. But they are necessary. As part of our business plan we have adopted the 17 United Nations Sustainable Development Goals. The business decisions we make are now subject to rigorous screening and we have put in place indicators and tangible objectives that will help us contribute to the UN Goals. It is now the way we do business, and it’s something new. I know that our peers at other European banks are making similar efforts.
To conclude, I’m confident that we can overcome the challenges we face and make progress towards building our single, European market. I’m also confident we can play our role in building a more sustainable world. It’s a slow process and I don’t underestimate the obstacles. But there is enormous talent, excellence and goodwill. Europe’s banks have shown they can be innovative and adaptable. And they increasingly show that they are contributing to a better future. At BNP Paribas, and in keeping with our own European project, we are fully committed to helping make this happen.
Thank you for this great award, and my thanks again to our clients and to all my colleagues at BNP Paribas.