Constantin Mareş: Achieving Transformation Through Talent and Technology

Show Notes

In this episode, we talk to Constantin Mareş, the Chief Digital Officer of OTP Bank Romania and a serious transformation expert.

He has over 20 years of banking experience and is an experienced technology leader within the banking sector. A firm believer that an engaged and motivated workforce, one that is aligned, and committed to a strategy, is key to unlocking the potential of any forward-thinking enterprise.

He started his career at Bancorex, in the Capital Markets department. Moving on to ING, where he worked for 9 years, leading the IT department and the launch of technology-based retail services. In 2006, he was part of the team that prepared the launch of Millennium Bank in Romania. Six years after joining Millennium Bank, he was promoted to the Board of Directors, first coordinating the operational area and then the corporate client area.

Since 2015, he has been a figurehead of cultural change within OTP Bank Romania, a change that has included both the digital transformation and the transformation of the way of working into modern and an agile one. 

His current role is Chief Digital Officer, directly responsible for the success of OTP Bank Romania's Apollo Organic Growth Program, which focuses on improving the customer experience, process efficiency and developing key products.

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[00:00:00] Mike Parsons: Welcome to Unbounded talks on growth in financial services. Hi everyone. I'm your host. Mike Parsons. Unbounded is powered by FLOWX.ai. And today we are indeed talking with someone who has a lot of experience. We are talking to Costi Mares, the chief digital officer of OTP bank Romania. He is a serious transformation expert.
[00:00:29] If you want to get talent going in the right direction, he's your man. He has over 20 years of banking experience helping people transform. So get ready to dig into the growth occasion custody. Welcome to the show.
[00:00:43] Costi Mares: Thanks Mike, for the introduction, really honored to be here and really glad to chat with you.
[00:00:51] Mike Parsons: Now because see, we are very excited to have you on the show because for somebody who has been in banking for two decades, who then [00:01:00] finds themselves as the chief digital officer, I think this must be on one hand, the most exciting and the most scary role in any bank you could have these days. How did you get here?
[00:01:13] Costi Mares: Thanks for the question is indeed exciting. And also challenging as you say, because it's a role that it's at the intersection between humanity and technology, and that might be scary as you say. How did I arrive here? I started my experience many years ago, as you said in in banking I moved to ING, millennium bank and now OTP bank, and I moved back and forth between business positions and technology positions.
[00:01:45] And I'm now merging these two LMS together With the sole purpose of providing great customer experience and delight our customers. So it's a [00:02:00] challenge because we are talking about clients and usually it, people do not really care either to say about clients. They care about the knowledge.
[00:02:11] So exact challenge is indeed.
[00:02:15] Mike Parsons: So custody, I love this idea of it's the collision between tech and humanity, maybe throwing the collision between businesses. Do you believe that the work that you've done in your career. Across both business and technology puts you in an in a great position to understand where you can get value from both technology opportunities, but also helping people achieve them.
[00:02:43] Is that the secret sauce to your role, do you think?
[00:02:47] Costi Mares: I believe so. In all my roles I put focus on collaboration and communication and alignment. Many companies and [00:03:00] banks also failed to have a clear communication between business and it, and I, these talking about technology. Business is talking about business initiatives and usually they do not they are not able to understand each other and always I was able to make this bridge.
[00:03:22] And because of that, when I was in the technology position, business loved. Because they were able to achieve their goals and to we, we talked together in the end, the same like language, but also when I was in business positions the technology people love me because I understand what they're coming from.
[00:03:47] I understand that they find that they try to find the best solutions and we are able to align again together to reach the goal of the companies.
[00:03:58] Mike Parsons: It's fascinating. Isn't it? [00:04:00] It's very similar to our previous guest, Daniel Popescu from bunker Transylvania. He said something similar that the real. Role of the moment here in 2022 is being a bridge between the different teams in an organization inside of a bank between business and technology acting almost if you will, as a translator.
[00:04:26] Now, this seems to be a really hot theme right now within banking and financial services. What advice would you have for someone who. To play such a role, but as perhaps today, only in let's say it, how do they get that, that, that extra skill? How do they cross-pollinate so that they can translate between the two?
[00:04:48] What would, what advice would you have for someone in it?
[00:04:50] Costi Mares: So first of all you need courage because at the beginning it might be really ugly because business [00:05:00] people. Very close to hate the technology people, because they believe that the technology people block their way to achieve the goals. And the technology people really hate the business people because they don't understand they are stupid.
[00:05:18] And the this type of. And you need the, you need to be bold and say, guys enough, it's enough. Let's take it from zero let's trust each other. Let's understand your priorities and let us do our job. And this is not easy. Because there is no trust and the people say, oh yeah, another one talking. But if you don't do this, if you don't set this ground zero moment zero, it will be difficult.
[00:05:53] Mike Parsons: That's okay. We'll add it to that door. I'll follow up with a question now. So if someone wants to be courageous, what's [00:06:00] one practical step that they could take to building the bridge with other teams. Do they need to go and shadow people for a week? Do they need to go on some common into other departments?
[00:06:13] How do we build more translators like yourself?
[00:06:18] Costi Mares: Yes. First of all, I think it's important to have your team behind diamond. The technology people behind must be on board must be behind you when you do this. And they have to understand that. We have to help the business. We have common goals. We need to grow this banking business.
[00:06:41] And that's the first step you need to do second step, you need to do. Go with the, to the business, put all of them together at the same table. And when I've done this debate as I told you, it got [00:07:00] really ugly. People were shouting pointing fingers. Really. At the first encounter.
[00:07:10] And then I set up by a established with the VP on retail. We are going to do this. This is also important to set, to play the stakeholder management and work with the PR on the business side. And the agreed that. I have to do this and no matter how ugly this, we are going to jump in together, look at the backlog. That was not that she fought her ear, says business said, look at that are not relevant from that backlog. Look at the things that are really important for them. And then the third step is to really deliver on those things that you discussed and agreed together that they are important. You need to show.
[00:07:56] That you can build what they [00:08:00] want. You need to build it fast and get it ongoing. And if these elements align and then you start to deliver business will gain more trust. And then it's easy. It's a, it's going in the right direction.
[00:08:18] Mike Parsons: The insight that I had pulled out there, COSTI is, it sounds like before committing to the product you're going to build, you have to get everyone to commit to the shared process because if they can't get behind the process and knowing that there's going to be some ups and downs, but we've got to commit to the process before the product.
[00:08:39] Otherwise it's all going to fall apart. That seems to be the big insight.
[00:08:44] Costi Mares: Yes. Correct. And why, what is also important is that transparency, because usually it do not say clearly and loudly what they will deliver, what they can deliver and what they cannot deliver. They are afraid about [00:09:00] saying we cannot do this in this time. And when you don't say anything, the expectation of the businesses that is going to be. Some never happening and then it's going south
[00:09:16] Mike Parsons: that's all right. People never went when the commitment to the deliverables is vague. Both bodies that the receiving party never says, oh, I will imagine that I'll get less than that. They always tend to be over-optimistic on the expectations that are being set.
[00:09:33] So I think it's really. Back to the humanity that you started with, which is such an exciting way for us to look at the next part of the show. But before we do that, I just want to remind everybody that unbounded is powered by flow x.ai. If you'd like to get the show notes. And if you want to see all of the transcript and the links from what COSTI is sharing with us today, head over to unbounded dot flow [00:10:00] x.ai.
[00:10:00] You can get all the goodies there and pulling. More. So because he let's turn our eyes now to OTP bank in Romania. Tell us about in a world of constant technology change, the markets are changing. Consumers are changing and there we have all of this ambition and desire from the business unit. In order to make that come alive, we have to participate in, let's just call it digital transformation.
[00:10:32] And what's really interesting about the way you construct it is you put people and culture at the heart of it. Can you tell me what does that look like? And I'd love to explore that with you now and see what we can learn from you as we go into the world of transformation, as you see.
[00:10:50] Costi Mares: Yeah. I think what is really important is to make it simple and understandable for the people, [00:11:00] because we'll use many words many buzzwords like digital transformation, like agility and people hear that a lot and they don't really understand what it is about.
[00:11:15] And it, some somehow. The values. When you talk about digital transformation, we're not the one talking about this. So I think it's important to, to understand, to make people understand that agility it's about delivering fast products to the customers, delivering superior customer experience having close collaboration between units breaking the famous silos within your organization.
[00:11:48] And when you break these down to simple concepts, elements like collaboration, communication, some practices that are very simple, [00:12:00] correct piece explore line to review, to make the planning, then everything is them. Understood and then they are on board. I think we'll have to go with the why it is important for us to do this, why it is important for you from business, from.
[00:12:26] For you for it to to embark this throat because change is not easy. We will always get resistance to change. It's normal. It's it's not reasonable not to expect something like this. So you have to be prepared to absorb a lot of negativity, a lot of fighting against these new practices.
[00:12:49] And you have to be relentless in. Moving on with practices that make sense. And deliver results. [00:13:00] We have a force and an agile playbook of 120 pages, but believe me, maybe 1% of our colleagues read that. And this is the, these are the people that wrote it. The transformation of. So what's really important.
[00:13:19] And we talk at the level of management. We have leadership team meetings. We have town hall meetings where I talk about agile manifesto, where we took 10 behaviors. No more than behaviors that are important for moving on with the agile transformation. Simple things, as I told you, collaboration, communication, execution.
[00:13:40] What is an MVP minimum viable product? I think this is key important. Has a key importance DC, not everyone aim for perfect. Let's have the perfect product with all the options, embedded, all the [00:14:00] exceptions, so on and so forth. And we do not accept anything less than perfect. And the force that has a cost of time has the cost of building a complex product.
[00:14:12] And at the end the result is the worst because we'll probably by the time. Launching the market, the product is already obsolete because of the time passed since the lungs. And then the product is so complex that no one can understand it. So it's something that we really push through your organization.
[00:14:35] We want to launch simple products first and then go to the next cycle, improve the product even necessarily. And we continuously adjust.
[00:14:47] Mike Parsons: So I love the fact that you are adopting a very iterative approach and you're shipping and shipping fast. You were able to create an agile manifesto that took 120 [00:15:00] pages and made it 10 key ideas.
[00:15:02] So let me try something very daring here. Custody. Could you, if you had to. Communicate to the world, your agile manifesto. And I could only give you one of your principles of the manifestor, which one is the most important to start with on your agile manifesto to help transform growth inside of a banking organization, which is the one that rules them all.
[00:15:35] Costi Mares: It's it's really tough to choose one. I would choose the one that has to do with the empowerment of the people. I think the traditional management style it's controlling sometimes over controlling, sometimes even micromanaging. And this is a cross the industries across the companies. It tastes [00:16:00] also to do with the, some the Romanian culture, but we see it across the world in different levels.
[00:16:06] So if I choose the one to talk about today would be to empower the people, to make decisions and to encourage them to fail. This this approach to failure from the management was also a key blocker keyboard ear in the development of the components, because when you start punishing the people that made mistake, whatever the phone punishing has when I put him on verbal reprimand or firing or cutting the bone, who said whatever. Punishment. This has a deep implication in the mindset and behavior of the people. And if you are able to get rid of this natural tendency of punishment, the rewards will be great because people will assign [00:17:00] daring. Things will try new things will innovate. And this is very important for the future of the company.
[00:17:10] And I stop here.
[00:17:12] Mike Parsons: Yeah. So let's just focus on these two. Failing fast is always see for some organizations feels very contradictory to risk management, risk aversion. So what's one practical way you improved learning through failing fast. How did you make it possible inside of the organization?
[00:17:37] Costi Mares: Talking about culture. Mike, this was one of the things that took longest to be changed because before there was a strong culture of fear within OTP and within the it environment, it is prone to errors, technology fails and fails [00:18:00] quite a lot. That the difference between winners. Made, especially not from technology, not failing because at one point technology will fail. The difference will be made by how we react. When technology fails, how are able to repost things on track, we want costs and what we do to prevent it next time and The, as I told you, this was the most difficult thing for me to change in the culture of your organization.
[00:18:32] So when I was asking people on the floor, I talk a lot with the people I'm not a very managerial or. And when I ask them, so how it is going, what works? What was what was bad? What you should do better people blocked. Yeah no. Most everything is okay. You don't have to worry as a c'mon. I know. [00:19:00] We both know that this is not the case. Otherwise the company would not need us. And now when I have my breakfast and I invite a lot of people, about 15 people around the table, we discuss about ourselves what our interests and also what we we can do better in the organization. And now I hear tons of fights. Bounce off ideas. Let's do that. Let's improve that. Let's go there and there's no go there anymore. And actually I have this start, stop, continue asking feedback, and we should start doing stop. What do we do? And. We should stop doing and continue what we do well, and we should continue doing it. And asking feedback in this way really was a game changer.
[00:19:50] But come, coming back to the question, because this is not the most practical advice that I would give the most practical advice is to [00:20:00] show. That it's okay to make mistakes and we have a mess up Bordeaux, or I don't know how to say it has a different name that is not very politically correct, but we have a list of mistakes and we talk about them. And in, in my town hall meetings, I talk openly about my own mistakes and. I share with them. I'm a human person, I'm a human being. I made mistakes. And of course I not proud about about it, but I did mistakes also. So it's normal. Let's on. Yeah.
[00:20:40] Mike Parsons: What I love about what you're talking about is that you're making a safe environment where people feel that they can trust the team in the organization to share mistakes failures.
[00:20:53] And today. Launch into a discussion of what they learned from those and how we could improve upon that [00:21:00] and creating that safety seems to be a key to failing fast. I want to come back to the other key point that you mentioned, which was this idea of empowering people. Yeah. When when a person is empowered, when they have wind in their sails, they can do amazing things and they will overcome the valley of darkness.
[00:21:21] When challenges come, they will sell high, they will take ownership. They will be accountable, emits this world of digital transformation. If we're going to make it safe to talk about failure on one hand, how do we then empower people? How do we give them that turbo boost?
[00:21:42] Costi Mares: Again here. It's. In the culture of the organization and culture of the people.
[00:21:50] There are some people that prefer the safety of being told of what to do. We have, we had some of these [00:22:00] people as well. But then my approach was we we have you on board. Do we pay you a hefty salary? You are the specialist on the stadia. You have to tell me what to do. I cannot tell you what to do because I'm not a specialist.
[00:22:19] I'm not a programmer. I'm not a DBA. You are the expert. You have to tell us what to do. And this approach. Really scary for many of the people, because I said, oh shit, now it's up to me. Oh my God. But I don't want this. And we had some some back and forth and goes hand in hand with this part fear approach.
[00:22:47] If they see that, wow. They are empowered. And if something doesn't go to perfection they are not a fire door. There are [00:23:00] no consequences. They get more courage and they start to do amazing things as you want. And we have ideas that. I didn't even thought about where we even there think about coming from the field from the bottom, because that's where the action is.
[00:23:21] That's where the decisions should be made. The majority should be made that the in the field, as I say not in the top, we discussed the strategy, the direction, and that's about it. We wish exciting. If we go in the right direction or not, other than that, the decisions should be done in the field.
[00:23:46] Mike Parsons: Yeah. That's so it's so exciting because what you're talking about is empowering people. Weren't only improve their productivity on the work of today, but they'll actually come with ideas and contributions for the work of tomorrow.
[00:24:35] Mike Parsons: I love this. I really love this, but I think we were on such a roll. I want to get to. The workforce structure. And to talk about that, but just before we do, I want to remind all of our listeners that unbounded is powered by flow ex.ai.
[00:24:53] And if you want to get any of the information that we're discussing, you'll find everything. Show notes, links, [00:25:00] charts, all at unbounded, the flow x.ai. Now talking about charts, Christie, we have dug up a recently updated McKinsey chat and it's called traditional banks work. Configuration and here's the cat.
[00:25:14] Limits its potential. Now if you want to get a copy of this chart for all of our listeners, just head over to unbounded dot flow x.ai, but Christie, it's a pretty interesting picture that McKinsey paints in his chart. It's basically saying only 15% of it spend. Directed towards transformative change.
[00:25:38] Only 25 to 40% of engineers can actually write some code in their workforce maker. And a majority of the people who have some sort of engineering role, a majority. 60 actually, 65% are either beginner or novice. This is clashing a bit with the [00:26:00] ambitions of any modern bank or financial services firm.
[00:26:03] How do you think about workforce modeling and mixing and what roles we need? And when you look at this McKinsey chart, I think you might have some thoughts.
[00:26:14] Costi Mares: Of course, and I'm very happy to report the different reality that we have in OTP bank. And let's start first with the percentage of the resources allocated to the transformation in OTP.
[00:26:30] We have about 50% of the people allocated to the transformatory. And of course we we evolved to this situation from a situation where the majority of the resources are allocated to it. Technical debt and regulatory changes. Probably we are very close to the 85% that McKinsey called in the report.
[00:26:54] But we then realize that we are spending a lot of money and a lot of [00:27:00] resources on a lot of changes that are not producing. Oh, these are producing the ambitious results that we want. And then we said, look we say that this is our strategy. Increase the customer market, share customer experience and employee engagement and stone, but how we are looking at resources.
[00:27:23] Are the resources CapEx Barix OPEX are located along the same strategy clients or not. And then we implemented a simple scoring mechanism in which we make this transparent. And indeed were a bit unhappy not to say scared that the situation was like a Mackenzie coat. It's a 15 transformation versus 85.
[00:27:48] And I said, no, this is not what we wanted. And we started to make the prioritization and to have the quarterly business reviews. And we work [00:28:00] on on the priorities and on the ratings that we do together with business along there, the initiatives. And it's a very powerful exercise to osteo self.
[00:28:13] Mike Parsons: Is our workforce configured in alignment with our strategy and business needs. I think that's what this really calls out.
[00:28:22] Costi Mares: Yeah, and it's very easy to say to brag that we are aligned with the business, but is the business aligned with the strategy of the companies with overall goals? This is a question it's a tough question, as you say, and we are very courageous to ask these questions and not only that to make decisions. To reflect that strategy. And of course the lack of resistance from the organization and from people saying but this, my pet project will be killed. What the, my going to do and the whatever who had many oppositions, many discussions, but [00:29:00] at the level of the management, we said, look, this is our strategy.
[00:29:04] These are the initiatives helping us to achieve the strategy. There is no debate about it. Let's move on.
[00:29:11] Mike Parsons: Exactly. Yes.
[00:29:15] Costi Mares: Allocate more than 50% of the resources on this transformatory changes.
[00:29:23] Mike Parsons: The invitation from myself to you is I would love to have you back on the show to actually go deep onto how you actually were able to create that workforce transformation and how, what advice and learnings you have for anybody who's working in the industry who's facing exactly those same challenges. Would you like to come back and do some workforce gen.
[00:29:47] Costi Mares: Of course, that would be my pleasure. And actually in this environment where the things are moving very fast in the it labor market and not only the [00:30:00] labor market overall we know about the great design the there are about that as well.
[00:30:07] So yes, it's a key success factor again in having a successful transformation. And I love to take to talk about our approach to that because we have some very interesting ideas on how to build a pipeline, a leadership pipeline, talent pools that we grow and invest actively in growing our people and fit this.
[00:30:38] Mike Parsons: That sounds wonderful. My last question for you costy Maresh. If people want to find you out on the internet being the chief digital officer at OTB bank, Romania, how do we find you? Are you on our LinkedIn? Are you a Facebook guy? What, how do we find you in the world? How do we follow your.
[00:30:58] Costi Mares: Yeah, so you can find [00:31:00] me under my ID name of constant in marsh, on LinkedIn.
[00:31:06] And that I I publish a lot of interesting things about what we doing or DP building a supercomputer, for example one of the most powerful in the world for. Boosting artificial intelligence and being able to understand better our customers and some other interesting initiatives at the level of OTP back.
[00:31:33] Mike Parsons: Wonderful. Cause see, it's been a pleasure having you on the show. I can't wait to have you back next time. Thank you so
[00:31:40] Costi Mares: much.
[00:31:41] It was a pleasure, Mike, very interesting questions. And you energize me a lot and I talk with patient about the things you asked me. Thanks for this
[00:31:54] Mike Parsons: sounds. Perfect.
[00:31:55] Thank you to you CASI and thank you to you. Our listeners, it's been great having you here [00:32:00] on unbounded talks on growth in financial services and all of this is powered by flow x.ai. Join the conversation. Unlock the growth [e-mail]. That's a wrap.