Listen in as Fábio Napoli, Itaú Unibanco’s Director of Information Technology and Chief Technology Officer, shares the bank’s digital journey, lessons lessons learned, and his personal advice for Latin American peers in other regulated industries. Featured experts: Fábio Napoli, Director of Information Technology and CTO, Itaú Unibanco Roberto Voi, Customer Partner, Kyndryl
With a large population of unbanked and underbanked citizens, late but rapid smartphone adoption, and a boom of start-up fintech companies, Latin America can be a tough market for traditional banks. But Brazil’s biggest bank has managed to remain the country’s most valued brand with a strategic approach to digital transformation that puts people first and 70% of its workloads in the cloud.
Listen in as Fábio Napoli, Itaú Unibanco’s Director of Information Technology and Chief Technology Officer, shares the bank’s digital journey, lessons lessons learned, and his personal advice for Latin American peers in other regulated industries.
Tom Rourke 00:02
Hello, everyone, and welcome to today's episode of The Progress Report. The pace of digitization is accelerating all the time, particularly in financial services. And today's two guests have been at the heart of the digital transformation of Brazil's largest bank. But as you'll hear, the key to success is often as much to do with understanding your customer and their needs, considering experiences and setting the right mindsets as it is around choosing the right technologies. I hope you enjoy this episode. I am delighted to be joined today by Fábio Napoli, Director of Information Technology and CTO at Itaú Unibanco, not only Brazil's largest bank, but also Brazil's most valuable brand. And also my colleague, Roberto Voi, who is customer partner for Itaú Unibanco, and he's dedicated to supporting the bank's digital transformation agenda. So Fábio, I'm conscious that there's a huge investment being made by banks in digital transformation. And Itaú's especially, what is the reason for this level of investment and energy on the part of the banks and you and your own, in particular?
Fábio Napoli 01:11
Thanks a lot for your question. Thanks a lot for having me today. You know that Itaú it's 100 years bank. And we understood that, even with very good results, we could do something better. We understood that the new banks, they were coming. And we need to do something different for our customers. So that's the reason we exist. And that's the reason we worked so hard. And we understood that to perform that we had to change not just in terms of technology, but in terms of the way that we got organized that today the culture of the company. So going straight to your question, we are investing a lot because we understood that - the customer behaviors - they have changed. And we understood that even being a very good company, for the last 100 years, we had to change a little bit. We had to be humble to understand what the new companies were doing and change ourselves to provide the best services and products for our customers.
Tom Rourke 02:14
You mentioned experience. So maybe you could talk a little bit about some of those expectations and how they've changed through your career in banking, how have they changed? And what are those expectations?
Fábio Napoli 02:24
The customers now they want everything at the same time. They want something that's really fast to retain. And what we have in mind is that in the past, we used to have the customers that they wanted a bank. But right now they do not want a bank, they want to buy a house, they want to buy a car, and they need banking. So we need to be in the customer journey. So that's the reason the expectations, they have changed. And then if we don't provide what they need, in the way that they need, they go to another bank, they will find another provider for sure. So that's the reason why we had to change a lot. That's the reason why we had to understand the customers. That's the reason behind we have to deal with data all the time to understand the behavior, and you interact all the time with them to create the best products that they can use.
Roberto Voi 03:24
And Tom, because in the past, the relationship between banks and the customers was based by going to the branch to understand the product. And now you have the banking in the palm of your hand with the smartphones. So in the most part of the journey that Itaú is doing is based on data. Not just to provide the right product, but when the right product comes to the customer, and they solve something that they need, I think this is the biggest difference. The expectation - a person's expectations now for the customers.
Tom Rourke 04:08
And actually, as you're talking Roberto, and obviously these challenges, create opportunities, particularly in the IT sector and, what are the opportunities that you see for, service providers, and particularly people working in cloud and networks and so on, in Brazil as a result of this level of digitization by the banks?
Roberto Voi 04:27
I think the service providers has the same journey, because in the past, our main service delivery is about SLA. And now we needed to have the right skills to be part of the journey inside the customer, just not only to provide the technology, and if it is up or down. We needed to bring more value in the relationship. So the skills about data, about all the disruptive technologies I think this is the most important part that we need to have the journey with the customer.
Fábio Napoli 05:06
The most important thing is that Roberto saying you have to understand our needs, but you have to understand what is our customers'? Because once you understand, you understand our mindset, you understand what we are doing, and then you will provide a very good service a very good product, a very good solution for us. So I think that what is really important is you have to understand how the Itaú's customers, what they are willing to have, what they need. So once you understand for sure, you want to provide a very good service a very good product for Itaú.
Tom Rourke 05:41
And how do you, as Itaú go about understanding those customers? Fábio, what are the approaches you take to actually understanding those new customers, those new digital customers?
Fábio Napoli 05:53
The way that we are changing is the way that we are working right now. We are acting like a digital company, like a tech company; this is what we want, and what it means, actually. So instead of working as a project company, where you used to have a huge investment, at the beginning and just after three or five years, you understand if your project had a good result or not what we are doing right now we have customer, we have a team that is integrated with the business very close to the customer. And we have the technology that enables us to test very fast. So when you have a new feature we put in production, and we understand if that group of customers, if they liked it or not. If they didn't, like we change very fast, if they like it, we scale up very fast. And if you compare 2023 Itaú to 2018, the first quarter, we improve it, we increase it 10 times the number of changes that we put in production.
Tom Rourke 07:04
So Roberto, you work very closely with Fábio and his team. How has that enabled you to play a different role in working with the team? Has that kind of presented challenges in how you respond, and how that would guide the rest of us in terms of how we respond to a customer like Itaú?
Roberto Voi 07:20
In all meeting, we start with a co creation process. Because part of the current culture of Itaú is we don't know everything. So how we can combine our knowledge, our skills, to understand what they need, and create the best solution the best service for Itaú and the Itaú customers, as well.
Tom Rourke 07:45
As you can imagine, and given my own role in cocreation and the experience of our customers' customer, is a very dear theme to me. Fábio, we both come from companies with very rich heritages, right? So you know, large companies with long histories, looking to change very quickly. What were the biggest business or technology challenges you had to overcome in getting to that new culture? And maybe you can shed some light on how we might learn from your experience.
Fábio Napoli 08:12
You need to have a very good approach to perform the digital transformation and to perform the system's modernization and move over workloads to the cloud. If you get to the board and say that you're going to perform that as a tech-for-tech approach, you will not have success for sure. Because when I talk about digital transformation, and we talk about moving to the cloud, and so on, it's not a technical project or technical initiative it's a cultural change that we have to implement inside of the bank. Because we have to change the way that we work. It doesn't make sense to move to the cloud and keep doing the same thing, working in the same way. So I think that the biggest challenge was really not to convince, but to have the board leading the digital transformation, leading the cultural change. I'm not saying that it was really difficult to convince them. Because we never had the technical approach. We always had the business approach, the customer approach. So we understood and we cocreated with them, what would be the new way of working for the bank. And then to perform all that, we had to change our technology; we had to evolve our technology, because the way that the technology that we used to have a monolith wouldn't be suitable for this kind of change. So we decided to modernize our workloads. And as a consequence, go to the cloud. I think that the hugest challenge was that to have the Board of Directors, the board of the President, the CEO, leading the digital transformation.
Tom Rourke 09:58
That's really important and I think to hear that, again from many of our other customers and partners in industry. At the same time, though, in banking, you're working within a very heavily regulated environment, and obviously moving from some really well established technology. So the journey from mainframe modernization to the cloud is complicated enough, but you also need to maintain a secure journey, you also need a compliant journey. What are some of the challenges that that creates for you? And how do you manage those challenges?
Fábio Napoli 10:33
The main challenge, in terms of technology in terms of regulators is that the technology is new, the environments new, so we didn't have to convince, but we had to explain the new technology with the provider. But you know, this is a different kind of mindset, in the level of security and availability and resilience can increase, but not doing the same way that you used to do, we have to use the new technology and implementing your process. So it was, again, it was really not difficult, but it was a matter of going to the central bank and explaining to the regulators, and explaining the new technology in our new strategy from now on. And once do that, you can work very well, but you need everything optimally to stay at least two or three steps ahead and think about who you need to convince, who you need to talk to really implement the solutions, the new solutions that are available now.
Tom Rourke 11:35
How has it changed how people need to work together as a technology provider to the bank? Roberto, you've worked with them for a long time, how has it changed how you work with the bank, and - maybe if I could then ask Fábio to expand about how other people have had to change and how they work with the bank. But maybe Roberto if you could give us a perspective.
Roberto Voi 11:52
We needed to understand the customer. We need to see what the customer needs, and then understanding the culture and the environment of the bank - the challenges - because every day is a different day. The number of changes that the implementations that Fábio mentioned is huge. And we try to not only understand some times, we did some changes to provoke something using new methodologies or bring to the table new technologies like 5G in Brazil - how to how to implement 5G or maybe 5G can be an enabler. So we are doing these kind of meetings to provide and make and create some value to the bank and the customers.
Fábio Napoli 12:43
What I don't like is when someone, some provider, comes to me and say, "Talk to me about your problems. How can I help you?" It doesn't work anymore. What really works is a provider like Kyndryl that knows very well our strategy, that knows very well my team, that understands my customer needs, because if they understand they can come to me and say "Fábio, I don't know if you realize it, but you have an issue in this point that you're gonna have in two or three years, I had a problem related to your migration." And then these kinds of providers, they support me, they helped me they work with me. So what is really important is that they need to understand our strategy, they need to understand our customers need. And one thing that I usually say to the to the very important providers is that a bank like Itaú has an incredible access to the huge providers in terms of technology. I have a huge team, a really technical team that really understands about everything that's new about generative AI, about cloud, about modernization of everything. So I don't need someone to tell me the things that I know, I need someone to tell me the things that I don't realize yet. This is the kind of providers that I really look for that understand what I need that understands my customer, and that is two or three years ahead to tell me "Fábio you you're gonna have to deal with this problem, this kind of thing." This is the kind of provider that I really want to stay close to me and to work beside me.
Roberto Voi 14:40
And Tom, I think that I have an advantage because I am an Itaú customer since 1985. So I started my career and Itaú was my first bank. I can see the change. I can see the solutions. I can provide some feedback. So this is a great moment to be there with those guys.
Tom Rourke 15:08
So this has been quite a journey, Fábio. What are the kind of things you are proudest of so far in Itaú's digital journey?
Fábio Napoli 15:16
When I take a look, in the in the past, I am working for the bank for the last seven years. And then when you see the results that are coming, they are really different seven years ago. The way that we are changing a lot, and you know, we are 100 years bank, 100,000 employees, but we are moving very fast. So it's really difficult to move a bank like this. We are a huge company with a huge digital transformation being implemented with our cultural change that is totally different. When we used to go to the bank, in the past, we used to do - if I had to make a presentation for the board, I used to maybe spend 15 days just with different kinds of people saying that if Is that right or wrong? Because I couldn't make any mistake during that presentation. And today, of course that I will try to do the best, but if I get to the board with a mistake, or with some question that I don't know how to answer, they will say "okay, that's fine," you can do that it's not a shame to not know something like that. And so this is the culture of change that I'm really proud of that, that permitted us to really work in a different way - really well integrated - so the technology is the core of everything that we're performing. So the digital transformation, it's really being implemented and the results are coming; I'm really proud about that.
Tom Rourke 16:54
Yeah, and you can actually feel the energy from the conversation, Fábio. If I was to sum up what you just described, the right mindset, the focus on the culture, focus on the customer, and the results have come. I have to say what I've been fascinated about is how little we've talked about technology, which suits me fine, because I'm not a particularly strong technologist. But I would like to get maybe a perspective, Fábio, as you look forward to the future, and you think about actually the pace of change in technology, and we talk about, you know, AI and generative AI in particular, like what are the things that you're looking at today, that you think may actually have real impacts on that customer experience that you've been building with, with your customers?
Fábio Napoli 17:34
All the kinds of technologies that comes we have to understand. It doesn't matter, if this is, that's the kind of technology that we say, it doesn't go to, in the future, you're not going to see this technology, for sure. As a technology department area, we have to understand all the kinds of technology to have the decision if the technology is going to to fit some something for the customer or not. And when we talk about generative AI - I'm sure that we really need to pay attention - because we are working with AI for a long time. And when I say that we are working with AI, it comes from the business where we understand the customer behavior, it comes for the IT operations for the change management, for instance, we have AI to understand if that change will cause a problem or not. So what we have to understand this, we have our AI solutions that are solving specific problems, and you don't have to change for generative AI. Because we do not have to be in love with the technology, but we need to be in love with the problem that we have to solve. So generative AI is something that's coming. And in my mind, it's not, it's not going to be something that will improve a little bit a process, will change a process, or maybe some process will not exist anymore in the future of generative AI. So in my opinion, generative AI, I don't know really yet how he's going to change. But for sure, it's going to be the next step for the AI solutions that we have today. And you have to be really smart to understand and not to work to solve the current problems that the current technology solves. But how it's possible to get productivity how it's possible to really obtain quality, but not incrementally but exponentially.
Tom Rourke 19:40
Roberto, it must be a joy to work with a customer like Itaú. I know I've had some experience working with you in the past. What recommendations would you make Roberto when working with a customer like Fábio what are the things that we all need to pay attention to in support of a customer on such a journey?
Roberto Voi 19:57
We need to understand not only the industry, not only the customer, but what our customer is doing to make money and how we can improve that process. I think that the most important is to be prepared, be with the customer, talk with the customer, read a lot. And then read about, not only the industry, but the ecosystem. When you see Itaú's ecosystem it's huge. Itaú is not a bank anymore; it's big tech, in my opinion, right Fábio? Because they are looking for new business every day, not only new products inside the base of customers, but looking for new opportunities in the business.
Fábio Napoli 20:39
That's the reason we have a huge partnership with Kyndryl because you understand our strategy. So this is the kind of thing that once Kyndryl understands my journey, my strategy can offer something that makes sense. It's the kind of provider that I look for.
Tom Rourke 21:01
One of my dearest friends and mentors, unfortunately, no longer with us, had a phrase about paying attention. John would regularly challenge us all to pay attention. And I'm sure as you listen to today's podcast, you will have realized the importance of paying attention in the context of the work that we are doing with Itaú. Paying attention to our customer, paying attention to our customer's customer, but also paying attention to the technology horizon and the things that will change the world in which we operate. You will also have heard us talk about the importance of co creation and collaboration and communication. And above all the mindset that sits behind making this level of change. This has been a fascinating afternoon. I hope you've enjoyed the conversation; I know I have. And I'm sure our listeners will so Fábio, Roberto, thank you so much for your time today.
Roberto Voi 21:49
Thank you. Thank you guys. Thanks for the opportunity. Thank you, Fábio.
Fábio Napoli 21:52
Oh, thanks a lot. It was a pleasure.
Tom Rourke 21:55
Thank you for listening to The Progress Report. I hope you've enjoyed our conversation and look forward to talking to you again in two weeks time. And don't forget to subscribe, so that you don't miss an episode.