Something extraordinary is happening in South Africa this week. Barclays Africa’s Stephen van Coller has brought the founders and faculty ofĀ Singularity University to the country. I’ve been among those whose thinking has been changed by exposure to some of the best minds in Silicon Valley – the heartbeat of technological innovation. Here’s what motivtated Van Coller to bring Salim Ismail, Peter Diamandis and their colleagues to Johannesburg. – Alec Hogg
Stephen, listening to what faculty have had to say and reading books written by the co-founders, Singularity University introduces a different way of thinking to South Africans. The linear way we as Ā beings are hardwired into needs to change to understand a business world of exponential growth…..
Absolutely. What was interesting for me was that these new technologies that are coming out are actually, enabling you to address problems from a completely different angle. If you stick with the way youāve been educated and trained; each year, you try to make your business just a little bit better.
Weāre hardwired that way, though. I remember someone once saying, āWe have Stone Age bodies in a Space Age worldā.
Thatās right but where we are in business is many people are now able to use these technologies to disrupt. If you think about Airbnb, who would have thought the second-biggest hotel chain in the world doesnāt own a bed? If you look at Uber, the largest taxi company in the world ā doesnāt own a taxi. Theyāve done that in a very short space of time, so business models are compressing. Business strategies and the way you execute on things have changed and if you donāt adopt that, you donāt future proof your business because someone else will come and do something that comes from left field, which you havenāt thought about. The way you want to run your strategy is now disrupted so unless you do it for yourself, someone else will do it for you.
Youāre in banking. For many people, banks are almost the epitome of the old age. Are you trying to change Barclays?
Absolutely. There are two things. 1. Our view is that weāre really borrowing the future from our children. Itās the old stewardship view. Weāve been around for 350/325 years and we want to be around for another 325 years. If you donāt adopt the new technologies, youāre going to disappear. 2. We also believe that where weāve been given licenses and where weāre systemic in the markets, we actually have a broader obligation to that society in terms of generating growth. Itās not purely altruistic because weāre also interested in having GDP growth faster, because then we rise with the tide in terms of a business.
I guess that understanding it lets you lend more smartly than you would, understanding all these changes. Steve, we hear of Uber and then guys say, āWell, the taxis will carry onā. You hear of Waze, which is showing you how to get to places quicker. All these new technologies that are coming in are being used by people, but itās almost as though the business world is saying, āItās not going to happen hereā.
I disagree totally. Just see how Uber has changed behaviours in this country, how many people now go out, have a drink, and use Uber whereas before, getting a taxi was quite difficult. Unless you had a special person or a number who followed you around, you didnāt just get a taxi.
The taxi driver who would have gotten a loan from you in the past ā are you now saying, āMaybe not. Maybe weāll give it to an Uber driverā?
Not necessarily, but thereās a completely new industry there. If you look at the way Uber works, Uber now does special training for its drivers. They know exactly how much a car can make and do. The money comes through Uber. Uber then pays us back and the balance goes to the driver, so you can already see that theyāve changed the risk profile of each of those drivers. My risk is now a big Uber company paying me back, because thatās where the money goes. That model itself has just made drivers more financeable.
What Iām getting at here is that we are seeing so many of these exponential changes. Are you adapting the way you do business with customers? A bank is there to look after peopleās money and to lend money to people. Are you shifting that yet?
Weāve started two things, Alec. One is to actually, start working with our clients on solutions. Iād take my infrastructure and say to them, āWhat are your big problems? How can I use my infrastructure to solve it together?āĀ Thatās just a synergy thing.Ā 1 + 1 = 3. Whereas before, we would design a product and just push it. Those days are gone. Itās not an easy change because the way we do business is ingrained over years and years, but weāre pushing that very hard. Secondly, you start looking at your own problems in a very different way.Ā Iāll give you a quick example.Ā Our FX systems are 20 years old. For the last five years, Iāve changed them, tried to make them a bit better, smoothed them out a bit, and refurbished them. However, when you realise that āI need to give FX to everyone because eventually itās going to be on your mobile phone with your bank account’ suddenly, I need do it for not 20,000 clients but for 20-million. I suddenly realise I have to close the system down and put in a new one. Youāre suddenly accelerating some of the change in your business because you can just see, if you really go where the marketās going, you use what you currently have, and your thinking is different ā bang, letās close that one down and build a new one.
It seems as though youāre trying to bring in Silicon Valley thinking (state-of-the art thinking). Singularity ā talking to the guys there ā tell me their campus is right next to Google. There canāt be too many more forward-looking companies, than Google.
What I really liked about it was when you read the book āExponential organisationsā, itās about a different way of thinking. If you look at these business models that are working now, itās about the scalability so that your marginal costs of that additional client/additional sale tends to zero. Thatās the ultimate barrier to entry. If you can build something once and scale it a million times, you can get the scalability. Just think about that effect on clients when the marginal cost of the extra transaction is zero. You can suddenly provide an entirely different service to them at a very different cost.
How do you get the guys in the bank to buy this? We can sit here now and pontificate indefinitely, but someone gets up in the morning, goes to works, and has to think differently. How do you get that in?
There are two things. What weāve tried to do is (1) put the clientsā needs first. Instead of building a strategy around it, we think these products need to happen. We actually go and sit with our largest clients and say, āWhat do you need from usā and then that determines our strategy.
You teach them. Letās just say you have a client who doesnāt get exponentiality, as most human beings donāt.
They donāt even need to get exponentiality. Iāll give you an example. Weāve had a client for years in the public sector and we do three things with them. We went and had a two-day session with them. We came back with 84 things that they would like us to do for them. Thatās rather interesting and we never thought about them because we thought we knew what they wanted, as opposed to them telling us, āIf you can do these things for us that will be awesomeā. We can because we have the infrastructure. Weāre just not scaling it. Thatās the first thing. The second thing is to get people to experiment. Especially in banking, we live in a hierarchical world and so it takes a lot of time to get to the top to get an approval.
If you can flatten that and say to this person, āIf you bring a good idea, Iāll give you R10,000 rand to bring the first prototype backā. If we then like it, Iāll give you R100,000. Then Iāll give you R1m and Iāll give you R10m, depending on how big it is. Instead of creating these big projects that then go through a three-month approval process, costs a lot of money, and takes two years to build, you actually get a lot of ideas and you kill a lot of it early because theyā realise itās not doable or it needs to change. You get more ideas and you get people really thinking and then you get all your staff giving you 100 percent, instead of limiting them to a job description and getting 40 percent.
Well, Stephen van Coller might well have been referring back to one of the original constituents of Absa. It was a bank, called Trust Bank which said, āBanking will never be the same againā. Well, itās come a long way from there and certainly, listening to him now, the changes are coming thick and fast.