Something extraordinary is happening in South Africa this week. Barclays Africa’s Stephen van Coller has brought the founders and faculty of 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  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 youâve been educated and trained; each year, you try to make your business just a little bit better.
Weâre hardwired that way, though. I remember someone once saying, âWe have Stone Age bodies in a Space Age worldâ.
Thatâs 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 doesnât own a bed? If you look at Uber, the largest taxi company in the world â doesnât own a taxi. Theyâve 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 donât adopt that, you donât future proof your business because someone else will come and do something that comes from left field, which you havenât 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.
Youâre 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 weâre really borrowing the future from our children. Itâs the old stewardship view. Weâve been around for 350/325 years and we want to be around for another 325 years. If you donât adopt the new technologies, youâre going to disappear. 2. We also believe that where weâve been given licenses and where weâre systemic in the markets, we actually have a broader obligation to that society in terms of generating growth. Itâs not purely altruistic because weâre 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, âWell, the taxis will carry onâ. 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 itâs almost as though the business world is saying, âItâs not going to happen hereâ.
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 didnât just get a taxi.
The taxi driver who would have gotten a loan from you in the past â are you now saying, âMaybe not. Maybe weâll give it to an Uber driverâ?
Not necessarily, but thereâs 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 theyâve changed the risk profile of each of those drivers. My risk is now a big Uber company paying me back, because thatâs where the money goes. That model itself has just made drivers more financeable.
What Iâm 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 peopleâs money and to lend money to people. Are you shifting that yet?
Weâve started two things, Alec. One is to actually, start working with our clients on solutions. Iâd take my infrastructure and say to them, âWhat are your big problems? How can I use my infrastructure to solve it together?â Thatâs just a synergy thing. 1 + 1 = 3. Whereas before, we would design a product and just push it. Those days are gone. Itâs not an easy change because the way we do business is ingrained over years and years, but weâre pushing that very hard. Secondly, you start looking at your own problems in a very different way. Iâll give you a quick example. Our FX systems are 20 years old. For the last five years, Iâve changed them, tried to make them a bit better, smoothed them out a bit, and refurbished them. However, when you realise that âI need to give FX to everyone because eventually itâs 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. Youâre suddenly accelerating some of the change in your business because you can just see, if you really go where the marketâs going, you use what you currently have, and your thinking is different â bang, letâs close that one down and build a new one.
It seems as though youâre trying to bring in Silicon Valley thinking (state-of-the art thinking). Singularity â talking to the guys there â tell me their campus is right next to Google. There canât be too many more forward-looking companies, than Google.
What I really liked about it was when you read the book âExponential organisationsâ, itâs about a different way of thinking. If you look at these business models that are working now, itâs about the scalability so that your marginal costs of that additional client/additional sale tends to zero. Thatâs 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 weâve tried to do is (1) put the clientsâ 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, âWhat do you need from usâ and then that determines our strategy.
You teach them. Letâs just say you have a client who doesnât get exponentiality, as most human beings donât.
They donât even need to get exponentiality. Iâll give you an example. Weâve 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. Thatâs rather interesting and we never thought about them because we thought we knew what they wanted, as opposed to them telling us, âIf you can do these things for us that will be awesomeâ. We can because we have the infrastructure. Weâre just not scaling it. Thatâs 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, âIf you bring a good idea, Iâll give you R10,000 rand to bring the first prototype backâ. If we then like it, Iâll give you R100,000. Then Iâll give you R1m and Iâll 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 theyâ realise itâs 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, âBanking will never be the same againâ. Well, itâs come a long way from there and certainly, listening to him now, the changes are coming thick and fast.