We talked to Boris Dyakonov – CEO at Tochka Bank – during Caucasus SME Banking Club Conference 2017 in Tbilisi in May this year. Initially, the interview was taken in Russian. Here you can watch the video with English subtitles and text transcription translated into English.
OG: Today we are at the Caucasus SME Banking Club Conference 2017 in Tbilisi discussing the development of SME banking.
I’m pleased to be joined by Boris Dyakonov – CEO at Tochka Bank.
OG: It has become a cool tradition to visit Tbilisi every year in May; this is the third year.
BD: Yes, a very good tradition! And thank you!
OG: Do you like Tbilisi? Do you like to come to Georgia? What do you like here the most?
BD: Yes, this time I just came for a day. Well, first of all, it’s easy to fall in love with the people. Second, the food they cook, and everything that’s created here; and the views are amazing!
OG: Tell us, what your work day looks like? What was your day like yesterday or the day before yesterday before you arrived here? What processes are you most involved in at the bank?
BD: They were atypical days; I had a lot of meetings in Moscow. I’m trying not to get involved very much now; we have an amazing team that makes a lot of decisions by itself and is responsible for them, as we like to say in the Urals, they have a handle on things. But sometimes I try to—and this is a good old Russian word— “challenge” them, to set their sights further down the road, to be more ambitious, something like that.
OG: Tell us, what is the main job that a bank CEO should do so that the concept of “the most convenient bank for entrepreneurs” – and this is Tochka’s mission – is something shared by all the team members?
BD: That’s quite a question! Honestly, I don’t know the answer. I always ask myself: how can I be useful, what can I do? It’s very dependent on the organization, on what it is used to. So, I don’t know. Sometimes I rush to get involved in sales, sometimes culture, sometimes in a product; sometimes I just let things unfold as they will.
OG: How did it happen that everyone at “Tochka” became so energized?
BD: I wouldn’t say that in perfect tense, as if this has been accomplished once and for all, because the second law of thermodynamics still exists. Everything moves towards entropy, heat cools, and not vice versa, and these things come in waves: sometimes it seems that we are at the peak, sometimes we aren’t, and we need to get ourselves together, to focus. “Tochka” is growing right now, and it’s a great challenge for us: how to keep the same warmth, and on a large scale, concentrating even more on efficiency, because efficiency, in the end, translates into opportunities to do more for the client at a lower cost. You just have to constantly think about it. The rule is that if you do something consciously, sooner or later it will improve.
OG: How many employees do you currently have in “Tochka”?
BD: Now we have more than 700.
OG: Today you speak in the panel about digital SME banking and “Tochka” is an online bank. But do you meet with customers in person, for example, to sign an agreement for opening an account, some moments when you meet customers face-to-face?
BD: Yes, we have to meet each customer face-to-face, and for us it is an important part of the client experience. “Tochka” is digital, but at the same time, we have a very human face. Plus, this personal contact is something we invest in even more than usual offline banks, because we can take advantage of these moments to perform a compliance evaluation of the customer and for legal formalities. We also use these meetings to convey the joy and feel of our brand, to show something, and a conversation is a good moment to try to understand where else we can be useful.
OG: Please tell us about the process of opening a current account. How long does it take from the moment the customer submits an application to the time you send a card with a bottle of wine – I saw your pics on Facebook.
BD: Yes, yes. Sometimes it’s half a day if all the stars are aligned. Sometimes it takes longer on the customer’s side. We maintain a constant dialogue with them about the most convenient time, and often “Oh, I can’t do it today, tomorrow I’m on a business trip” means this time shifts slightly. Well, and then, finally the customer receives that bottle of wine.
OG: So, you work with clients in the cities where you have employees? Can clients in another city, where you don’t have a presence, open an account with you online?
BD: Well, we already have employees almost everywhere. Going by the Pareto principle, we have more or less covered the country.
OG: I also saw on Facebook that you can open an online deposit for your customers without any paper agreements. Is that true? Is there a completely online process for existing customers?
BD: Yes. But it has always been online since I can remember, and I have a short memory. The process wasn’t fully automated. The issue is that Russian legislation requires verification that the customer doesn’t have any outstanding taxes when opening each new account, which can lead to stupid situations where you’ve already opened a current account, and it works, but because you owe 16 kopecks, you’re technically and legally prevented from opening a deposit account – it sounds strange, but it’s true. It took us some time to automate this, so that we could instantly accept and process these applications without having to use chat, and without any time delay.
OG: I know that you travel a lot. Have you noticed any problems or challenges that are common to entrepreneurs in all or most countries, and others that are mainly faced by Russian entrepreneurs?
BD: Every country has its peculiarities. In Russia, the most painful thing is a lack of credit resources. Another key problem is everything related to regulation, permits, raids on businesses, when you opened a kiosk, and it was then demolished, things like that. And changes in legislative – the change of cash machines … well, such things, in addition to the usual business stress an entrepreneur has actually accepted, but then there are other things they didn’t know they were signing up for and those things are the most difficult.
OG: People are talking a lot about digital transformation in the banking sector. The challenges are clear: the transformation of banks’ IT infrastructure, ways of communicating with customers, and internal processes. How long do you think it will take for banks, here in the CIS and the Caucasus region, to reach the level of digitalization that exists in Europe or Asia?
BD: Well, a few thoughts. Firstly, I don’t think about this as on a digital level, or in terms of a pretty landing page or app. I think primarily about how processes will be transformed in terms of their effectiveness and customer orientation. Everything else, including IT systems, can be extremely flexible and modern, but they will still remain unfriendly in terms of approach and processes and this will give you nothing; the customer will not feel anything. Well, balances will be updated slightly more quickly, but in general, there is no fundamental difference. I think if you think this way, it’s a perspective that sometimes allows you to get results much faster with old systems. The second thing I really like is this story: a very large Russian bank, other Russian banks, agile or not agile, well, in general, it also considered it, they took a detailed look at the issue, held tenders, then decided, guys, we won’t implement agile, although it is impossible to implement agile—it’s a philosophy after all—but, in general, we won’t implement agile because agile implies an absence of instructions and documents, which, incidentally, is also not true, and this contradicts our instructions that we should have instructions for everything. Well, in my opinion, at least a fair position. But when people discuss issues in such a way, it seems to me they won’t succeed because in all this discussion the word “customer” is missing. It was about the Bank, about being agile, but not about why we should do it. I think the market is pushing bankers to implement these things. And I think in five years, everything will move. But there will be new challenges.
OG: When we were recording our podcast a month ago, you said that there were three things that inspired you: coffee, coffee in Istanbul and communication with Eduard Panteleev, your partner at “Tochka” and “Knopka.” What are you discussing now; what are your latest ideas? What are you thinking about now, what are your inspirations?
BD: I remember, but I don’t think coffee inspires me very much these days.
We talk regularly about opportunities for transformation. Everybody is talking about data now, but it isn’t the data that are so important, but how they are applied, that is, how the user’s life can improve from using that data and the insights it provides. We are thinking and talking about that now.
OG: Are you planning to bring “Tochka” to new markets?
“Tochka” is essentially a joint venture between the team of what was Bank24 and “Otkrytie” for Russia, but with a slightly different composition of participants. We already have one project, and I will tell you a little bit about it later, but it isn’t about bringing “Tochka” to new markets, it’s about creating a similar digital offer for entrepreneurs in another market.
OG: OK, we’ll be waiting
OG: I know that you are a yachtsman. I also saw pics on Facebook from your last sailing trip. Can you get something and if yes, what do you get out of such expeditions that you can transfer to business or apply to service models or maybe even improve customer experiences?
BD: When it comes to sailing, what comes to mind is that if a car breaks down and it doesn’t cause a serious accident, or happen during extreme conditions, then you pull over, hail another car for help and get towed to a place where there are spare parts, etc. On a yacht, when something breaks on the open sea, and this usually happens at the most inopportune moments, there is no easy way to get spare parts or make repairs. You have only what you bring with you. On the other hand, often what breaks shows signs of it beforehand, i.e. metal doesn’t break suddenly; first, it rusts, then it cracks, and only then does it break. First the engine knocks, and so on … or the smoke changes. And what captains are taught and what I, unfortunately, neglect and have to force myself to pay attention to is a regular checkup to search for the things that may break tomorrow, that will become a problem, if they are not addressed today. And paying attention to these trivial things, to what might be a problem tomorrow, as a rule, is unpleasant. But sailing accustoms a person to the idea that problems need to be nipped in the bud. One captain said this well, it’s like a bank, that you’re accumulating credit scores, stopping this and that and other things from gaining momentum, and so when a storm comes, and if you had zero credit or negative credit, you have a problem, but if you have accumulated a lot of scores, you’re lucky if the storm eats away what you have down to about zero or a small minus. I think this is a good, wise example.
OG: Boris, thank you very much for this conversation.
BD: Thank you! It was very nice and very cool, and thank you for not discussing numbers.