EXCLUSIVE: ‘All for one, one for all!’ – Sohail Raja, Societe Generale ‘The Fintech Magazine’
Societe Generale’s open approach to innovation redefines what a ‘core banking system’ is, says its Head of Execution Platforms Sohail Raja
It’s easy to generalise about digitisation and incumbent banks. Their technology spines bowed by legacy and their attitudes shaped by a culture that belongs to an analogue age, they were slow to adapt, which opened the doors for fintechs to steal their lunch.
At least that’s the received wisdom. But these venerable Leviathans aren’t ready to be put out to pasture just yet.
Societe Generale, for one, began taking an inventory across all its complex business divisions about five years ago, to see how innovative it could be in making the digital max of what assets it already had. And what it hadn’t, it now creates from in-house development, through partnerships, investment in start-ups and buying in services – or, indeed, the companies that provide them, as it did with banking-as-a-service Treezor in 2018. This is one grande dame of French banking – a member of the industry’s respected ‘trois vieilles’ – whose best years are definitely ahead of her, according to head of execution platforms, Sohail Raja.
“We aim to be very smart in our approach. We examine our resources, our budget, our skillsets, what the client wants, the use cases that result, and ask ‘is it deliverable?’,” he says. “Given our size and history, we have a lot of assets internally, so we think about reusability and repurposing. Moving away from silos is vital. What has one department done that can be reused by others to avoid needlessly starting again from scratch?”
A good example of how it answered that last question was making the bank’s internal platform for uploading customers’ documents to a central server available to corporate clients, including payments companies and other fintech providers, in 2019.
“For that type of thing to happen, we must have an internal ecosystem culture where staff share great ideas and share news about solutions to problems,” says Raja. “It needs to be documented well, so there’s the potential for extending it to other uses. You can’t just have a technology solution without the ways of thinking adapting, too.”
While no one expected the bank’s Transform To Grow strategy – which has been in place since 2017 – to change the organisation overnight, it has allowed the bank to ‘refocus what we do in-house to make something happen’, says Raja. “If we look at fintechs in the B2C space, the way they deliver and offer solutions to clients is very fast. But that capability is available not just to fintechs or challenger banks, it’s also available to incumbents. By focussing on use cases, rather than just thinking about three- or four-year timelines for programmes of work, we too can make things happen quickly.
“It’s about getting that balance right, between the use of technology and understanding that we are in a culture and environment that’s been around for more than 150 years.”
Founded in 1864, SocGen has 30 million clients, 133,000 staff and operates in 61 countries. It is majorly focussed on corporate and investment banking, but also runs a retail banking division in France and an international banking and financial services business. A step change in its core banking approach came with the introduction of SG Markets, a single platform to which it is currently migrating all customer access to its wholesale banking services.
SG Markets gives both clients and staff one user-friendly platform over which they can manage the myriad of services that lie beneath – a one-stop shop for everything from cash management, financing and security services, to global markets and private banking. Given its huge span, the platform is constantly evolving, but its cornerstones are Cloud computing, systems linked by application programming interfaces (APIs), and use of opensource solutions. Ultimately, the platform will run across all SocGen’s geographies and banking businesses, taking into account regulations in each country, so clients everywhere receive a similar experience.
The programme does not mean ripping out legacy systems, but rather adapting existing tech that can still fulfil a role, and networking it with new or externally-provided systems beneath the SG Markets interface. The end game is to render transactions, such as payments and simple investments, almost invisible, leaving SocGen staff and the bank’s clients to focus on giving and receiving added-value advice and complex services. Having both the bank’s clients and staff use the same system vastly improves efficiency and customer service, says Raja.
“What we wanted to ensure was when the client interaction is ongoing – whether that be sales, support or operations – whoever the touchpoint is within the organisation sees the same information that the client sees. It’s important that whatever we offer to clients is also made available to our employees to make the relationship more effective.”
THE NEW ‘CORE’
When it comes to product and systems development – be it customer-facing or middle and back office – the bank takes a pragmatic approach, assessing what can be delivered in-house, and what is better provided by a third party. That confluence of intrapreneurship and external partnership is redefining what a core banking system is – and not just at SocGen, says Raja.
“I think the language around core systems is changing; around what’s the right solution for the problem we need to solve, and what the use case is,” he says. “It may be that a fintech provider is offering a Cloud solution related to regulation, for example, meeting rules from a regulator that affects the whole industry. And if it’s something that can be used by other banks as well, why not?
“We have our own API integration with fintech partners if that solves a challenge we are facing, but we’re not just inward looking. We use opensource toolkits and frameworks. It’s important to be plugged into an ecosystem of some description, and then being smart around those partnerships and investments.”
When it comes to adopting Cloud-based solutions, Raja says the first driver is often cost, since it can be cheaper initially, while offering the flexibility to scale. And, since Cloud computing is a cross-sector phenomenon, it also presents opportunities to collaborate and integrate systems with partner firms and clients.
He says: “Clients are also moving towards Cloud. They also approach it from a cost-reduction perspective, and because it makes sense as regards their own digital transformation challenges. In addition it allows them to integrate, to interact with other providers and data sources, in particular. So, having that available in the Cloud, and then delivering via an API, or through another mechanism, to a client, is something that we’re seeing a lot more. “Using that Cloud infrastructure enables and accelerates collaboration and co-creation of ideas and product solutions. Partnership is easier with such a framework. It helps with the interaction of data, analytics, developing pricing, developing ideas. With SG Markets, for example, we can cater for clients who simply want to take services from us, and also those with more sophisticated needs who may want to take data and price ideas from other providers, and then build their own models. Either way, we can support them, and the Cloud has enabled us to do that.”
SocGen’s digitisation programme and collaborative approach also serve to empower the bank’s subsidiaries, such as the French challenger bank Shine, which provides services aimed at freelancers and small companies, online retail bank Boursorama, and blockchain services provider Forge. SocGen is a member of trade finance consortia We.trade and Komgo Alliance, which both run on blockchain rails. And in 2019, it launched Societe Generale Ventures, a €200million start-up investment fund for e-commerce, e-payments, open banking and SME services.
Meanwhile, its Open Innovation platform connects more than 30 of the group’s innovation leaders with start-ups in those same areas, as well as credit, global markets, real estate, insurtech, cybersecurity and regtech, blockchain and cryptology. It was a founding member of Le Swave in Paris, a co-working space devoted to the incubation of fintech and insurtech start-ups.
Collaboration works both ways. For example, ownership of Treezor allows SocGen to share the platform’s API expertise, while the bank guides Treezor in matters of global compliance. Indeed, Treezor chief executive Eric Lassus has said: “Our relationship with the bank goes beyond what Societe Generale can do for us – we also ask ourselves what we can do for Societe Generale.” The bank is already building services and products based on Treezor tech.
The progress SocGen had already made with digitisation put it in a strong position when COVID-19 struck in 2020, allowing the bank to quickly switch to remote working in business areas where data was less sensitive and regulation allowed.
“We were better placed because we already had our SG Markets platform up and running,” says Raja. “We had started that process to be more transparent [with data]. It’s not been achieved yet across the whole organisation but the last year has got everyone really focused on this now.”