Embrace change, take risks, and disrupt yourself

Hosted by top 5 banking and fintech influencer, Jim Marous, Banking Transformed highlights the challenges facing the banking industry. Featuring some of the top minds in business, this podcast explores how financial institutions can prepare for the future of banking.

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How to Make ESG a Cornerstone of Your Bank’s Business Model

More than ever, consumers want to associate with companies that are committed to environmental, social, and governance issues. This includes where they do their banking.

But, while almost every financial institution is jumping on the bandwagon saying they are committed to doing what is good for society, how does a bank or credit unions differentiate from the noise in the marketplace?

We are fortunate to have Chris Skinner, one of the foremost influencers in the banking industry and author of the book, ‘Digital for Good’, on the Banking Transformed podcast. He discusses the value of having a higher purpose for financial institutions.

This episode of Banking Transformed is sponsored by mParticle.

mParticle believes that better decisions start with better data. Cleanse, visualize, and connect your customer data from any source or system to any API. Better data, better decisions, better outcomes. Visit mparticle.com for more.

Jim Marous:
Hello and welcome Banking Transformed. I'm your host, Jim Marous, owner and CEO of the Digital Banking Report, and co-publisher the financial brand. More than ever, consumers want to associate with companies that are committed to environmental, social, and governance issues. This includes where they do their banking, but while almost every financial institution is jumping on the bandwagon saying they're committed to doing what's right and good for society, how does a bank or credit union actually differentiate themselves with all the noise in the marketplace? We are so fortunate to have Chris Skinner, one of the foremost influencers in the banking industry and author of the book Digital for Good on the show. He discussed the value of having a higher purpose for finance institutions, and how that relates to what's going on digitally in the industry.

Jim Marous:
So walk through the show, Chris, you know you're one of the few guests we've had on Banking Transformed multiple times. In fact, if I'm not mistaken, you're one of the first to hit the three timers club. So we really appreciate you taking the time to join us again today. You're one of the most prolific writers I know, I've mentioned this before, I'll mention it again, but with your daily blogs and also being author with multiple books on the banking industry, before we start, could you talk a little bit about your most recent book, which is unique in that it really includes a compilation of several perspectives from leaders around the world and how banks can dedicate more time to not just merely making a profit, but making a positive impact on the world. And more importantly, it really gives a lot of insight into, the how to do it? What inspired you to do this book and do it this way?

Chris Skinner:
Thanks for having me back, Jim. And I'm glad you said the three timers club, and not the old timers club.

Jim Marous:
We're both members of that, but we don't need to bring that up every visit. Yeah.

Chris Skinner:
I guess the themes of what I write, are reflecting what I'm hearing on the conference circuit. And obviously there hasn't been much conference circuit for the last two years, but it was building up towards these ideas at the end of the last decade of what I would call stakeholder capitalism and purpose driven finance, which are two of the overriding themes in the book, and around purpose driven finance and stakeholder capitalism, another part of the backdrop came from when I visited with Ant Group who you know, Hangzhou, China, and they had a post on the wall of Jack Ma saying, "Do good for society and good for the planet." And it really resonated with me as a message. Now I've had that message rumbling away for 30 years because we've been talking climate change for a long time, but this isn't a book about climate change, I think people could mistake it for that.

Chris Skinner:
It's actually much more to do with the nature of how the financial system can make the returns to society and the planet to make a better planet and make a better world. And I thought, well, that's a great theme, but if Chris Skinner writes about that, it just sounds like me shouting. And I don't like to be a shouty person. So I purposefully in my purpose-driven way, went out, and reached out to many of the people I've known for some time now around the world, and got contributions from Asia, America, both North and South America, across Europe, across many of the African nations. I guess the only places I missed are Arctic and Antarctica. I couldn't find many people there.

Jim Marous:
It's interesting. I found it interesting that while there's the perspectives in your book, including your own focus on environmental, societal, and governance issues, the book is still a business book that focuses on leveraging data technology distribution, and reach to achieve better results. How do you think the pandemic moved this focus of doing good forward?

Chris Skinner:
Well, the pandemic, as many of us will realize made us all move to being truly digital. Certainly as consumers sitting at home, locked down, and as businesses, a lot of the old businesses on our cloud based which they weren't pre 2020, but they haven't necessarily changed their business model. But one of the things that was coming through is very clearly that with digital change and the use of the network, we can create a much more net zero structure, not network zero, but net zero emission structure, and that's what we've been exploring through the book, but it goes further than that. It's about how do you communicate these messages internally? How do you come up with a purpose that makes sense and make it breathable, livable, and alive? How do you change the organization's thinking to incorporate these views? And so now what I say is that for those companies that were dealing with digital transformation that really should have been done and dusted by now, what we're dealing with in the next decade is how can we use digital transformation to make the world a better place and give back to stakeholders?

Jim Marous:
Well, with that in mind, you and I have both been the banking industry forever and financial institutions have dealt with some of these issues on the periphery at best. What is changing in the way financial institutions are embracing, being more purpose driven and more specifically, what does purpose driven even mean?

Chris Skinner:
Well, I think there's three things happening. First of all, the message around ESG is clearly a priority for investors like pension funds, and that's the squeeze on a bank's executive team to say, "You have to change your ways to reflect our values as investors in your institutions and in the institutions that you invest in on behalf of us." Secondly, very active consumers, as you can see from people like Extinction Rebellion, and Greta Thunberg and the things that have been taking place over the last few years, from consumers getting fed up with the lack of action on dealing with the issues our planet faces. And then thirdly, the FinTech community in particular and the technology community, having far more youth vision around wanting things to change and incorporating purpose and values into their companies. So by way of example, there's two that come to mind from the book, I interviewed Tom Blomfield, who was co-founder of Monzo which is a UK challenger bank.

Chris Skinner:
And he was very clear that right from the start, their purpose was to make finance for everyone, that was their mantra. So therefore it included people who had historically being excluded like homeless people. And you think, how can you give a homeless person a bank account? Well, you get a guardian who has a fixed vote to be their guarantor, and then the homeless person can have a bank account. And equally Adrian Gore, who's the founder of Discovery Financial Group that came out of South Africa, but now is in a number of countries, started the group 25 years ago as an insurance company, really with the purpose of using wealth to make health. And an example of that is the vitality insurance product, where if you have a device on your wrist that monitors your activity on your heart rate, which could be an app on your phone or a Fitbit you link that to the insurance company.

Chris Skinner:
And as long as you show, you're doing the activities and your heart rate is running at the levels it should be, then your insurance premiums are reduced. So it's an incentive to get health through wealth. There's many others, and I think the issue for the traditional financial community is that they started out 300 years ago, 200 years ago with all of these purposes and values with their founders. Because if you think about, It's a Wonderful Life, that great Christmas movie with James Stewart, when the run on the bank occurs, to me, that's one of the most heartfelt moments in the film because Jimmy Stewart explaining, "Your house is actually, created and funded because of Mr. Jones here, Mr. Jones, your business is running because of Mr. Smith here." And it goes through the link between people and community.

Chris Skinner:
And we kind of lost all that. But as we moved into shareholder capitalism, the Milton Friedman economic movement, which a lot of people are now questioning because it was purely about... And people say, I make it too simplistic when I say this. So I am being simplistic, but Freeman's economics was, make profit any way you can, as long as it's legal. And I think we finally got to the stage now that we recognize that's not really a great way to deal with making the world a better place. That's just making profit for shareholders. We need to make profit for stakeholders.

Jim Marous:
So are you seeing organizations going beyond just talking to talk for great PR, which financial institutions have done forever, are financial institutions going beyond just writing a check and letting somebody else do the heavy lifting?

Chris Skinner:
Not yet. I actually had a chapter in a book about green washing, which is where from a PRM marketing viewpoint, you claim to be green, but you're not. And it included the major culprits, which are the big four American banks and HSBC and Barclays, and the editor and publisher said, "Probably don't need that bit, Chris." I mean, it is referenced, but a lot of what sustainability corporate social responsibility ESG has been in traditional financial firms to date is just pure PR and marketing. And there's a number of examples I can give, but there's one in particular BlackRock Investments where Larry Fink, as their leader sends out annual shareholder letter that talks about environmentalism a lot. But if you lift under the hood, a lot of what they invest in is in non-sustainable organizations and activities.

Chris Skinner:
The last time I looked at was 97% of their investments were and things that were unsustainable and detrimental to the planet, so that gives you the example. I'm sure he's trying to change the needle on that. So I'm not saying he's a liar. I'm just saying the issue is that as a leadership team, trying to get an organization of 100,000 or more people to turn around the ship, and at the same time, recognizing that you need to make a profit is of really difficult balance, and it's best summarized maybe by Ana Botin, who's the executive chair of Santander Group who was on Bloomberg a while ago. And I just remember her saying that they're very active in Poland, which is where I live.

Chris Skinner:
And Poland has massive pollution because it's completely dependent on coal products for energy and heat of houses and businesses. Now you can't turn that off because then Poland would implode it would disappear because homes wouldn't have businesses, wouldn't have energy, you'd have to work out the plan for transition. And that's what the bank's role should be, and that's what she was referencing saying, their role is to start working out, how can we get the organizations, the businesses, the governments to work together, to move towards renewable and net zero and use the leverage of finance to influence that process and to potentially accelerate it.

Jim Marous:
So what are some examples of organizations that you've seen that are doing unique efforts in the ESG space?

Chris Skinner:
There's a number. I mean, I always come back to in the financial space, I guess my favorite two are Ant Group in China, again, who big case study in digital human, for those who are interested mentioned in Bank 4.0, our friend Brett's book. And what they did is they had an employee and I think this was about 2017 who had this idea about, "Could we use the way in which people spend money to incentivize them to meet more green in their approach?" And so they started a game within the Alipay app, which is the payment system of China used by over 800 million people. And the idea was that if you, instead of getting petrol or a taxi use buses or bicycle to work or walk work, for example, then you get points. Because walking is obviously much greener than driving and what do points make? Prizes.

Chris Skinner:
And the prizes that when you get to a certain point, they plant a tree, which is based on a virtual tree that you see, but then they move to a live cam of your tree being planted in the deserts of China. And they planted millions and millions of trees. I mean, it's the biggest player game that exists, I think they have 600 million people playing this game now. And I don't know the current numbers, but they were talking about in a period of five years, reducing emissions in China by about 5% based on-

Jim Marous:
That's big, yeah.

Chris Skinner:
... the oxygen coming from the trees that are being planted. And the other is Ireland's Bank and which is a finish bank, not a finish bank, a bank in Finland to be clear. And they came up with a Baltic card, which was basically based on your behaviors, they would invest in making the Baltic see sustainable, and having natural fishing funded rather than massive net fishing and lots of other activities to be greener and having done that, they then took their idea and they offered it to other institutions and MasterCard picked it up and a number of others such that the last time again, I saw the numbers, there was over 100 million people using their white labeled card service to be greener in their activities.

Chris Skinner:
I think those are two great examples. And I think a lot of people don't realize how much financial systems at the heart of all this. The Paris Accord was 2015, late 2015, since then through 21, $4.6 trillion went from the biggest 60 banks in the world into unsustainable organizations, such as those in fossil fuels and fracking. Whereas you have these organizations like Ireland's Bank and it's a very small bank, suddenly giving 100 million people the ability to offset as is over 500 million people in China through Ant Group. So there's an interesting friction going on between unsustainable and sustainable.

Jim Marous:
Are there certain regions of the world that are demanding more of their businesses and banking communities and how are our financial institutions responding accordingly? Because from my understanding and my travels, when I was doing more travels, it seems that Europe has a greater focus on sustainability in the whole ESG environment thing. Then the US does for instance, are there areas that you've seen in the world that really are focused more on this and are demanding more?

Chris Skinner:
It varies by countries and regions, which probably doesn't by states in America. So for example, Northern Europe is very environmentally conscious about how people are using or abusing the planet, particularly from the Netherlands upwards through the Nordic region. And I also see in the African nations and South American countries, something quite interesting starting to happen because they're launching financial technology services to people who never had access to them before. And in doing so innovating ideas around how can you use that to equally make society and the planet better? And it's much more difficult to do if you've got a very traditional structure and I've often said, I think I said it to you, maybe in the last couple of chats we've had that when you have a organization that's been deploying technology for 50 years on a 300 year old business model, it so embedded, it's very difficult to change it. And that's the reason why Asia, Africa, South America, are much more dynamic in maybe thinking about these things than Europe and America.

Jim Marous:
In that whole context that you just made, the title of your book is Digital for Good. How does digital transformation in the banking industry positively impact the opportunity that finance institutions have to be more purpose driven? Does digital serve as a more of a turbo engine to make the impact greater and faster?

Chris Skinner:
Absolutely. I mean, if you think about one of the things I was saying earlier about digital transformation is now should have been done because we've moved on into, how can we use digital transformation to provide better products and services that are addressing stakeholders needs rather than just the shareholder's needs, that can be done very easily. When you have a organization that's lean dynamic using cloud based services in a microfinance architecture, microservices architecture. And so, one of the things I saw when I was talking to a lot of these big banks who've been doing digital transformation for a while, is that they've moved into a 30,000, 100,000 person organization into a 3,000 to 10,000 teams organization. And the team based structures have empowerment to own areas and come up with ideas, just like the one guy in Ant Group who came up with the idea of Ant forest, this massive game, that's used to cross China now.

Chris Skinner:
And, and I think that's where, if you haven't done that change, the challenge will be in the next decade because we got a lot of banks that were forced to move to cloud because of the pandemic, but they just moved their existing business model and services and people onto the cloud, they didn't change the thinking and infrastructure. Yeah. And that's still there for demanding digital transformation. And yet the FinTech world is doing that transformation, has done it because they started born on the network and they are moving on to stakeholder and purpose. In fact, many of them were already there at the start because their founders were in their 20s and 30s, and one of the shocking things I saw the other day, I don't know if you saw this Jim?

Chris Skinner:
But there was a report from my friend's CFT who were hosting my book launch in London next month, and their FinTech report had this one chart, which showed in 2010, the value of the complete FinTech system was 3% of the value of the complete financial system of all the banks, in 2021 it's 38%. A lot of people say, "Oh this is neobanks challenges. We don't need to take these guys seriously. Hey, in 10 years it's taken a third of the marketplace in terms of value and they're growing fast and these are the guys with the great ideas that in the traditional organizations, you need to internalize them and you should have done it by now, already in digital transformation. Now start looking at their wider thinking and values, which is what this book reflects.

Jim Marous:
So are you starting to see that the investor public and the consumer public are starting to respond to those organizations that are taking the higher road and becoming more consumer facing and taking a good stand on ESG issues? Because we talk about it a lot and yet there's no pain. I mean the reality is financial institutions are still making a ton of money and we even get pushback. I mean Jamie Diamond had pushback when he said he wanted to invest more in research and development. Are you seeing that both the investor public and the consumer public are starting to make decisions based on the policies of financial institutions?

Chris Skinner:
Not yet. And I think that's a big issue. It's bubbling away, and I mentioned activists investors, activist consumers, but even with, so for example, Extinction Rebellion who wrote a chapter in the book, talk a lot about Barclay's Bank and HSBC and their involvement in fracking and fossil fuel firms. And they actually broke windows at the bank's head offices, outside their AGM. It's not illegal to break a window at a bank as it turns out, I thought it was. And they compare what they're doing today because it seems extreme and it causes a lot of headlines to what was happening 100 years ago when the Suffragette movement was trying to get the vote for woman in Britain, which is you have to have active protest otherwise no one takes notice, but active protest doesn't mean you harming people.

Chris Skinner:
It means you're making people sit up and go, "Oh." So I think, everyone is sitting up and going, "Oh." But then do take your bank account away from HSBC and Barclays? And that second thing isn't happening yet. But what I do see is people being drawn to the FinTech challenger banks, but they're using it for day to day living lifestyle because it's much more informed and using big old boring bank for big old, boring products like mortgages and loans. And one of the clear signs of that, it's a personal sign, is that when I use the New banks, I get everything given to me in my phone in real time. So I don't have to go into the app to find anything out.

Chris Skinner:
Whereas when I use big old, boring bank, I have to go into the app to find out the balance and to see if anyone's paid money in or any money's gone out. So the big old, boring bank thinks I'm one of their biggest digital users because I go in maybe every day, but I never go into my new bank because I don't need to. And that's where you starts seeing big differences and that's what's going to attract people. They'll move gradually towards day to day lifestyle banking with the new banks and then dusty their values and their virtues and move to living their whole life in those new banks and eventually moving away.

Jim Marous:
Well, it's interesting, Chris because I think you've hit a nail in the head that there could be a lot of consumers that are already making decisions to move to those organizations that are really focused on ESG issues. The thing is that the problem is that the bigger financial institutions don't track that, they look at attrition and consumers even when they get an uproar may not close their accounts, but they will not open anymore, and they're moving their daily banking elsewhere, as you said, 38% value proposition and some research that was done by Ron Shevlin found the same thing that the opening and the using of neobanks is escalating exponentially. But traditional finance institutions may not realize that they're losing business and losing relationships while they may not be losing accounts. So Chris, we were talking before the break about the impact that neobanks are having on the industry, in that some of this may be a reflection of what's going on in the ESG space. Are there any neobanks out there that impress you in what they're doing in the whole ESG arena?

Chris Skinner:
Absolutely. There's a number, but one that Springs to mind, because I just came back from Brazil is New Bank. And I was doing quite a bit of research around the Brazilian FinTech scene, which is huge. It's a really vibrant scene as it is in Mexico and other parts of South America, but we're seeing again, lots of unicorns arising and that there's three or four unicorns coming out of in African nations, and I don't know the number from South America, but again, it's four or five that I've definitely seen recently, but New Bank stands out because it did their IPO at the end of last year, $50 billion value for the company, and it's probably, maybe even more than that now, 45 million customers across a number of countries, I think they're in five countries now across South America.

Chris Skinner:
And the one thing that really stood out for me in when I was researching it is I found a really fascinating article, which I can reference and give you afterwards. But it was a case study talking about how they started. And when they started, and I knew this because I was in Brazil in 2015 at the FEBA Bank conference, which is a big banking conference. And they wouldn't allow peer to pre lending in the country, the government and the banking providers seem to work very much hand in hand to protect any new entrance, getting into the market. And what New Bank did is they started with the weak underbelly of banking, which was credit cards. And typically you would have to pay $20 a month to have a credit card at that time in Brazil and the fees will be high. And so that's what they attacked with their simple FinTech offer because they didn't need to have a banking license for that.

Chris Skinner:
So they could get into market and they offered, I think their fee was $5. I can't remember if it was $5 a year or $5 a month, but it was far lower than the banks and equally interest rates much lower. And what was quoted by the CFO of New Bank is at the time, if the banks were Dar Vader, credit cards were the death star and that's where they attacked and sank their bomb. And when the government saw and going back to 2015, Brazilian government was not interested in FinTech's new entrance, but when they saw this and the takeoff and how quickly it was moving and shaping, they gave them a banking license in 2017 and their license has given them not just the license to provide competition against traditional Brazilian banks, but equally inclusion for so many people who never had access to finance or credit cards before.

Chris Skinner:
And I think there's a big point there around, when we're talking about purpose, ESG, better society, better planet that it's all of these aspects in the round. It's not just, I invited one guy to write a chapter for the book and he said, "I can't endorse your book or write a chapter because I don't believe there's a climate emergency." And I said, "But my book's not about a climate emergencies. It's about in the round." And it's looking at everything from ESG to CSR to purpose to the way in which financial inclusion and literacy is being driven by technologies. How can technology and finance work together to make a better society and a better planet?

Jim Marous:
Yeah, it's interesting if New Banks a great example, their growth is exponential and it's also in a region where the people didn't trust banks, and now they're making a foothold because they're actually doing things for basically the entire consumer base, very much like brought up the Chinese banks, but it's another great example of using digital to be able to serve a complete customer consumer audience rather than just the most wealthy. You had a lot of contribution to your book, Chris and a lot of really interesting stories. Were there one or two that stood out from the standpoint of just being unique perspectives or something that you said, "Boy, they really came at it from a different angle than I expected."

Chris Skinner:
Yeah. I mean, I've mentioned a few already in terms of the interviews with Discovery Group and with Monzo, and in interesting perspectives from small through to big. So but banks like Rabobank in the Netherlands or Teachers Mutual in Australia. And I think generally what surprised me is everybody had a different nuanced view around where they were coming from, so one example was I got a friend going back to Brazil, Google stocker, and Google, it actually launched a neobank in Brazil a number of years ago called Banco Original. And where he came from is when the whole of the financial system is running as algorithms. Now, I'm not sure that's a good thing, but it was an interesting angle in terms of what happens when the financial system is replaced by algorithms and smart contracts?

Chris Skinner:
And we've just seen, for example, the implosion of the terror cryptocurrency, which does run on algorithms and smart contracts because things can get messed up, in a similar way, flash trading, for example, and flash crashes are caused by algorithms that go wrong. So I'm a little bit wary about the whole financial system running on algorithms, but very interesting chapter. In fact, originally when I started this book, I got a friend saying that he wanted to write a book with me and you'll know this guy, Anthony Thompson? So Anthony's co-founder of Metro Bank and Atom Bank in the UK, and then 86 400 in Australia. And then unfortunately he got a bit of illness, so we put it on the side, but we'd already written a few chapters. So his chapters are in there and what's nice with his thinking is, and in particular, this is in one of the early chapters in the book that he was asking the question, what is the problem with banking today? And how can we fix it?

Chris Skinner:
And he's obviously got a very clear view because he's done it three times of what we can do to fix it. So I really enjoyed that partnership with him. I mean, I could talk about so many, I guess the final one I'll mention is that Gottfried Leibbrandt who's the former chief executive of SWIFT is another person in my network that I respect. So I invited him and he co wrote the chapter with a colleague of his called Natasha de Teran about how payments and the digitalization of the payment system can deliver good for society and good for the planets. And that's a very specific niche perspective, but a very good one.

Jim Marous:
It's interesting. One of the things we take for granted, especially within the legacy financial institution marketplace, is that they all have very large consumer bases, customer bases that could be impacted by the financial institutions say frequent. In other words, if a financial institution really focused on doing good, they could rally their customers to help them do that as well. Do you think that we'll see a multiplier effect in the marketplace or institutions will say, "We want all of our customers to participate in this." So as to really give themselves, they can put some springboard money together and efforts together, but really can multiply that by using their customer base?

Chris Skinner:
Yeah. I mean, let's put this in context because the large banks are not all dumb and stupid and that's something I've said we've got quite a while. And so one of the books that I've written, I think that's the last one we spoke about was doing digital, where I interviewed all these big banks around how they're actually doing digital transformation? And when you have an organization of 100,000 or 200,000 or 300,000 people, I think JP Morman chase is currently about 256,000 people. You can't change that overnight. And again, you've got to turn it around slowly, but I'm going to pick on the example of Royal Bank of Scotland, RBS. The reason being is that when Fred Goodwin was chief executive, everyone admired them. In fact, they won one of the most admired banks in the world and in 2007 did a deal, which was very high cost to acquire ABN AMRO.

Chris Skinner:
And then the financial crisis hit and they imploded and they had to be taken over by the government, and they'd been in government ever since. And then during the 2010s and this was true actually of most banks around the world, particularly Anglo Saxon banks, lots of skeletons in the closet came out around how they've mistreated customers, and particularly in the [inaudible 00:33:55] case, mistreated small businesses. So they would pull the rug on the small business loans for individual organizations that they felt were weak, then say, "We're now going to take over your business at a 10th of the cost of the value of the business." And then they would sell it on at 200% of the cost. And it was great way of making a quick buck that all came out in the wash, it's disgusting. It's a little bit like some of the Australian banks were charging premiums for advice that they were giving to people who died years ago, it was just taking money for without reason.

Chris Skinner:
And the head of the regulator in Britain in 2009 made this comment, which is a lot of what banking does is socially useless, and they've lost their moral compass. And that all came out in the 2010s and using this in states with false account openings and other things that have happened. But this was the shareholder capitalism mission of making profit at any level, as long as it's legal, that all came out in the wash in the last decade, and where we're at now is RBS is being run by Allison Cox, you've got City Group run by a lady, you've got a number of banks getting far more diversity, far more, maybe of a moral compass and a view around they need to be socially useful, and so I think that's actually a reflection of another reason why this book's been developing in my own mind that for the last 15 years, we've had this complete discussed version to the way in which banks have been run, and now, particularly, if we run them more like a family with far more diversity at the leadership level, that will change.

Jim Marous:
So I'm going to put you into a position here and say, okay, so you've just been assigned to be president of a major bank in Europe. And while many organizations around you are still testing the waters around ESG issues, purpose driven issues, all these, you're in charge, and you're going to start making a difference. Where would you start? Where should organizations start to make a difference so that they can build from a good foundation?

Chris Skinner:
So a number of questions in there. I mean, if I was walking in my first questions would be obviously around, have we actually done digital transformation, or do we just put lipstick on the pig? My test for that is the executive team able to tell me the difference between machine learning and artificial intelligence? For example, are they able to tell me the difference between blockchain and distributed ledger technology? And you may say, "Why should an executive on a C-suite in a bank need to understand those nuances?" And I'd say, "They don't need to give me technical detail, I just want to see if they understand the concepts because if our bank is going to be running on AI and distributed ledger technology, and you don't understand what those concepts mean, then you shouldn't be in the leadership team."

Chris Skinner:
And that's what digital bank's all about is having people on a leadership who can understand digital transformation, and what that actually means. And then if the house is in order digitally, and for me, that means the data is being cleansed consolidated, and it's being moved to the cloud, and digital is at the core and heart of the organization, and the business model is built with, how do we apply our physicality on top of the digital foundation rather than the other way around? Then I'd start getting into the ESG discussion and the values and what is it we want to project to our people and to our customers? And what's important in this institution as purpose? I probably would say that that needs to be very inclusive of people and customers, it's not just an executive soul searching, it really would need to have, what's important to not just our customers, but to the children of our customers, or to the Gen Z or Gen Z if you prefer, what's important to the next generations in particular about how we behave and the values we project?

Jim Marous:
Finally, you have a section of your book called The View from 2030. What is that view?

Chris Skinner:
Various pieces, but I guess the key one is that we'll be looking back and wondering how we allowed in the 20th century, the behaviors of corporations that we did, 71% of all greenhouse gas emissions are produced by just 100 companies. And we'll wonder how we allowed those 100 companies to do that? And we'll be looking back and saying how the impact of activist investors, activist consumers, the new technology startup community that pressured the financial system for change made that change happen, and I don't think we'll be net zero by 2030, but I think the financial system will play a core part of getting us to net zero before 2050.

Jim Marous:
Well, it's interesting, if they don't invest in the firms that aren't doing the right thing, eventually firms are going to realize they've got to do the right thing. The ripple effect again is enormous. So, Chris, I'm going to get a little off topic here. We talked at the beginning of the discussion that you're a very prolific writer, but it's not all about banking anymore. You have another set of books that have come out that really are a complete departure from your focus on financial service. Can you describe a little bit about your other set of books?

Chris Skinner:
Thanks, Jim. Basically, all of us were locked down for two years, so suddenly, I was at home with two, four-year olds scrambling around, I've got twin little boys, and so every night I'd read them stories, and I eventually got bored with the stories I was reading them, I think they got bored with me reading them too. So I decided to just make one up one night, and it developed into an idea that then developed into something I presented to my publishers as an idea. And now they contracted me to produce five books about Captain Cake and the Candy Crew. And Captain Cake is obviously the leader of the Sweet Candy spaceship, Lieutenant Chocolate.

Jim Marous:
Obviously.

Chris Skinner:
Yeah, Lieutenant Chocolate, Sergeant Jelly and Private Potato, our RS team. And the whole idea is that for children between three and eight years old, it helps them read, but equally helps them learn about some friendship, diversity, loyalty, and different characteristics that each of the characters have around bravery and leadership.

Jim Marous:
You know, it is interesting Chris because we all talked about transforming ourselves in different ways, and we've had conversations over drinks, over meals in the past about how we've changed our dynamics on how we do things and what we look at. I would imagine this new book series's a nice departure that just gives you some comfort, especially being able to read this to your sons and to develop them around what you want your learnings and your legacy to be. So it's got to be fulfilling to say, you know what? It's not all about banking.

Chris Skinner:
Yeah. And the really weird thing is that when you spend a lot of time with children, you actually learn quite a lot yourself. So book number four is the Candy Crew fighting the Rotten Tomatoes through space. And they moved through all the planets in our solar system. And I would never have been able to tell you what older our planets were in before I was taught with these my boys, because I did that when I was 10 years old, which is a long time ago. Yeah.

Jim Marous:
It's great. I would imagine that all your books, both the banking books and the new Captain Cake books are all available in the normal Amazon, and all the major distributors. Chris, really appreciate you being on the show again and again, as in the US, we have Saturday night live where they have a five timers bubble, you're more than halfway there, and I appreciate you being on the show again.

Chris Skinner:
And I really appreciate you having me back Jim, and it's looking great to see you because you look a little bit slimmer and leaner than last time I saw you.

Jim Marous:
A little bit and not done yet, the good news is it keeps on looking in the future and saying, "You know what? If you finish the process, then you don't know where to go." Well, I'm well in the journey, but certainly not done. Thanks a lot, Chris.

Chris Skinner:
Take care now.

Jim Marous:
Thanks for listening to Banking Transformed, we're just a top podcast in the banking industry. I genuinely appreciate the support you've provided since we started this endeavor. If you enjoy what we're doing, please show some love in the form of a review on your favorite podcast app. In addition, be sure to catch the articles I'm written for the financial brand, and check out the research we're doing for digital bank report. This been a production of Evergreen Podcast, a special thank you to our producer, Leah Longbrake, audio engineer, Sean Rule Hoffman, and video producer Will Pritts. I'm your host, Jim Marous, until next time. Remember, doing good for those around you, it's the most important decision you'll ever make.

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