Orcel CEO UniCredit: mission, purpose, principles

Leadership styles are very different; they must fit the situation and the role. But there is one general principle: "don't ask others to do what you don't want to do." This is one of the important messages that emerged from the Leader Series by Andrea Orcel, CEO of UniCredit Group, who met with the participants of EMF - Executive Master in Finance, led by Andrea Beltratti, EMF Academic Director and Alessia Bezzecchi, EMF Program Director as part of the EMF Leader Series.

Professional background: "As a tradition, we ask for a presentation from you that focuses more on personal aspects and that can allow us to get to know the leader beyond the CV," Beltratti begins. "I come from an international family, and I had the opportunity to study in schools with very different approaches: the French school, which was very quantitative and Cartesian, for a limited number of students. On the other hand the Italian University was for very large numbers. I fondly remember my undergraduate advisor, Federico Caffè at the University of Rome. Overall, these experiences, going through an MBA at INSEAD, taught me to combine/unite quantitative approach with creativity." From the outset, Dr. Orcel's inclination to turn challenges into opportunities, a constant feature throughout his professional career, is evident.

The Italian banking system: "how do you see the Italian banking system?" The answer may come as a surprise only to those who do not know Italian banks from the inside. "The Italian banking system is one of the strongest in Europe, but it could become even stronger as part of a consolidation process." "Consolidation is also long overdue in Europe, but the achievements so far have fallen short of expectations. How so? I couldn't imagine a better person to ask, not least given the background of knowledge and experience accumulated through years of working at major international investment banks," the moderator continues. "M&A deals are more difficult in Europe than in England or the United States because of various factors, including cultural and regulatory differences. In addition, the acquisition of a large domestic bank by a bank from another country often raises political concerns and fears about weakening the country's system given the banking system's relevance for corporate financing and investment in government debt securities."

The UniCredit case: "Banks' business models can also be distinguished from the point of view of international diversification, and Unicredit's case is particularly interesting: the Group operates in thirteen countries, and this might seem to be a point of weakness when one takes into account the need to interact through different legal entities and regulatory systems, even though they are coordinated by a single Central Bank. The resulting regulatory framework does not leave much room for optimization in capital and liquidity management because each country's bank must keep its resources separate, without being able to create a pool centrally that can help individual entities manage risks and take advantage of opportunities. But this situation puts UniCredit at a competitive advantage that few other banks have: we can make acquisitions more easily in all the countries where we have a presence, and we can also better serve corporations for their trade finance needs and simultaneously allow them access to #13 Different Countries as efficiently as possible."

ESG and sustainability: "The challenges posed by environmental, social, and governance considerations have been addressed on the basis of principles rather than pragmatism. It is good to set challenging, long-term goals, but before signing agreements, it is vital to be certain that the goals set can be achieved. The recent period, marked by pandemic and war, has helped to bring back some useful pragmatism, as we have realized that to heat our homes and go to work, it is necessary to use energy sources, such as coal, which are unfortunately more pollutant than other solutions that alone are not enough to meet the huge demand for energy. Local peculiarities must also be taken into account: eliminating the financing of certain activities in some countries can create a great deal of immediate economic damage and in essence extend the transition time, rather than reduce it. Unfortunately, in this case the many European national and international regulations don't correspond with each other and sometimes give conflicting directions."

Diversity & Inclusion: "What do you think about Diversity, which in the Group you lead has a very obvious relevance even from the outside?" "Diversity is fundamental, and it should not be reduced to gender difference. From scientific studies, we know that it is diversity in perspective of various dimensions that helps to achieve the best results. Of course, even in the social field, no meal is free: Diversity can be exhausting to manage, although, at least in the company, a cohesive culture is of paramount importance. At UniCredit, precisely because of the already mentioned international diversity, we find ourselves managing groups composed of people from nations that only a few years ago were at war with each other. But these people, admirably, and also thanks to UniCredit's values and culture, can work together and develop relationships." "The idea that the company can be the place where certain social norms and a cross-culture manage to break down walls instead of raising them is fascinating, and it is an extraordinary message for all of us coming from this Leader Series," echoes the moderator.

Technology: "Does technology affect banking's business model?" "Banks have a great strength and a large area for improvement in this respect. The strength lies in the amount of data available: banks can look at the data that record people's behavior and use this evidence to design products and services that can improve customers' quality of life. The improvement? It relates to legacy due to the continuous external growth processes of many stakeholders. When two banks integrate, they very rarely decide that one information system is better than the other and proceed to full and immediate integration. Instead, they try to connect the systems, making sure that they can work together while being two separate entities. Therefore, reunification investments are necessary, but these must be properly evaluated and implemented. From the point of view of operations, who could even be taking advantage of the new possibilities conferred by the cloud, it is important to first rationalize and only then digitize processes, at the same time changing all the processes, which is why regulators need to be involved. As for evaluation, we cannot rely on inputs, i.e., the amount of spending decided, but we need to look in detail at how available resources are spent. But management is also crucial: people of my generation are not as good as young people, who learn all the possibilities offered by technology from an early age."

Leadership in finance: "What is leadership?" "There is no single leadership style, although a key task of the leader is to understand the challenges and opportunities so as to determine the goals (the vision), how they are achieved (the strategy), and how key performance indicators are determined (the business model). This must all be viewed in the context of a career path where the skill set changes over time. As one's responsibilities grow, the problem is no longer managing oneself, but managing relationships with others, in the context of situations where one is more rarely the leading expert on a certain problem and other people have better information and knowledge. In addition, leadership must be enacted in the context of an open and frank dialogue that encourages differences of opinion. When you think differently, it is essential to dialogue: if your idea was wrong there is time to learn and change your ideas and decisions, if it was right there is still a way to improve your choices."

Advice for EMF Participants: the Leader Series closes with the customary question, which while very general has a fairly precise answer in this case: "Remember that professional careers can only be predetermined up to a point. Accidents and disappointments happen, and they must be used as opportunities to get creative and improve. Also, one should not be in a hurry to get ahead, and a straight line is not always the best one to follow between two points. At the same time, one must signal their desire to grow and their willingness to step out of their comfort zone to the company. As Magic Johnson used to say, every training is a step. My wish to the future leaders of EMF Finance is that they enjoy the journey."