FD Arno Daehnke reveals the new future-ready Standard Bank

Arno explains that Standard Bank plans to turn its focus to the environment and new ecosystems.

As one of South Africa’s biggest banks, Standard Bank always has something exciting going on. Not even the Covid-19 lockdown could slow down the pace of change at the bank. In fact, FD Arno Daehnke says that it accelerated materially.

“The Standard Bank group has transformed at a much faster pace than ever before,” he says. “The most exciting project right now is Standard Bank’s future-ready transformation, where we are reimagining how the bank will function in the fourth industrial revolution.”

Standard Bank is currently on the fourth wave of this change programme and is set to complete this future-ready transformation programme in the first quarter of 2022. However, Arno adds that the actual transitioning to an ecosystem driver model will take years to be achieved.

In order to measure the success and progress of this future-ready transformation, Arno’s finance team has spent a lot of time on the Standard Bank true north metrics. Normally, a finance function works on revenue growth, profitability and ROE, but Arno has defined measures across the dimensions of the bank’s six value drivers:

  • Client-related metrics, such as client satisfaction and client base growth;
  • Employee related metrics, such as the amount of learning employees do, employee engagement and transformation;
  • Risk and conduct metrics, including how the group thinks about the risk of the group and measures conduct;
  • Operational excellence metrics, including data monetisation and migrating to the cloud;
  • Financial outcome metrics, which is a result of the first four metrics, including revenue and cost growth; and
  • Social, economic and environment metrics, including how Standard Bank ultimately delivers its purpose.

“Value is an equation,” Arno explains. “It’s client experience, plus employee engagement, plus doing the right business, plus operational excellence, and equals the financial outcome and the social, economical and environmental impact we have.”

In finance, Arno has realised that he is not just responsible for the financial outcome, but also to deliver value through these value drivers. Because of this, he now carries the title, chief finance and value management officer.

Environment versus economy
Standard Bank is also aiming to reach net-zero emissions by 2050. Part of this project includes rethinking the way the bank finances its power projects.

The amount of brown energy (oil and gas related) Standard Bank currently finances is less than five percent of its portfolio. “We are participating in the financing of the Mozambique gas fields, for example, which requires very difficult trade-off considerations,” Arno explains. “These gas fields transform the Mozambique opportunity and will uplift so many people who have previously struggled economically.”

Because of this, trade-off decisions have to be made on a case by case basis, he adds, depending on how the bank is going to continue to participate in the economic upliftment of the continent, while doing it in an as green as possible way.

“We all recognise that Africa contributes a tiny portion (3 percent) of the greenhouse gases globally, and yet we now need to think very carefully about how we finance it without damaging the economies,” Arno says. “If you don’t finance some of these activities, you could damage the economy by taking away power. It’s easier for Scandinavia to do that, because there’s enough power there and people are well-off, but less so in Africa, where many people can just afford the basics.”

Contributing to or orchestrating new ecosystems
Being a 160-year-old bank, Standard Bank’s business model has always been a linear one, where the bank owns the manufacturing of their solutions and the distribution thereof. However, part of the group’s intentions to reposition itself for the future includes working in an ecosystem of partners, suppliers and distributors instead. “Nowadays it’s not so much about owning the value chain, but working in an ecosystem,” Arno says. “Either you want to contribute towards that ecosystem or orchestrate it.”

He explains that Standard Bank has identified various ecosystems it plans to contribute to, for example:

“There are people in China who want to drink South African wine, and in the past we would say here is the yuan to rand exchange rate and we’ll give you a loan so you can buy the wine and sell it in China. Now the bank connects the local wine suppliers with the Chinese importers directly.”
Arno also refers to the millions of tiny stalls in African markets, which get products from wholesalers and sell them to their clients. “You can imagine the trader ecosystem around that. Take a stall that sells Coca-Cola: first is the supplier, which, because of our relationship with Coca-Cola Beverages, we can connect to the trader. We can also provide financing and insurance, and take the cash out of the store entirely.”

Another example is the home ecosystem. In the past, if your geyser broke and the house flooded, you would have to phone the bank and follow a lengthy, cumbersome claims process. The bank would then send an assessor and you would have to phone a plumber to fix it. Nowadays, people can take a picture with their phone and the bank automatically connects them with a plumber that same day. This ecosystem also includes interior decorators, renovation companies, gardening services, pool services, and more. Standard Bank now has a platform called LookSee where clients can understand the entire ecosystem of their home.

Adopting a growth mindset
Arno says that his finance team has adopted “The growth mindset” that Carol Dweck teaches. He explains that the first time he really saw this being entrenched at scale and in detail was three years ago, when he went to Seattle and spent a week at Microsoft’s campus. “I believe that the success of Microsoft is because they’ve adopted this mindset.”

As part of this mindset, the finance team has focused on how people can grow themselves with learning, new skills, adaptive and agile thinking, being creative, and problem solving, which Arno says has been tremendously successful. “We’ve had many people who’ve gone through personal growth journeys as a result of this project, especially around automation and technology,” he explains. “The growth mindset allows you to realise that you don’t have any limitations and that you can learn everything. You move away from a fixed mindset of knowing it all, to learning it all. And once you have changed your mindset, you can think about staying relevant in the fourth industrial revolution.”

The final component of “the growth mindset” is combining these hard skills with the soft skills you need to work together in teams.

Learning new hobbies
Arno also tries to learn new things outside of work. During the Covid-19 lockdown he tried to bake bread like many other people, but says that it wasn’t very successful. “I don’t have enough patience to bake.”

He also enjoys watersports and spent a lot of his free time during lockdown learning how to do wing foiling, which includes riding a hydrofoil board while harnessing the wind’s power via a handheld wing.