Banca Generali's numbers speak for themselves. Funding that is heading towards a new record in 2017, +20,5% on the Stock Exchange in the last six months with a capitalization of around 3,3 billion euro. A young and dynamic governance that has managed to make digitization and quality the trademark of the Banca del Leone.
Last April he joined the Banca Generali team in the role of Chief Financial Officer & Strategy also Tommaso Di Russo, a 52-year-old manager with extensive experience in the financial sector, coming from Poste Vita and previously employed in Banca Fideuram together with Gian Maria Mossa, the new CEO of Banca Generali.
In this interview, Di Russo explains to FIRSTonline the bank's future strategies and objectives, underlining how the challenge represented by the entry into force of the Mifid II directive in 2018 is not only not scary, but has become a real business opportunity that the institute has no intention of letting slip, focusing on digitization, quality and the development of a proprietary platform capable of responding to the needs of families.
Doctor di Russo, in recent months Banca Generali celebrated its first 10 years on the Stock Exchange with a total return of 300% which symbolizes its success: now where do you want to go and what are the next goals?
The market has been following the evolution of our business with great attention for some time. The trend since listing has been supported by strong growth, unmatched in the industry, and we are proud of the results achieved. The masses have increased by 141% in the last 10 years against a +74% in the sector. In the last 4 years assets have practically doubled from 26 to 52 billion which is the preliminary figure at the end of the second quarter.
I reached out to the managing director, Gian Maria Mossa, with whom we had worked together at Fideuram in the past, only a few months ago but the acceleration in funding in this first half year (+31% to 3,8 billion) has already led us to revise the estimates upwards for the entire year in a range between 5 and 5,5 billion. At this point, the long-term objectives see us with assets of over 70 billion by 2021, of which approximately 30% made up of our managed products (containers and new sicavs), double the current 10 billion.
Last Tuesday in London you celebrated Mifid Day to tell the financial community and the market that Banca Generali is ready to take up the challenge of the new rules of the game: what does it actually mean and how will it change for your business model?
The bank is already ready for the challenges of regulatory evolution. The meeting at the Investor day was very constructive in presenting clearly and exhaustively the effectiveness of a business model which already responds in detail to regulatory requirements. We have been working for years to be ready for this date.
The orientation towards cost transparency, quality for the client, best execution with dedicated platforms and tailor-made consultancy solutions, and openness to innovative "pricing" mechanisms such as the fee only on the administered portfolio, or the possibility of separating all advisory costs as an alternative model to the "fee on top" where you pay for the extra service requested, represent concrete actions that put us in pole position to seize new market opportunities. We have seen in Mifid II a business opportunity and not a pure and simple new regulation. In essence, the approach to wealth management that we are able to offer to families by providing solutions that were previously the prerogative of only institutional managers, combined with the push towards digital and the quality of our network, is the strategy for dealing with changes.
It seems to understand that Banca Generali's orientation is to focus more and more on private banking, ie on wealthy customers with assets of over 500 euros to invest: what are the characteristics of your service compared to the competition?
Private customers, with more than 500 thousand euros, account for over 60% of our masses, numerically we are talking about over 20 thousand customers, more than double compared to three years ago. The growth in this segment is exponential and we see a strong demand for advanced consultancy services.
Since his arrival in 2013, CEO Mossa has pressed the accelerator for the development of a proprietary platform capable of serving all the needs of households at the asset level, not only in the financial sector with the protection of multiple market risks, but also in real estate, corporate finance, and generational change. As a man of numbers, I can tell you that the work sown in recent years is attracting a lot of attention among high-end customers. We are growing by 100 million a month, in terms of assets under advanced advisory, and we aim for 5 billion assets under advanced advisory by 2019. So the strengths of our service lie precisely in this proprietary and distinctive offer. Let's not forget that we have a "modular" managed offer based on customer needs, built ad hoc also for private customers.
Banca Generali seems to focus a lot of energy on financial advice but there is no shortage of competition: why should the customer prefer your advice to independent advice?
Mifid clearly explains the value of non-independent consultancy which is equal in degree and value to independent consultancy from a regulatory point of view. Once of course you meet the requirements. And in terms of customer service, best execution, and the search for solutions tailored to needs, the bank is at the forefront of feedback and is therefore fully compliant.
The answer to your question is very simple: quality. As when looking for a specialist in certain areas, legal, medical, juridical, even in consultancy there are skills and tools that highlight an added value. It's not about immaterial concepts, but about knowing how to protect customers' savings. Banca Generali has focused its entire business on this, ensuring that its professionals have the best tools, technology, risk analysis, asset management, technology, possible on the market under the bank's hat.
The numbers reveal the strength of our reputation and are the best evidence of the quality we are able to provide. It is difficult to think that independent areas are able to correlate platforms like ours and services at different levels which in fact simplify and enhance family needs.
Growing digitization is another strong point of Banca Generali: will the day come when the robot will replace your advisors?
Technology is a strong growth driver and one of Banca Generali's paradigms. We have coined the terminology “robo for Advisory” which is very different from the mass market concept of the robo-advisor that is monopolizing Fintech discussions.
The algorithms for calculating investments have been around for several years but they do not reflect the contribution of consultancy other than the statistics of a diversification.
The advantages that Fintech offers today are much more than these, they concern the opportunities to merge technologies to build unique services that can give new value to the role of the consultant, which is central and nodal in this sector. The ability to understand the needs of families is not resolved in trading, but affects many other aspects.
In the field of asset management, the season of M&A and aggregations is upon us, even in Italy: is this a prospect that may also interest your business segments and your company?
As an asset-gatherer, i.e. a distributor and not a mere "product factory" like asset managers, we have other goals. For us, the heart is the professionals and the value of customer service. We know how to analyze the products with dedicated skills and select the best proposals, but our focus is precisely on consultancy.
The CEO of Banca Generali, Gian Maria Mossa, said that the company is ready to grow also through external channels with acquisitions "in Italy and abroad and in particular in Switzerland" and that the target is represented by "boutique banks asset management boutique”: how long can typical transactions take? Are there talks going on? Are operations foreseeable within the year?
As clarified by the CEO, our ambitions are to grow among small private boutiques that could find themselves under pressure from the regulatory changes of the Mifid II, as well as in realities of excellence in the care of assets, and in this direction we certainly look around even if- as clarified- at the moment there are no dossiers on the table. In fact, we have no urgency, having a strong exogenous growth as demonstrated by the collection data. Almost 4 billion in 6 months of funding, are practically the assets of some private banks on the market; the strength of the team - of managers and of the network - gives great confidence in future objectives.
