Unicredit’s head of retail Roberto Nicastro explains why the bank’s cross-border strategy for its 19-country franchise won’t necessarily entail standardisation. He talks to Stephen Timewell.
The past five years have seen a dramatic growth in the retail network of Italy’s Unicredit group. Following acquisitions in Germany, central and eastern Europe (CEE) and Turkey, the group has amassed an extraordinary franchise stretching across 19 countries with more than 28 million customers and 7000 branches.
As well as being one of the 14 top banks in Europe by market capitalisation, Unicredit has the largest European branch network and is market leader in Austria with 18% market share, number two in Italy and Germany with 10% and 5% respectively, and has the largest CEE franchise.
For Roberto Nicastro, head of retail and group deputy-general manager, “leveraging our unique strength, our network, is the key”. While the 41-year-old former McKinsey consultant has played a critical part in building the CEE network of 2800 branches, he is far from complacent, telling The Banker that customers are more and more demanding and that the group must fulfil its role as a retailer.
“You need to listen more and you need to listen a lot,” he notes. He adds that it is also difficult for banks to justify profits: “Customers do not always fully accept that we are a private profit-oriented company.”
First-mover advantage
As one of the first to create a genuine pan-European financial group, Mr Nicastro is keen to use his first-mover advantage and to leverage the bank’s 19-country network. But while he knows its strengths are the depth of its franchise and its ability to scale down costs, he is not interested in standardisation for its own sake.
The new group holds a leading position in Poland, Bulgaria and Croatia, ranks among the top five in Bosnia, Turkey, Slovakia, Serbia, Romania and the Czech Republic, and has a significant presence in Russia, Ukraine, Hungary, Slovenia and the Baltic states.
Mr Nicastro says the priority is customer satisfaction but how this is achieved differs from country to country. While centralised training is a critical part of the group’s strategy, he says that one of the key factors of success is the capability to differentiate the value proposition and the brand equity by country.
Different brands
Mr Nicastro supports a central headquarters support system but not a purely centralised operating strategy. “We have no strategy to unify the brands across Europe. It is much better for brands to mean what they will for different products in different countries.
“We are a people business,” he adds. Values such as trust, competence, innovativeness and value for money are rated more or less highly by different customers in different countries. For example, trust is the top priority for Italian customers, but fourth for Germans. They rate competence as most important while Italians rate it their third priority. Products therefore need to be tailor-made to suit the market and the country.
For Mr Nicastro, what matters for his customers is providing high-quality, competent and specialised face-to-face advice, along with a state-of-the-art, simple and cheap online transactional infrastructure.
But while a group of Unicredit’s size and clout can provide much of what Mr Nicastro wants, he believes competition will come not just from the big European banks in the market. “Who do we need to fear?” he asks, noting that two groups of banks, the ‘specialists’ and the ‘locals’, can take important market shares away from the bigger banks. The specialists, such as ING Direct, GE and MLP Private Finance, can cherrypick specific market segments and do very well, while the locals, such as Germany’s Sparkasse, Raiffeisen Bank and Veneto Banca, can concentrate on building strong relationships with targeted markets and provide an attractive service offering.
Although he is well aware that the strength of the bank’s network and technology give it some competitive advantage, Mr Nicastro says this alone is not enough. Providing a rigorously measured quality service, maintaining local relationships and a strategy differentiated by region are essential to Unicredit’s ability to build sustainable long-term value and he has no illusions about the retail challenges ahead.
