UniCredit 'unlocks' upgraded ambitions and client capabilities

“It’s one of the most exciting periods I’ve experienced during my time at the group,” observes Richard Burton, UniCredit’s head of client solutions, speaking after the bank unveiled its strategic plan for 2022–2024 — a plan that includes substantive changes and objectives in his area of the business.

Era of growth

‘UniCredit Unlocked’, as the plan is called, was launched by the group’s new CEO and industry veteran Andrea Orcel in December 2021. It strikes an ambitious and optimistic tone, following on from the period of de-risking and balance sheet strengthening overseen by former CEO Jean Pierre Mustier. Since taking over the reins in April 2021, Mr Orcel has indicated that he feels the bank now has the “opportunity to do things differently”, and suggests that the plan marks a “move into an era of purpose, growth and value creation”.

Mr Burton was previously head of corporate and investment banking at the group since February 2019, following six years as its financing and advisory head. In May 2021, he was appointed to UniCredit’s new 15-strong group executive committee (in place of the previous 27-person executive management committee) and confirmed as continuing in post, at a time of simplification across the bank’s broader senior management. Under this strategic plan, his division will play a central role in the bank’s growth prospects for the future.

The sense of excitement he described is felt across his division. “We have a real vision and ambition for the future, and you can feel the pulse of excitement in the teams,” he explains. “We’ve turned the page and moved from a period of reorganisation to one of growth, with a clear vision for who, how and where we want to be.”

Harmonised model

A key pillar for the plan is a harmonised service model, where clients across two broad segments — corporates and individuals — will be put at the centre of how the bank operates, i.e. serving their full needs is a shared responsibility, rather than individual product or regional teams serving them in a potentially less joined-up way.

These two client segments will be served by what UniCredit describes as “two centralised product factories, corporate solutions and individual solutions”. Mr Burton oversees the full ‘client solutions’ offering, with individual solutions covering funds, portfolio management, brokerage and assets under custody, and insurance, along with corporate solutions comprising client risk management, advisory and capital markets, specialised lending, and transactions and payments.

Ultimately, Mr Burton says, this way of structuring activity is “about empowering our bankers with both the right tools and best-in-class products to focus their attention, effort and energy on delivering for our clients”. Rather than operating in silos, they are working together to meet client needs.

He explains that it is also about bringing together the capabilities of bankers across its European network of banks to provide a unified client offering: “If we take all 13 of our banks together, there is an economy of scale to manufacture and offer best-in-class products.”

A key aim is to harmonise the offering so that clients across the network can access the same products. “This will enable us to serve our corporate clients in each country better than any other local bank,” he says. UniCredit’s main market is at home in Italy, although it also has a substantial presence in Germany, and central and eastern Europe.

Digital ambitions

Delivering an upgraded digital platform and investing in technology more broadly are important aspects of this. Mr Burton outlines that UniCredit has a very broad client base, but in all cases a well-functioning digital platform will be the foundation for the seamless client experience it is aspiring to. For some smaller clients, it will be their primary mode of interaction, and for its larger corporates digital services will be augmented with higher level support in areas such as strategic advisory and capital markets. “It’s about both fostering a better client experience and overall process efficiency. We are considering all avenues where we can use digital to increase speed and ease for our clients. For instance, speeding up payments via faster payments technology or introducing more straight-through processing of transactions,” he says.

Better use of data is also an important complementary area, he says. “We have a lot of data and there are certainly ways we could be making better use of it. Analytics, for example, could help us to identify those clients that are likely to need capital markets support in the future, enabling us to begin assisting them earlier on in their growth journey.”

Cultural shift

The bank is also embracing a cultural shift that will give bankers greater agency to take decisions at the local level. “We have simplified our processes so we can arrive at faster decisions. We’ve put the decisions closer to the client,” says Mr Burton. “We have great people and we’re setting the parameters to allow them to perform to their best.”

Mr Burton is keen to emphasise this is not in any sense a compromising of risk standards — there is a risk and behaviour framework within which bankers are accountable, and central oversight will still play an important role on appropriate occasions. “The bankers on the ground know their clients best; we are just giving them greater flexibility around that,” he says.

Community focus

Being closer to clients is inherent in the tagline for the bank’s strategy “empowering communities to progress”. Mr Burton describes UniCredit’s corporate client base as covering one million businesses of varying sizes across its markets, with small and medium-sized enterprises being an important part.

“A key part of empowering communities is about supporting small businesses to grow and reach their ambitions, and if we can make their lives easier — for instance by providing key services digitally — that’s going to have a have a big impact.”

For larger clients, with cross-border interests, the bank’s footprint puts it in a prime position to support them with exports and cross-border expansion in Europe, he argues.

He also cites the major NextGenerationEU economic stimulus package, which will see €800bn pumped into economies across the EU, including €191.5bn into Italy’s, as a key opportunity. “This is capital that is going into the real economy and we want to be in the middle of those flows. This is going to be a big driver of activity and we can provide important support by assisting them with their working capital, for instance.”

Supporting transitions

The bank also places supporting the transition to a more sustainable economy in this same category. For instance, it is aiming to facilitate €150bn worth of capital raising linked to environmental, social and governance objectives between 2022 and 2024.

Mr Burton highlights the bank’s long pedigree of engagement in this area, with it acting as a lead manager on the world’s first-ever green bond, issued by the European Investment Bank in 2007. However, he is also keen to emphasise that “these issues have moved on from just helping companies to issue green bonds and loans”. The bank has an established sustainable finance advisory team that supports corporates in “understanding the transition that they need to complete within their own business, supporting them to analyse and design their sustainability frameworks”. This is “highly strategic advice”, with sustainability moving from a “technical step to a strategic board-level discussion”, he says.

He reflects that these are conversations that, increasingly, businesses of all sizes are engaging in. “The vast majority of clients want to discuss transition planning. It started with the larger clients, but it is also now a topic for medium-sized clients and smaller clients.” UniCredit, he argues, can play an important role as “mid-sized corporates don’t necessarily have the resources for in-house sustainability expertise. We have a sustainability team and a board committee engaged on these issues and can provide valuable support.”

Achievable targets

The corporate solutions business has some healthy growth targets for its revenues of 4% compound annual growth between 2021 and 2024. This is starting from a base of €5.5bn revenue for 2021, already up by 13% compared to 2020.

“We are starting [the strategic plan] on the right foot,” Mr Burton comments. “We are already delivering it … most of the growth comes from capital-light business with record high fees and flat risk-weighted assets.”

Mr Burton suggests these targets are “highly achievable”, citing the bank’s strong pan-European footprint in areas such as international payments and its service enhancement plans. On the capital markets and advisory side, he highlights what he describes as a “leading financing franchise” in areas such as debt capital markets and lending. A key step now, he says, is to “leverage that existing strength and access” to support greater growth. “We feel it’s very achievable, it’s exciting and we’ve had client feedback that they are pleased to see the bank prioritising these areas too.”