Good morning ladies and gentlemen,

I would like to thank the organizers for inviting me to talk in front of such a distinguished audience.

You may think of me as being an outsider to the field of innovation in my present capacity as a member of board of the Romanian central bank. However, as a former commercial banker, with more than 25 years in the field of inventing and tailoring financing solutions for my clients’ needs, I think I can add some topics to today’s discussion. Probably some of you expect me to elaborate on projects I have successfully finalized. We may refer to the construction of the First Financial Group in Romania, BCR Group, based on the concept I like very much i.e. “one stop shopping”. The Group included in addition to the bank, two insurance companies (life and general), leasing, asset management and brokerage companies, adding value to the stakeholders and getting into one of the most valuable privatization and success story in this field in Romania. Or, the creation of the first Corporate University in Romania, providing a vital contribution to the professional development of the BCR Group employees.

“Innovate Now” I think is more of an invitation to a forward looking approach.

Therefore, I would like to address today three points related to financing sector innovation: the framework, the financial products and the system. I have to admit that they derive from concepts one can easily identify in the work of Simon Sinek, Stephen Shapiro and Nicholas Taleb.

First

The landscape of commercial banking has changed dramatically since I’ve started to learn and enjoy this topic in the 70’s. However, there is one aspect that hasn’t changed since then and has become even more important since the financial crisis. I refer to trust, to credibility. Gaining and/ or regaining the credibility are probably the core challenges facing the banking industry. We are talking about the trust between the banker and the client. It might sound like rhetoric to you but there is no business whatsoever that will thrive unless those who run it and those who are the recipients believe in it. This is the sense of Sinek’s mantra of “asking why”. If one does not believe in what one does the others will have no incentive to do so. Therefore, I think that bankers in general have to go back to the drawing board and ask themselves why do they think their business is there in the market after all and why others should use their services.

Second

The banking sector here and elsewhere is undergoing massive reforms and restructuring because of new banking regulation under Basel III and CRD IV. Whether this will serve the new BUSINESS MODELS that are emerging today, where creativity reigns, it remains to be seen. What I want to underline here is that we might fall prey to the wrong questions about the banking sector and innovation. The problems are not related to how to find financing for innovation because banks are thinking in terms of risks, but more about the fact that innovation is presented as producing a certain type of risk for a bank. In other words, banks must match the risk structure of short versus long term on their balance sheets, while the innovative projects are presented as interfering with this. This is how I interpret Shapiro’s first principle of “asking better questions”. I also think that banks in Romania can use the experience from other countries that tried different innovation financing products. This will help us to speed the process of finding solutions and not repeating others mistakes; this is in a sort what Shapiro talks about when referring to “parallel processing”.

Finally

I think that the objective of the banking reform of creating a resilient system is not favorable to what the society needs. I do not think that we need banks that can withstand the kind of financial storm that we had in 2007 – 2009. I think that we rather need a banking system that not only is able to adapt to risks and unknowns like those that created the financial crisis, but that also is flexible enough that it welcomes risks and uncertainty. There is no human activity that does not have risks. Risk, uncertainty and change are natural elements of our existence and it seems rather naïve to try to forge a system for human activity that does not embrace these attributes. In this sense, I think that Taleb is right to speak about antifragile. In the current post – financial crisis we can see in the banking field that caution is often the watchword and that genuinely innovative risk takers stand out. We all know that risk taking and risk mitigation are sides of the risk culture. In my opinion, exaggerated protection and prevention and too much risk aversion are detrimental in a long run to the economy, to the innovation and to the living standard. Banking does not need special treatment; it is a business like any other and bankers have to come with tailored products for their trusted clients (be they depositors or borrowers) instead of trying to push their clients to take products that neither suits them nor benefit the trust relation between them. We need to revisit some opinions that the banks are utilities providers and their clients are consumers. The relationship is more complex and, in my opinion, should take place in a strong and sustainable partnership to the benefits of all stakeholders. In essence, the current “transaction banking model” has to go into a deep change, becoming a more solid “relationship banking model”. This cannot be achieved without entering and finalizing a TRANSFORMATION process, starting with the MENTALITY CHANGE and implementing a forward looking banking culture. Additionally, I make reference to the most recent paper on “The New Patterns of Innovation” of Parmar, Mackenzie, Cohn and Gann mentioning that in addition to cross-functional team, adequate resources and top management support, success factors in innovation initiatives are: strong technology presence, inputs from external parties, motivated leadership and emotional commitment. Valid value adding approach to banking as well.

I would like to end telling you that creativity and innovation are becoming more present in the Romanian business sector and banking as well. I do not see how it could be otherwise since Romania changed entirely the structure of the economy in 25 years. This means a lot in terms of changing attitudes and mentality. In the same time this means that the seeds are already sawn for the next change. It takes time and we all are looking for facts and high quality delivery. In their recent book “Scaling Up Excellence”, professors Sutton and Rao making reference to change and sustainable expanding of a business and of an organization have mentioned that these accomplishments are asking for “fighting a ground war, not just an air war” and that “scaling excellence requires the kind of grit required to run a marathon rather than a sprint”. All applicable to our long term approaches in Romania. I am fully convinced that Romanians are ready, willing and innovative to be part of this complex marathon toward achieving convergence and competitively goals.

Thank you for your attention!

Bucharest, April 10, 2014