Cutting-edge banking technology for the world

Bank Hapoalim plans to partner with the Jacobs Technion-Cornell Institute to advance smart research.

November 20, 2016 12:16
Bank Hapoalim

Bank Hapoalim. (photo credit: PR)

Arik Pinto is on the cutting edge of banking, and his experience as an executive leading Israel's largest bank's strategy and as a basketball coach keeps him ahead of the game. The smart and tech-savvy new CEO and president of Bank Hapoalim believes that one of the key aspects of the future of the banking industry rests on the development of data science, the new interdisciplinary field in modern banking that targets provision of innovative services to customers in an increasingly digital world.

More and more, you hear about smart cars, smart cities, smart grids, smart this and smart that,” Pinto tells The Jerusalem Post. “The underlying technology behind a significant part of recent innovations is the application of data science, and this is one of the main keys to the future banking.”

The bank has embarked on a range of innovative initiatives, including a key partnership with the Technion- Israel Institute of Technology in Haifa and possibly with New York's Jacobs Technion-Cornell Institute as well. In August 2017, the Jacobs Technion-Cornell Institute, a joint academic initiative between the Technion and Cornell initiated by former New York mayor Michael Bloomberg, is due to move to the new Cornell Tech campus on Roosevelt Island.

Born in Morocco in 1961, Pinto made aliya with his family in 1964, and studied at the Ben-Shemen Youth Village. He earned a bachelor's degree in business administration from New England College and a master's from Boston University.

He also graduated as a basketball coach at the Wingate Institute, was appointed head coach of Israel's wheelchair basketball team in 2007, and led the team to sixth place at the Beijing Paralympics, earning him the title “Coach of the Decade.”

Married with two children, Pinto was appointed to head Israel's largest bank on August 1, 2016, after working his way up its corporate ladder since 1980, becoming deputy CEO in 2009.

How do you envision the future of banking in Israel and across the world?

I envision that tomorrow's banking will differ significantly from today's banking. The future of banking will be more seamless, more cognitive, and more personalized to customer needs. Banks will fulfill new advisory roles and be less visible at the transactional levels. For example, (given regulatory approvals) banks will assist their customers with all aspects of buying a house vs being visible only when a customer needs a mortgage.

The banking sector will need to remain at the forefront of technological innovation, while at the same time maintaining stability, as it has for centuries. We are not competing against technology but rather competing with technology.

Competition has increased, and if we want to prosper in the global economy, we must constantly strive to increase efficiency, improve risk management and meet stringent regulatory requirements. Technology helps us achieve this.

Technological innovation provides us with unprecedented opportunities, and it is clear to us that we must take advantage of them. Our customers expect us to adapt ourselves to these new technological developments, rapid changes and their new needs. In order to accomplish this, we must make sure we have the most knowledgeable staff and be ready to maximize their potential.

Why should the CEO of such a large bank – a symbol of conservative stability – be so concerned with technological innovation?

Change is a way of life. History has taught us that you cannot and should not stand in the way of innovation. We must lead with innovation, not just adopt it.

There seems to be an undisputed consensus throughout the world that the changes that will take place over the next few decades will be significant and continue to occur at a dizzying pace. This revolution is based on the understanding that innovation is the key to improving, streamlining, and making life better. This understanding has led to improvements such as the wooden plow being replaced by an iron one. It led to the invention of the steam engine and gasoline, to the development of cars and airplanes. In the middle of the previous century the digital revolution and global village were born. Now, every person on earth can have direct and fast access to an incredible wealth of information and rapid communication with other people. The world calls this disruptive innovation. I call it constructive innovation.

Every single aspect of our lives, without exception, is and will continue to be affected by it. Every sector of the economy must adapt itself to this fast pace or find itself left behind. The banking system, too, is currently facing a big challenge. For hundreds of years, banking was based on stability and conservatism. The big challenge now is to incorporate these changes while remaining stable.

How will you achieve this?

In recent years, Bank Hapoalim has invested tremendous effort meeting this challenge by cooperating with some of the greatest minds at leading Israeli and international organizations.

We've collaborated on projects with Google, Microsoft, Amazon, Cisco, the London Stock Exchange and numerous FinTech companies.

Over the past year, we announced large-scale organizational changes at Bank Hapoalim. For example, we are the first bank in Israel to establish an Innovation Division, which is headed by a chief digital officer in charge of identifying and implementing new technologies. In addition, we've created a department that was set up with the sole goal of helping startups and investing in FinTech companies.

William Gibson once said in an interview with The Economist that “The future is already here – it's just not evenly distributed.”

This is the main reason we opened digital branches and have recently launched a new application “The Chat Bot.” We recognized that the adoption of new technology is not evenly distributed among all sectors and ages, and therefore we have a responsibility, via digital branches, to introduce technology to non-millennials and help them adapt to it.

POWERFUL PARTNERSHIP (from left to right): Dr. Yoav Intrator, Prof. Boaz Golani, Arik Pinto, Prof. Peretz Lavi, Avi Kochva and Prof. Avishay Mandelbaum. (Courtesy Bank Hapoalim)

Bank Hapoalim was the first bank in Israel to create digital branches where customers can be guided on how to carry out a variety of financial transactions, and the bank has plans to launch several supplementary online services soon. Bank Hapoalim also promotes a change in its approach to banking. We believe that it's important to think quickly and not get held back with existing paradigms.

We shouldn't be afraid of carrying out collaborations with leading institutions in Israel and across the globe.

What is the goal of your cooperation agreement with the Technion?

We are striving to instill a culture of openness to innovation and new technologies. To that end, we created a special innovation laboratory in cooperation with the Technion, Israel's leading engineering school and an internationally renowned institution.

In this laboratory, faculty at the Technion, together with professional bankers, are researching solutions that could make banking smarter and enable us to offer improved customer service. Through our relationship with the Technion, Bank Hapoalim has direct access to the institute's data science researchers who possess professional knowledge about the most advanced techniques in the world.

Technion faculty members who are involved in our projects help us deal with our current challenges and improve our services.

Our collaborations with the Technion and the other organizations I mentioned help us to raise Bank Hapoalim to a new level, which up until now seemed like science fiction.

We are living in an age in which many things that seemed like science fiction two or three decades ago are now considered conventional. The rate of change in all aspects of innovation is getting increasingly faster.

Can you confirm that Bank Hapoalim is planning to collaborate with the Jacobs Technion-Cornell Institute as well?

We are looking into the possibility, but I first I need to provide some background.

The Jacobs Technion-Cornell Institute  is a joint initiative between the Technion and Cornell University in New York, which is to be part of the new Cornell Tech Campus in NYC. This is a multimillion- dollar initiative that will eventually house over 2,000 master's, PhD and post-doctorate students, all in technological fields.

Jacobs Technion-Cornell Institute is truly one of a kind, and operates more like a startup than a traditional academic institution. It seeks to incorporate industry-related content into its research, and a possible future partnership with Bank Hapoalim would bring the financial aspect to the mix.

We are currently in the process of formalizing this idea, so I would prefer not to elaborate, beyond noting that the opportunities are wide open, from conducting joint technological research to joint technology events and exposure to US-based FinTech and hi-tech companies.

What do you and Bank Hapoalim find so interesting in data science?

We are hearing more and more about smart cars, smart cities, smart roads – almost everything has been made smart these days and they are all connected in the Internet of Things. None of this would have been possible without data science.

The traditional technology that banks and other businesses have used up until now does not allow us to control the exponential growth of digital data. Data science is a new field upon which new techniques that are game changers have been created. These techniques enable us to more efficiently process huge amounts of digital data.

Perhaps the most interesting use of data science is to help us create new products and services for our customers. Using sophisticated analytics on data from multiple sources will allow us to discover relationships that are not obvious to the naked eye.

Data science will enable us to understand our clients to predict their needs and advise our customers accordingly.

Such an activity was extremely hard or even impossible to execute in the past.

How do you see the future of FinTech?

I view the FinTech industry as an opportunity. We have developed and will continue to invest in integrating FinTech solutions, supporting these companies through investment and exposure to other banks worldwide.

Here is a fact that not many are aware of: the majority of the Israeli cyber security companies that have gone public developed their products in conjunction with the bank.

It is no surprise that so many international banks are knocking at our doors to partner with us. Hapoalim's Innovation Lab opened its doors to FinTech companies with promising potential, providing opportunities to co-develop while also gaining worldwide exposure to the banks' business partners.

It is interesting to note that in the past two years we have heard a change in tone from the FinTech companies – from “We want to disrupt the banks” to “Let's partner,” and as noted before, this is an opportunity that we cannot afford to miss out on. So, FinTech and integration, or as some call it Fintegration, is now the new norm for us.

What do you see as the biggest challenges facing Bank Hapoalim?

We must, first and foremost, fulfill our obligations as best we can to meet the expectations of our customers. To find the best ways to manage their money while reducing personal risk.

This also means going beyond the limits of today's banking – constantly looking for new products and services that add value to our customers.

For example, by aggregating relevant valuable information for our customers we can be their “financial gateway,” which helps them make better decisions towards meeting their goals of financial independence.

We are determined to find the right balance between implementing new technologies, especially data science, while keeping the bank-client relationship personal. Preserving the right balance of these two will result in a more efficient, more seamless, more proactive and even more enjoyable customer relationship.

We have to do this in the friendliest way in close cooperation with our customers, remembering that technology is not an end in itself. At the same time, we have to meet our business goals of making a sustainable profit, operating with transparency and being faithful to our moral values and social responsibility. From my intimate knowledge of the Israeli banking system, I am absolutely convinced that we will meet these challenges while preserving our edge as the leading bank in the country.

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