An interview with Stanisław Namyślak, Chief Technology Officer in the Digital Transformation Division at Santander Bank Polska, by Łukasz Bober.
Łukasz Bober: My guest today is Stanisław Namyślak, Chief Technology Officer in the Digital Transformation Division at Santander Bank Polska.
Stanisław Namyślak: Hello!
Ł. Welcome, Staszek. Thank you for accepting my invitation. I’m all the more glad to see you here that one can rarely meet experts as experienced as you. Over 20 years of experience in IT for banking!
So let’s talk about how banking has changed over the years and, of course, how it has changed over the past months, since March 2020, when the situation in the world changed radically and suddenly.
What has changed in your company? What has changed in Santander Bank Polska? How do you see it? How did the completely unpredictable circumstances change the image of the bank?
S: I will go off on a tangent, but I will come back to your question in a moment. It is a fact that Covid-19 has forced our bank, the whole financial sector, and many organizations, to act very rapidly.
It is a situation in which there were no weeks or months for preparation and taking gradual steps. We had to act immediately, actually overnight. Yesterday we were in the office, today we’re at home.
While answering this question, I would like to stress very strongly that in my view, and I think I am not alone in this opinion, the financial sector has passed the test. In Poland, it didn’t happen that banking services were inaccessible, customers had no access to their money or there was no money in ATMs.
Of course, there was some anxiety and it was noticeable. For example, we saw increased cash withdrawals at ATMs. However, it was a short period of apprehension and very soon the market calmed down.
Also in terms of business continuity, it must be stressed that the banks, the whole financial sector, have stood up to the challenge.
And the second very positive thing, where the financial sector also passed the test with flying colours, is the support for the government’s actions to protect the market and entrepreneurs.
Governmental and further statutory regulations were introduced very quickly, largely using tools, resources and structures of the banking and financial sector. I am talking, for example, about the possibility to apply for assistance funds through e-banking. Here again, I dare say, the financial sector, including our bank, has done very well and has adapted its systems very efficiently. Thanks to all these activities, customers have been able to access the aid very quickly and act more flexibly.
And that is praise for the financial sector. Well-deserved, I think.
Ł: No doubt. I have been watching it closely, for example because of BlueSoft’s involvement in the activities of the Polish Development Fund. There have been difficult moments, but there are probably few people who haven’t had them.
S: Yes. Back to the point, I’m on the IT team. In IT teams, we are well-prepared to be able to handle remote banking processes and systems or support the bank at any time when needed.
For me – a representative of IT, business development, analytics, software development departments – the fact that overnight you had to leave your office and go home to do your work remotely is nothing new. But of course, there are a number of people, departments and even areas of the bank for whom it was completely new. The pandemic has shown that many things that once seemed difficult or even impossible to be done, suddenly proved to be possible or even necessary overnight. It seemed that before, banks had been striving to make work done in offices, at the desk, together, in a team, for the sake of efficiency. The pandemic has shown that it doesn’t have to be like this at all and that it’s possible to move all the operations outside the bank, practically from one day to the next, and all this can work smoothly.
And here I’m coming back to where I started: the banks passed the test. Of course, this involved a number of different actions that the bank had to take in order to switch the entire production line and all people to remote work. Not all units were as prepared as IT; not everyone had laptops and remote working tools.
The bank is, of course, equipped with tools for remote work, for organizing meetings, web conferences, teleconferences, sharing desktops, but the processing power of these tools had to be greatly enhanced, because they were designed for a certain scale, a certain percentage of employees working remotely, and now it turned out that this small percentage became a hundred percent.
Ł: In other words, the processes that already existed in the bank needed to be properly scaled.
S: Yes, that’s right. If we were to define what impact Covid-19 had on employees and the approach to remote working, first and foremost it showed the organization, its employees and managers, that it’s possible. Remote working can become a completely normal mode of work in the future. For employees, it’s convenient; they are fond of this type of work because it solves a number of problems: it limits the time spent commuting, often solves the issue of childcare, getting children to school, picking them up after school, etc. Of course, remote work requires everyone to reorganize their private lives and adapt to the new reality.
However, looking at how bank employees function in this new situation, how efficiently they have reorganized their lives, how much time they spend on working for the bank and how much on their personal lives, one can safely say that it all works very effectively.
Ł: Good summary. The safety valves the bank is equipped with worked the way they were supposed to and the bank managed to get through the initial perturbations.
S: Yes, and that also shows how well the bank works. Most branch offices are open, because of course not everyone can work remotely. It’s hard for me to imagine a person who serves customers at the counter to work remotely – such a person must be in the branch office.
Ł: More and more companies that operate only in the virtual world appear on the financial services market. An example here can be Revolut, and other companies that try to imitate their model. Can you see a chance for banks to become such purely virtual institutions? Will there be a headquarters and just a few branch offices, including one at the head office?
S: Generally, it seems to me that the world is going in that direction. You gave the example of Revolut, which is a bank, after all. Maybe not here in Poland, but it functions completely virtually and yet works well.
In Santander Group, we have the example of Open Bank, which is a completely virtual bank. It has one office in Madrid, but besides, it operates all over Spain without any branch offices, completely virtually, and all operations can be performed remotely.
Our bank is also striving for that. Covid-19 has shown that we need to get things going, because whether we want it or not, Covid-19 makes our customers eager to do more and more things remotely, without contact with the branch office, or at least without contact with the employee, even if they are being served at a branch office. In order to meet the expectations of our customers, we need to speed up the digitalization of all our processes so that they are designed for such type of service as the main channel.
And to answer your question directly: there is of course a chance for a completely virtual traditional bank.
Ł: The word ‘traditional’ is the essence of this question. If banks are created as virtual, they are by definition ready to function in the digital world. However, the question arises whether we are facing a future in which the banks that have been operating traditionally will move to the virtual only?
S: If by virtual we also mean an employee servicing a customer, but via the internet, remote communication tools, video conferencing, videochats, etc. rather than at the counter, then of course we do.
Ł: And do you think regulations will keep up with that?
S: They will, I’m sure. Regulations must adapt to life and follow the changing reality of the market. Lack of proper regulation hinders us. Institutions such as banks are very strictly regulated and this is one of the reasons why it is more difficult for them to compete with start-ups, which are not regulated. Their business model is to introduce only a certain subset of banking operations, one that is the most attractive or the easiest to implement, for example payments and transfers.
Of course, it’s crucial to understand the idea of these regulations. The main strength of the bank is customer confidence and security of funds. Customers come to the bank and place their money there because they trust the institution. They know that their money is safe, that it will not get lost and will always be available when they need to reach for it. That if they have to, they’ll get a loan or will be able to deposit their money. This confidence is also built by banks meeting the requirements of national and international regulators.
Ł: Covid-19 is definitely the thing that changed banking, tested its mechanisms, but also gave the sector a boost. The previous big move, in my opinion, were the PSD2 standards, which entered into force in all European countries. Isn’t it that the changes introduced by the PSD2 made the pandemic situation easier? Isn’t it as if the PSD2 made the banks open up a little and change, and made it easier for them to think about a situation like the one in March?
S: I wouldn’t link it in such a way. I don’t think the PSD2 had much influence on that. The regulations just cracked open the gate to cooperation of banks with other entities, for example other banks. At the moment, I don’t see such a dynamic use of these regulations, apart from the obvious possibility to check one’s account located in another bank and its history; a possibility that is gradually appearing in online banking systems.
It is still far from perfect and from being able to work efficiently and actively from a global perspective. We can’t yet transfer money or perform various operations in a one-stop-shop, or do all the operations we want from our favorite mobile banking app, no matter which bank we have an account in. For me, as a customer, it would be convenient because I wouldn’t have to log in to three or four apps if I have accounts in three or four different banks. But it seems to me that when it comes to the PSD2, we are just taking the first baby steps.
Ł: Staying for a while in the topic of opening up to the new. Do banks want to compete with fin-tech? Do they want to enter this non-banking zone? How do you see it?
S: I don’t see any such plans in our bank. Rather, we are aiming to give the customers access to and make it easier for them to use banking tools. The simplest examples are BLIK or Przelewy24, which, thanks to their integration with banks, give customers the opportunity to make an immediate transaction, e.g. in an online store. Banks provide tools that enable efficient handling of non-cash transactions or shopping in stores. Wherever there are financial aspects, where you have to pay for something or let the customer deposit their money, there is space for banks to take up their role of ensuring efficient service and security of transactions.
Ł: So further focus will be on integration?
S: That’s how I see it. However, of course, the strength of banks is not only security, but also a wide network of branch offices or good knowledge of the financial market, and thus – consulting. There are many customers who need access to more sophisticated, more advanced financial instruments and come to the bank for that purpose. Not only to buy the financial instrument, but also to get advice from an experienced bank employee. The second strength of institutions like Santander is acting globally, all over the world. And thanks to this effect of scale and international exposure, we can make it easier for the customer to use the services.
Ł: For many years there has been talk of a digital revolution in banking. From your perspective – that of an experienced practitioner – how has banking changed and what is the digital revolution for Santander Bank Polska today? What are the challenges facing banking today and what are the directions of development?
S: I remember the times when we created the first online banking app in our bank. The very first one, something completely new. We combined the branch systems into one central system and joined this central system with the one available to our customers. It was the first or second online banking app in all of Poland. The digital revolution was already on.
But in the IT world, it’s hard to talk about anything other than a constant revolution. Our world is accelerating; more and more things are happening faster and faster. But the history of my career is actually taking part in the digital revolution all the time.
What is digital revolution in banking right now? It is primarily the digitization of all banking services to enable our customers to perform all operations from home, from their own desks, without having to visit a branch office of their bank.
Ł: Before it was said to be done for convenience and now it’s for safety.
S: Yes, but I still think it’s mostly for convenience. The first criterion is the convenience and speed of operations. Easy and quick access, anywhere, anytime. No matter what country you’re in, you want access to your account and use it.
Now, of course, the issue of safety is also gaining importance because of Covid-19. Online banking gives us the comfort of performing all the necessary financial operations without leaving home and risking infection.
Ł: Flexibility is very characteristic for IT, while globalization is visible in virtually every industry, in every business vertical. Whenever we talk about globalization and flexibility, we need to mention cloud solutions. How do you think it is with banks? Will the cloud, apart from its guest appearances, make it into the banks for good? What do you think are the limitations of using the public cloud in banking?
S: Many banking solutions are already based on cloud services. There are even some that are entirely cloud-based. We are thinking about using this type of solutions more and more and it is only a matter of time.
When will it pay off for the bank to transfer certain functionalities or applications to the cloud? When will legal regulations, which are a kind of corset restricting the bank, loosen up and allow for a wider use of cloud solutions? We are constantly analyzing the situation.
Today, regulations allow the use of cloud solutions, but only those located in the European Union, which obviously implies that many solutions available on the market cannot be used by banks in Poland. This is a bit contrary to the idea of the cloud and limits us geographically. After all, one aspect that interests end users is speed. Even if they are working from Japan or the USA.
Another important aspect for the bank is costs. Of course, as cloud solutions grow and become more popular, they become cheaper. However, we must not forget that today the overall cost of transferring existing solutions to the cloud is high.
But if we are building a new solution, then it is much easier and a bit cheaper.
Ł: Can you see cloud-based personal data storage as a potential blockage? You mentioned that the bank is a trust-based institution. At the same time, the paradigm of the cloud is to be everywhere and nowhere. The principle of showing the precise location of a person’s data is practically impossible in the cloud. Do you think we’ll run into a wall and the banks will say, “no more”?
S: I’ve been in IT for too long and too often have I thought there was a limit and you could do nothing beyond it, to still be of that opinion. Today it seems to me that the sky is the limit, so there are practically no restrictions that humanity will not overcome sooner or later. Of course, there is still the issue of security of the cloud, but there are a number of different solutions, such as encryption and security measures that provide no less security than a a safety box in the bank’s server room.
Ł: Having worked with different cloud solutions since 2013, I’m of the same opinion. I see the weaknesses of the solution in its design and the person who uses the application.
S: It has been said for years that the weakest link in security is the human being, and regardless of whether the data is in a safety box in the bank’s server room or in the cloud, the biggest risk of a leakage is when, for example, access keys leak or someone intentionally extracts the data.
Ł: You talked about globalization, we discussed the cloud, the safety and convenience of users. All of this requires that our organization be integrated, and systems be interconnected and operate at the same production rhythm.
There have been different approaches to integration, such as the ESB and SOA. There were Gateway APIs developed to support the PSD2 and commercial services.
At this point in time, a new trend in building rather than integration is microservices and microfrontends. Do you think this approach has a future? Will IT continue to develop in this direction? Or is this a temporary trend?
S: No, I think microservices are the future. Of course, until engineers come up with something even better. Everything you’ve said, all those terms you’ve mentioned, they either were or are implemented in the bank. The bank, in fact, is to a large extent an IT institution and software house, but one which provides software for its own business and not outside.
The bank today is based on software. We follow and use all the novelties that improve our work. Of course, for the reasons we mentioned earlier, namely the need for security, a bank cannot immediately use every new technology that has emerged. It must only use technologies that are tried and tested, and provide stability and security.
Thanks to microservices and microfrontends, our development teams can work independently of each other on different components of the solution, which speeds up software development and shortens the product’s time-to-market. Teams react to changes and customer needs faster and more efficiently.
At the moment, microservices are built and microfrontends are used in the bank and we are building new solutions or new processes based on these paradigms.
Ł: Automation is becoming increasingly important the more we use microfrontends and microservices. The increase in granularity, i.e. building smaller and smaller components to manage, is overwhelming for humans. Automation is no longer just a matter of deploying or testing. How is it in Santander Bank Polska? Is there any limit to automation?
S: There is. I don’t see at the moment any technology that would allow to automate the human mind, i.e. to automate the development work itself, understood as working out a solution to a problem, for example how to design a screen to be ergonomic, how to build or implement certain algorithms. Artificial intelligence is developing more and more dynamically, but at the moment there is no technology to replace the programmer in the conceptual part. All repetitive activities that do not require a creative approach are automated. Programmers automate the processes and activities that they don’t want or don’t like to do. Entrusting machines with activities that do not require creativity and imagination is a very good direction. In the bank, where it is possible and cost-effective, we automate the testing and deployment process of the application.
Ł: Are there any cases when automation does not streamline the process? Has it happened that something was supposed to be better, cheaper, faster thanks to automation, but for some reason it didn’t work out?
S: Looking back at my long career, there have been such cases. I remember the times when attempts were made to build tools that would create working code based on an algorithm or description how the application should work in the model. And they were never successful. The working code was so heavy, so difficult to maintain, and so troublesome to get to work that such attempts were abandoned. The world has gone in a completely different direction, towards creating templates or libraries that make the programmer’s work easier and provide a number of different ready-to-use components. Today, a programmer, apart from building internal algorithms, a certain operational logic of the application, to a large extent builds the application out of ready-made components or blocks. Today there is no need to design every window and every button from scratch. Once designed, they are ready to use. All you have to do is plan and code how each action of such a button will look like, whether it’s pressed, double-clicked or interacted with in a different way. In this sense, the world is moving forward and there is a lot of things that make a programmer’s life easier.
On the other hand, the IT world is becoming more and more complicated, there are more and more connections between systems and between companies. The consequence of this may be that, for example, problems with access to banking services are not necessarily due to errors on the part of the bank, but rather due to errors outside our systems.
Ł: Can you think of any elements of technology that could be the future, the direction of the development of banking? Do you see anything in this technology that can emerge, is emerging or will emerge, that banks should invest in or look at?
S: Among technologies which in my opinion will have a very strong impact on the functioning of banks there are quantum computers, which will accelerate our work even more. In terms of software solutions, I think it’s artificial intelligence. But appropriately understood artificial intelligence. There are a number of different applications that are commonly called artificial intelligence, but for me they are not true artificial intelligence. In my opinion, artificial intelligence is a mechanism that makes decisions that I cannot predict because they do not result from algorithms. These decisions result from the kind of collected data and the order in which the data was collected and learned. You have to distinguish artificial intelligence from BI. BI is a piece of software with built-in algorithms that sift data and draw conclusions from it, but according to an algorithm strictly defined by the developer.
Ł: So that is the developer’s intelligence…
S: Yes, in this case we can probably call it that. In such an approach it’s possible to create something with the use of ‘non-human’ mechanisms, while the evaluation of its effects, in my opinion, will still be up to a human.
Ł: Some of IT world’s VIPs are saying that we will be able to talk about true artificial intelligence only when we have even faster computers; when we can validate a thousand or ten thousand possible scenarios, determine their probability and choose the best one; when computers are able to perform the same thought process as a person, only much, much faster.
S: Computers work completely differently from the human mind at the moment; it is still the Neumann model. You could say they work sequentially. The human mind works in a completely different way: if I now see something unexpected in the corner of my eye, my mind will react immediately, not because I am constantly sequentially scanning the entire field of vision to see if something is different, but because all these images are processed in my brain in parallel. I’m looking forward to the creation of computers that work this way, not sequentially, but parallelly.
Ł: So we have at least one digital revolution before us.
S: Oh, definitely more than one.
Ł: Staszek, thank you very much. It was really nice talking to you.
S: Thank you for having me.
Chief Technology Officer in the Digital Transformation Division at Santander Bank Polska