FinecoBank Banca Fineco S.p.A. (FBK) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and thank you for joining our IT conference. As you probably are familiar, the technology is dramatically reshaping the financial industry. And so we expect that in the next -- over the next few years, everything is going to be completely transformed, particularly on the side of the clients' behaviors, but also in the way the companies are, the banks are, financial institutions are working. So the goal of today's meeting is to -- practically is to introduce what does it mean in Fineco technology. Fineco for everybody that is familiar with our story, we were -- firstly as a tech company, and then progressively moving direction of becoming a bank. So for us, technology has been always there core component of our activity. The -- but what we want to achieve today as a main goal is to explain exactly the real strength of Fineco, what does it mean to be not just a company that is using in a large way technology for running the business, but the striking difference with a company like Fineco that is not just using technology but is in good control of technology. And more importantly, what does it mean in terms of physical results, competitive advantages driven by this approach of technology, what does it mean to be in perfect control of technology, the incredible benefits in terms of our one-stop solution. So I'm going to stop here. And now I'm going to introduce the meeting and going to -- we are going to have a small video that, in my opinion, is going to summarize extremely efficiently what we mean with technology in terms of impact on the business and client relationship. [Presentation]

So this video, we think that is summarizing very clearly the kind of experience that, on daily basis, our clients are enjoying. So now in going through the presentation, we are going to bring you in a journey that is going to deeper, more in depth exactly what the risk behind this amazing experience of clients. And for doing that, let me introduce my colleagues that are going to bring you in this journey. We have Paolo Di Grazia, that is the Deputy General Manager of the Bank, and he's in charge for business development, marketing, communication and so on. I think that he's the best -- he's the best positioned for explaining what does it mean in terms of effects produced by technology in our commercial activity and the clients' interaction. And clearly, there is then also Gianluca Martinuz, that is the person responsible for our IT and for all the infrastructures. And he's going to drive you throughout the -- what exactly our infrastructures, how they are organized our point of strength. So thank you. And now please, Paolo, Gianluca, if you can start, we can begin our journey.

Yes. Thank you, Alessandro, and good afternoon, everybody. Welcome to the first Fineco's IT day. Just to start, asking our clients, the point of strength of Fineco, the answer is always the same. It's anonymous. Fineco is simple. Fineco, we have everything within a click, and it works very well. So this is the essence of the -- of our model, the one-stop solution model, combining, of course, investing, brokerage, banking and the network of more than 2,600 financial planners. And the question is why Fineco works so well and why it's so hard to replicate it? Because it's not just a single point of strength. It's a multiple points of strength. Fineco is just a combination of them. And it's very important because they enable from a very strong IT culture that we have since the beginning, since the foundation of the bank. And this is what we think make Fineco in the unique, in the financial industry, in the European financial scale. So it's a combination of range of product, quality of products, ease of use, reliability of the platform, of course, fair pricing, top-quality customer care and great marketing. And this is the main pillar of our excellence. But again, the concept is quite simple. We are able to internalize every single piece of IT that we deem crucial to feed our one-stop solution model. So just as an example, it would be impossible to have such an easy front end without this approach. It would be impossible to have a user experience, a multichannel users being so smooth. It would be impossible to have a fair pricing made possible by the huge operating leverage that we can create. Would be impossible to have a marketing so effective because the big data is made very simple. We will talk about this later with Gianluca. It would be impossible to have a development road map so why, then quick to deliver has such a strong time to market. It would be impossible to have a path for reliability with 100% uptime in the last year, 1.5 years, which is quite impressive. We will talk about this later with Gianluca. And also, will be possible -- would it be -- would not be possible to have a cybersecurity and for management so affecting and hassle-free for our customers. So you can have one or few of this point of strengths. Now if you want them all, you need to have a stronger IT culture. And it's not easy to create it from scratch, of course. We can go to the next slide. To basically we consider ourselves a fintech, of course. But of course, also, we define ourself an unusual fintech. We are unusual fintech because we have features that other fintechs have. We have great products. We have good marketing. We are quite able to communicate in the right way. We have easy content, but we have some pieces that other fintechs are missing and that they are very important. The first one is that we have, again, our own IT internal systems. We have not a single product platform, but we have multiple product services platform, just the one-stop solution model we were talking before. And last but not least, we are a very profitable company, which is crucial for the sustainability of the business, of the story. So now I leave the floor to Gianluca, and we will talk later again.

Thanks, Paolo. So first of all, a few figures on Fineco technology department. We have more than 200 professionals working in technology in Fineco representing an ample range of skills. Back-end and front-end developers, system engineers, cybersecurity analysts, fraud analysts, governance people and so on. Our tech is basically deployed over 3 data centers, 2 top tier physical data centers and 1 virtual hub based. We have under management 25 -- more than 2,500 servers, thousands of terabytes of storage, as you can see, and hundreds of applications under management related to banking, brokerage, investing and so on. And more important, even more important is that we can handle more than 10,000 changes in any given year, changes on our technology layer, duplication infrastructure. And this is an important capability giving our business a chance to frequently radically release new and updated services to our customers. Okay. What we've seen before is basically a typical, very satisfying omnichannel customer experience, okay? But -- so I don't think an omnichannel approach is desirable. Every company would like to do that. But unfortunately, providing a real omnichannel experience is hard. This is because actually inside the company, a complex like bank, like us, for example, you have hundreds of thousands of application systems, databases and so on. And making them work as a single application, just giving a good experience is really, really important. So in this line, I tried to show you briefly how we try to cope with this part. So first of all, we have a very strong integration capability. We are using this kind of capability to move data back and forth between the systems and application in a reliable way. And I see this is quite important. As you have seen, as you were watching the video, to update your balance, on any given channel we are using to access our services, basically, you need to move data really, really fast, okay? So then the second point, there is some decoupling between the channels. So you can see in the top part of the slide. Basically, in the applications, we use to serve our customers, our financial advisers, our internal staff and so on. So this application, basically are managing the business logic and the data. And if the capital from the channel data managed by the application, you can ask those data in a more effective way to show them in -- on any channel basically. Last point, we are using a message-oriented modular, so-called MOM. And this is basically a technological tool, very reliable, very fast, and that's the way we're moving the data from one system to the others. So Paolo mentioned in short so-called big data, big data is a buzz word. I think that we all know that. But the real problem here is to extract real business value from the data we are managing, we are basically in -- we have in our bank. So let me try to show you how to extract business value, how we do give business value extraction from the data we manage. So basically, if the data are collected and reach analyzed and user information, according to your business goals, you can gain really a great value. So the same sort of your technology, you should have, in our opinion, that the way we are structured here. You need to have a strong analytics and business intelligence technology you can use to do this kind of data enrichment, for example. So especially if you consider that we are managing a huge volume of data. Imagine all the interactions we have daily with our customers, with third parties, with the markets and so on. So how we do that? Why are we trying to do that? So first of all, we have a proprietary integrated back-end. This makes easy to access data anywhere, anytime in a timely way. Second, an end-to-end approach. So this means that we design interactions with the customers in a way that it makes easy to capture all the data of interest we generated along the chain of the process. Imagine, a transaction in stock exchange that are being done with the data maintenance, it's a long chain, and every link of this stream basically generates data. So we try to capture those data everywhere. Further, as Paolo mentioned before, we have a strong announced development team. So this means that it's easier for us to integrate application, consolidate the integration problem. So at the center of all, we have a strong business intelligence system, developed using advanced technology. The system can feel the business and operational processes like cybersecurity and anti-fraud relevant and timely data. Later on in this presentation, we'll show you the formats of such operational processes. And by the way, this as helps in keeping our operational risk low. We'll show you a few figures later on, on performance, on operational risk level. This is due basically to the reduced level of -- for the maintenance. Okay. So Paolo, as you can see, point #4, we are mentioning the benefits to the commercial -- that our commercial strategy is getting from group data analytics. So maybe you want to comment on this?

Yes, sure. Thank you, Luca. Of course, big data is crucial for our model. It's crucial that only because our infrastructure allow us to concentrate all the data in one single place, the data warehouse, the only one -- the only data warehouse we have, everything is concentrated there. And so it very becomes, very easy to extract data in real time at a cost of close to 0. And this is crucially important because enable us, above all, to have a very good time to market with new products and services. It's crucial to -- for an easy product development customization of the products. It's good for fast decision making because we have terms of reporting that we can extract real time. It's very, very helpful to take a decision in a fast way. It's also useful because great for marketing campaign, campaign management and customer analytics for both clients and personal financial advisers. And of course, it's a great pointer for the efficiency of the customer care that we will see later. So centralized data warehouse is something that gives us a huge advantage. It's just possible because we have everything in-sourced. And as Gianluca was saying, we have this kind of structure.

Thanks, Paolo. Just to go deeper in this respect, insourcing versus outsourcing. Just the slide you have in front of you describes basically our tech sourcing strategy. In a few words, this is the decision-making process we are using to understand what technology or service we want to manage internally and what we want to outsource. It's not feasible to manage 100% of your application landscape internally, of course. So this is the way the decision-making process, I'm describing to you is basically in the classic make-or-buy decision. And remember that in this case, the make is designing, developing or running a service internally in this context, okay? We're not just making a piece of our -- in a fab. But you must understand, basically what are your capability, what your capabilities are to do this kind of stuff because designing and developing, running a service internally is not a piece of cake. That's why outsourcing is quite popular lately in the last few years. So we have 2 main dimensions that we consider, first, in our decision-making process. How critical is that specific service or technology to your core business, how it can impact the business of excesses of Fineco? Let me do an example, brokerage. Brokerage is a business pillar in Fineco. This means that all the services and technology related to brokerage must be considered as core business for us, okay, critical for our core business. Secondly mentioned is how we are managing the technology internally, if we have basically the know-how, experience, the skills and so on, okay? So the chart in front of you is the best results of this analysis. So imagine you are on the top right of the chart, make an invest. This means that the technology of service you are investigating if you want to manage it internally is core for the success of your business, of Fineco. And at the same time, we have the capabilities to design it, developing it, running it in a proper way, okay? So if you are in this condition, the decision will be internalized that service. Imagine you are on the top left, so that technology of service is quite important for the business, critical. But we don't have the internal capabilities to run it for whatever reason. Then our decision will be to outsource that service, so outsourced to a contractor than runs service for us, developing service for us. But invest, so maybe in the future, we will be able to internalize, to insource that service. Maybe at a later time in 1 year or 2 years or so, okay? So in the next few slides, I will show you a few examples on stuff that we internalized, close to 100% or even 100%. And so in your mind, you should think, okay, this means that this stuff is critical for the core business of Fineco, for the success of Fineco. And Fineco staff has the capabilities to run it internally. So first example, give me a sec to do ahead -- sorry.

Just as an information for who is attending to the conference. Clearly, at the end of our presentation, we are going to have a Q&A session. So in the meanwhile, you have -- you can start on preparing your questions for us, and we are going to be very happy to answer. Excuse me, Gianluca.

Of course. Okay. This is our slide. Okay. This is our tech infrastructure. So yes, what is the tech infrastructure? The tech infrastructure is a sum of what you see there, network connectivity, environment of service, and even work at the business supervisor there on containers and so on. So this is like is quite popular lately to outsource this kind of infrastructure because many consider infrastructure a commodity. This is, in our opinion, wrong. We don't agree on that point because tech infrastructure is the foundation on top of which we did run our application. So managing it in-house with internal staff, we are doing that. We see the capability to rapidly change adapt improve it if needed in a very short time frame comparing to outsourcing setup, okay? Moreover data control gives us the chance to decide without depending on anyone else. The right way to go to improve cybersecurity, reliability, benefit basically from better integration between applications. So proactively with that, I said before, infrastructure is critical to our business performance. We have a strong know-how as we are managing it, we've been doing that in the last 20 years. Then it's 100% managed internally. Okay. Now I ask Paolo to go in, just 1 second. Paolo will talk about basically the business pillars where brokerage, investing funds et cetera, and almost all of the technology underlying these business pillars are internalized, first, to 100%.

Yes. Thank you, Luca. I think it's we just have this slide just as an example. And of course, for us, you're talking about the main areas of the bank, mainly brokerage, investing and the funds management and X-Net, which is B2B platform we use it to manage the financial plan and their activity. So it's just a metric combining -- comparing out 100%. Of course, on the right side, we are -- Fineco is in the right side. And it's just a list of costs, lead time, user experience, integration in term of know-how. If you have a single product platform, you don't need this integration, of course. But if you want a platform, they have the ambition to have a full range of financial products totally integrated in one single platform with a great user experience, the ability to evolve and innovate frequently your products and services and most of all, be profitable and sustainable, taking advantage, of course, of the huge operational -- operating leverage, then we think there is no other choice than in-source and develop your own system, IT system as much as possible. And here, we have huge advantages talking about costs, obviously. If you have completely outsourced infrastructure, probably you will pay for each client and amount to your outsource. In Fineco, it's having everything in-house, we have taken advantage of that, as I said before, a huge operating leverage. The time to market, of course, is crucial for us. We think, we design and we develop our products internally. It's very, very important to deliver right away without waiting too much the user experience. One of the point -- the big point of strength of Fineco, I'm not talking just about front end, it's about -- I'm talking about the user experience. Of course, the ease of use, but also if you have problems, the customer care, for example, is ready to solve it in real time. We'll talk about this later, which is I think one of the most important point of our success. The integration, if you want to integrate a new service, we don't have to pay somebody else a lot of money and wait for their time to integrate the service. So we know how to integrate. We know very well our systems, and we know how to, let's say, plug in new services and products in a very efficient way. And last but not least, the know-how. Of course, if you out, you don't have know-how. The know-how you give to somebody else is going to be sold to other companies. So your advantage is going to 0. And here, it's -- the know-how, we have internally. It's crucial for our model. It's crucial for our -- to maintain the competitive edge against the -- versus the rest of the market. Luca, please?

Okay. One of the thought on this. I just think developing side, innovative services and technology allows us to access the patent box regime, basically a tax relief law in Italy. So we can have a fiscal discount at the end of the year after the period because we showed in the internal revenue system that we have invested in innovation, okay? So it's quite important to pay less taxes basically in Italy. Okay. Go ahead, okay, Paolo?

Yes. So we were talking about -- before about the importance of customer care and back office, and it's another very important point because having customer care and back office 100% integrated in the systems, in our systems. It's very important, above all, when you have to solve problems, let's say, for example, or reverse errors eventually occurred to clients during their journey, or when you have to adapt your system to a new rules or regulators that we have new rules to follow, new requirements. So this is very important. And having customer care and back office integrated is much, much, much easier. So the integration between back office customer care and the entire IT systems, high speed and low cost to solve problems and evolve or adopt new system to new rules and very important -- it's very important, especially in the brokerage and in the investing area. So it's the customer care and back office are operated 100% in in-house. Our operator are in-house 100%. Every single operator has access to a full range of data into that allow us -- allow them to solve problems on the phone in real time. And we know very well that you raise the satisfaction rate of your clients where you solve problems, and this is very, very important. Yes, please, Luca.

Okay. A slide on cost efficiency. So cost efficiencies in other popular term lately. We all know that being effective is, of course, necessary to compete on the market. But being efficient, I can give you sustainability in the medium and long term, okay? So unfortunately, being effective and efficient at the same time is really hard. It would be one of the hardest I think you can find in my job. And so without being self-referential, we regularly run benchmarking activities versus the market, okay? So we compare ourselves with our competitors, with the industry in which we operate, with the country, in Europe and so on. I'm talking about benchmarking activities value in this case. So in the next few slides, we show you 3 different benchmarks. I'll comment on why 3 and not 2 or 4. But basically, we show you that in our opinion, we should be able to be considered really cost-efficient compared to our competitors. So first, benchmarking. This is a comparison between our that IT spending versus banks of comparable size on the Italian markets. Comparable size means that we need total assets around EUR 30 billion. Other banks data collected from a yearly survey run by Italian Banking Association, along with Bank of Italy and others, entities that try to understand how the banking industry spends money on technology year-after-year, okay? So according to this survey methodology, you can see the comparison, if you have a look at the ratio, use the ratio, for example, IT spending in total assets, first row on this slide, or IT spending on revenue and so on. Okay, you can see that if you have a look at the right column, the ratio exposed by Fineco are clearly, clearly very interesting in terms of IT spending. So if you take the first -- for example, the first row, the ratio of IT spending on total assets exposed by the Italian banks of comparable size to us is 130% more expensive, okay, 130%. And if you have a look at the second IT spending on revenue, the situation is even better for us. So we are exposing a 7.8% versus an average of the banks of comparable size in Italy of 20.57%. So they are on average, 163% more expensive than us. They spend more money on IT. Of course, being cost-efficient and effective, I told this before, is very hard because this is not a comparison on who is spending less on IT. But who is spending less on IT being effective like us, okay? So this kind of benchmarking gets us there. We are very well, at least in Italy. Second benchmarking is much selective. We decided to select a few competitors. These are competitors in terms of more focused business pillars. So they are banks with a strong digital presence and with, for example, a network of the financial advisers. I can't name these competitors for obvious reason, this kind of benchmarking we are doing is also to understand you very well, I told before. And you can see that also -- by the way, the data we are collecting are public data, so basically derived from end-of-year financial statement, so are totally public, okay. You can do the comparison by yourself if you want. Now as you can see, again, leverage ratio consider, for example, in operating spending on revenue, or the operating spend in gross working results in some, we are by far less expensive basically. So this means that for EUR 1 we spend, the other company is spending EUR 1.5, okay? Contain result that maybe -- can be considered more effective or less effective. So we have always to consider the effectiveness and the efficiency at the same time. Paolo showed you before that we are quite effective in spending money on technology for the resources. But now I'm showing you that we are spending even less money than our competitors, okay? Important point in this. Third benchmark. We asked Gartner, Gartner is a well-known independent technology and research company, to help us comparing Fineco to worldwide panel of companies in financial and banking industry. So we are comparing, just to be clear, Fineco versus banks, international companies in the United States, Canada, Europe, Asia and so on. Of course, Gartner helped us in getting the data. By the way, we provided our data to Gartner. They calculated by themselves. So as Gartner is an independent company. Really, independence is quite important for Gartner. Otherwise, they would be out of the market soon. To show you the results, basically, just a couple of words on that methodology. What they do is that they try to understand not only if you are spending less or more than comparable companies, but if you are spending that money well in a good way in technology. So how much business value you are generating for every dollar or euro you are spending in technology? So they compute 2 indexes, the value index and the cost index. And then they plot what happens in a classic four quadrant chart. As you can see, they have a number of installations, more 200 companies, and they put us in a comparable being, comparable in terms of revenues, so Fineco is in between EUR 0.5 billion and EUR 1 billion for the revenue. The figures are in dollars. No difference, okay? So what happens? This is how Gartner sees IT spending in Fineco. The four quadrants you see, highly efficient, top left; cost efficient, bottom right; or cost inefficient, bottom left. Basically places where you want to go away from, okay? So the ideal place to be is the quadrant in which we are, value for money. Value for money means that, as you can read by yourselves, you are spending well your money in technology by creating a good business value, okay? This is quite satisfying for us because, of course, they did this all alone. We didn't show the data. We just provided our raw data, and this is the result. So this is quite important, by the way, because this benchmark is global, okay? So 220 companies. I don't know the names of the companies. For obvious reason, Gartner doesn't disclose them. But you can find the best companies in the world may be in a financial and banking industry. Okay. That was for cost efficiency. Next, we have not much time today, unfortunately. I don't want to waste time on the technology. We'll go faster. You have the Q&A session later if you want to go deeper if you have curiosity to adopt or whatever. I'm just showing you basically, our tech set we are using in Fineco, tech set meaning that it's a subset of the economy we're using. For the tech-wise analysts, again looking at this, watching this presentation, we have modern programming languages, modern paradigms like micro services. We are using heavily the API approach. For the programming languages, we have React in the front end. We -- swift and coating from our development. We're using containerization orchestrator. I'll shift in this one, it's our reference architecture for the kind of stuff. We are using NoSQL, NoSQL are so modern generation databases, very efficient in handling a huge volume of data, very important for the business analytics and the data I mentioned it before and so on. So there's a lot of difference between the technology that we are using and the one you can find in the most advanced fintech or challenger, okay? Then again, if you have curiosity later, I will try to answer those questions. That's it. Reliability. Oh, this is another important point. Because that being reliable, so basically providing a good service to your customer, is of paramount importance. No question. Okay? It gives you the chance to provide your services to your customers without technical glitches or disruption and so on. Even in this case, we like benchmarking because we know our data. But comparing our update on reliability with competitors, the banks, usually, you take the same industry for software business. But doing benchmarking, as I said, allows us to understand how well or how bad we are faring. In this slide, you can see a benchmark related to the so-called uptime starts. Uptime starts are the ratio between the 10-year services where available and total timing in here, okay? This is expressing in precision time. And this is a panel of traditional digital banks where we're chosen. So the 7 competitors, you can see in the slide, are a mix of big traditional banks with many, many, many millions of customers, and the smaller digital banks like us. Okay, in the histograms in front of you, you have the uptime percentage. This is on a quarterly basis. We have taken the last available quarter, should be Q2 but -- okay, I'm not sure. Last available quarter on this kind of sales. And as you can see, we are selling quite well. We have announced 100% of time on our banking services, this internet banking, okay, services. And as you can see, we have competitors that are available at 99.36%. For example, competitor 1, 99.81%, 100% competitor. One caveat, if you had 0.1% of downtime in a quarter, on a quarterly basis, this means that you are down more than 2 hours, okay? So let me do one example. Take competitor 1. They had 14 hours downtime in this quarter, 14 hours. So imagine, you have a disruption of services 15 minutes today, maybe 0.5 hour tomorrow, maybe next Thursday, it will be an hour or so. If you project this kind of downtime over a year, this bank has been down likely for more than 50 hours last year on the banking services. This will not be acceptable for us, of course. And even if you -- so you are -- let me take a competitor 4, 99.64%. They had 8 hours of downtime, okay, in the same period. 8 hours, a very long time. We wanted to put another performance stuff in this slide. This is the response time. This response time is the time perceived by the customer when saying clicks on your website or maybe taps on your mobile app, okay? The response time you can perceive is in milliseconds. So light blue is the response time and we have for information services like, say, account statement, for example, or past transactions. And dark blue is for payment initiation services like money transfer, for example, or a B2B payment. So as you can see, the average time, the average response time on a quarterly basis for Fineco customers is 0 under, 0.2 seconds for account statements and services like that is 0.4 seconds for payment initiation, okay? Have a look at the competitors. For example, take competitor that announced 100% reliability in the same quarter. They are responding in 6 or 7 seconds, 6 or 7 seconds. You mentioned the customer experience. You are on your website. You want to have a look at your past statements, for example, in your account. You just clicked and nothing happens for 6 seconds, 7 seconds. And these are the average time, okay, response time. So maybe a few of their customers had 15 seconds, 20 seconds and so on, okay. So if you consider, at the same time, reliability and performance, you can see that we are faring also in the respect much better than our competitors, okay. The competitors here represent, for sure, the last part of the Italian banking industry in terms of the customers, in terms of new events. Again on reliability, let me do this example. It's the slide -- okay. Effect to be faster here, this is the day end of November 2020, which Pfizer announced good news about the vaccine. This was disruptive for the market. You can see, zoom here. Because, of course, the markets went crazy. And if you remember, if you're a global broker had really a bad day, because when you have a huge, sudden, unexpected -- huge increase in the value to handle, your systems are very stressed and maybe they can't function. Okay. As you can see, we had -- basically, we passed from 100 execution, market execution, this is a trading system, per minute to more than 4,000 in a matter of seconds, okay? So from 100 to 4,000. This is not good for your systems at all, not even for us. And this what's happened to our response time. Left part of the slide, our response time, seconds before Pfizer announced the vaccine efficacy. On the right, our response time after Pfizer announced, okay, a few seconds later. As you can see, the response times are completely current. So we didn't have any interruption. And if you have a thorough look, you will see that we responded even faster. This is an effect of our elasticity. So the capacity of our systems to a large computing power, to augment the computing power if the volume increases, okay? This is a good indication on the scalability of your platform basically. Okay. We are closing this presentation with cybersecurity and for the management segment. Paolo mentioned before that we are handling a substitute from management internally is through, in terms of staff, our internal -- just internal staff, we are not using contractors or companies to handle both processes or from the cybersecurity. So instant response, imaging prevention, whatever. I show you -- sorry, the number -- okay, a few figures on the number we are handling each year. We have more than 300 million accesses to digital channels per year, more than 30 million money transfer, 1.3 million of accesses each day in 5 days a week, okay, so huge volume for digital bank. And these are our performance. I show you figures because I think that this can convey better our effectiveness in cybersecurity and firm management. First of all, we didn't have any major cybersecurity incident in the last 10 years. A major cybersecurity incident is the finance an incident that can have an impact in terms of operating losses, claims, finance, regulation, reputation and so on, okay? No cyber -- no major cybersecurity incident in the last 10 years, okay? And on the fraud, a truly business point, okay, our performance for banking services on the left, and card management on the right. So on the left, you'll our find transaction volume, over EUR 20 billion, from banking services like in money transfer, GPay payments, debt stuff like that. As you can see, we have adjusted a fraction of business point. So this is a net fraud loss rate, the ratio between the operating losses within our financial statement and total transaction value for banking services over a year. And these figures are related to 2020. 2021, we are doing so far in the same way. On the right, the same, not for banking services, but for card services. So card present, plastic -- GPay, stuff like that. As you can see, we have a fraction of the business point of EUR 6 billion transaction value in eligible losses. If you do the math, you realize that in 2020, we have loss in operating losses related to fraud around, EUR 10,000, okay, EUR 10,000 over the combined of EUR 26 billion in transaction value, okay? A very good performance, by the way. I could show you but they didn't let us -- the comparison benchmarking of card management, cards management between us and VISA, Mastercard data for Italy, Europe and global, but we couldn't -- I can't show you for intellectual property and so on. Okay. So this concludes effectively our presentation. As Alessandro said before, we have a Q&A session. And of course, the questions will be routed to Alessandro, Paolo or me according to their comfort, of course. Thank you. Thank you very much for your attention. Thank you.

Thank you, Paolo. Thank you, Gianluca for this extremely effective presentation. So now we have a quite long and it is a quite numerous amount of questions. So I'm just starting from the first one, so I'm reading. So you say that the customer care and the copies are crucial, how scalable is the platform now from -- is from Mr. Watson, Deutsche Bank? I don't know, probably Paolo and Gianluca, how do you want to answer? This is your question. If you want to start Paolo, then with the support of the Gianluca, so please.

Yes. Yes, basically, yes, of course, we can use the same structure for many, many, many more clients. The thing that, of course, we will need to hire new people in customer care, some new in back office, but the proportion is in our side. Basically, there is a huge space. Maybe Gianluca, you can be more precise about the advantage we have.

Yes. As for the back office activities and CRM, we are just using a fraction of our technological resources, especially because we have developed inside all the dashboards and interaction between the colleagues working in back office or CRM. So we are not paying a license fee or headcount -- license based on headcount, how many colleagues working in call center and so on. So in terms of technology, in respect to technological platform, we have no problem whatsoever in scaling up with the number of colleagues working in back offices or CRM.

The reason -- the other question is for you, Gianluca. Because you mentioned that you have 2,500 service operating under management. And the question there a competitive advantage of running the IT of cloud as other banks claim to do?

Well, the answer to this question could be very long. So I don't want to keep you here for another half an hour or so. I'll try to respond this way. Cloud can be quite beneficial for quite a few activities. But also, you can meet issues and problems in using the cloud effectively, okay? So for example, on the spending side, I show you before that we are quite efficient on the IT spending even if most of our infrastructure is managed on a physical data centers, okay? So going to cloud for us, it could be really not so beneficial or even damaging from the IT spending view if we move our infrastructure there. Just to give you an example. By the way, we are using cloud, okay? So we have -- when we, for example, we need to do massive workloads, imagine, we have an artificial intelligence program internally, so maybe we need very high, big computing power for a limited time, we are using cloud. We are using cloud. We're using cloud for many Software-as-a-Service setup like a platform for HR, for example, for real estate and managing our real estate issue in our financial adviser physical points in the country and so on. So we are using cloud, taking consideration that basically, you have 2 cost benefit analysis for each single application and services and so on. So it's not a black and white, equation okay? It's not binary. We are using cloud but less than others.

In any case, Gianluca, you have been extremely polite in describing the cloud and so on. But let me I want to be provocative with you. So -- but this is my personal point of view, I'm not a guy like you are. But my impression is that when you're talking about the cloud, there is the dream by many banks going to cloud, they are going to save tons of money. This is a legend. So probably this is going to change the way they are working. But if they really expect to save tons of money, this is not so the companies that are specialized in providing cloud services, I'm not charitable organizations. And so at the end of the story, probably the reduction of cost is not going to be the main driver in going to the cloud.

Yes. Let's say that going to cloud can be requires a well-designed program, let me say. So especially if you are moving to cloud from on-premise situation like traditional banks. It's different if you were more on the cloud, okay? So you founded the company lately. And so maybe at least for foreseeable future, your application are designed to run well in the cloud and so on. So many banks have likely idealistic expectations about cloud benefits for them. Also because we have to write and to redesign most of your applications, you can't move a legacy system or a mainframe or application waiting, I don't know, coded 10 years ago in the cloud. Like it's a lift-and-shift approach. And this approach is, my opinion, not 100% successful likely.

So another very interesting question. And so from time to time also, some major banks suffered several attack. What makes you confident that your clients are more protected from the risk in both absolute and relative terms?

Yes. Okay. Cybersecurity, I said this before, is related to operational risk. So -- and thus must be handled, managed exactly like other types of risk. So you have different phase in handling cybersecurity, managing cyber security in the prevention phase and central response phase after you were, say, hacked or breached or whatever. We have to work on the communication level for your internal staff, for the bank's management for your customers and so on. So lately, you've seen many incidents strictly related, for example, to ransomware, where basically you are hacked. They make your databases and data and storage and backup or whatever not usable anymore, unless you pay a ransom. The ransom can be quite high, being in the order of -- sometimes tens of millions, depending on your company size, if the company is profitable and so. So we are confident because we are working seriously on cybersecurity, just a long time ago. Fineco was more on the Internet. It's not coming to a traditional bank like a banking -- the on banking channel or a traditional bank. Fineco was founded, and the first service that opened was online brokerage. So we fully understand cybersecurity issues, dangers and so on. This does not mean that we are invulnerable, no way. We had no major incidents in the last 10 years, as I said. But you need to continuously work to continuously improve your architecture, your application, their procedures, et cetera, et cetera, because this is basically a very dynamic landscape. And so it's like a war, no. You make progress and advancement, and they do the same tomorrow and so on. So you have to respond. This is kind of escalation. Last thing, we are devoting a big part of the technology budget to is cybersecurity. I won't disclose the figure, but likely based on calculation and so on and so on, we are spending relatively double the average of the banking areas, okay, in terms of percentage.

And Gianluca, let me add another consideration on this very important point that, clearly, the kind of organization we have, the business model in which a large part of the infrastructure activities are internalized is making everything much more in control. So frequently, a large part of the damages caused by cyber attacks has been also driven by problems with external providers. So the more you have a structure that is compact, under control and, clearly, the lower the risk.

Yes. perfect point. Most hacking incidents happened to -- up your outsourcer. But also on your premises, if you lose control of your technology landscape, it's quite complex to understand how your technology is working for a bank, national banking because the banks are very big in terms of technological landscape, the hundreds of thousands of service and so on. So being hacked is a possibility, and having a full control of our infrastructure and application like us, maybe not 100%, but close to that, to their pass-in, of course, [indiscernible]. So of course, if you know how you work, then it's easier to fix when it doesn't work.

We have another question on cybersecurity. So how many people work in cybersecurity only? And what has -- what has been the worst attack being suffered by us?

Last part first. Worst that had been, I can't remember -- it was more than 10 years ago, 10 years ago, and maybe 12 or whatever. They hacked one of our server, I can tell you, but we didn't get any operating losses because they were interested in -- not in taking our -- breaching data, whatever. Very interested in doing free calls, international call, I'm not kidding. So they wanted to do international free calls. So we have to pay a bill -- to our telephone company at that time. And it was like, I don't know, EUR 6,000 or EUR 7,000, okay, so not really a big problem for us. How many people work in cybersecurity only? Okay. Our setup, we have a department in which we have a technological and cybersecurity people working together. So we have dedicated teams for anti-fraud and for cybersecurity, but most of our system engineers had operational duties on cybersecurity. So we try to distinguish basically technical activities. These are in terms of system engineers, architects, database manager, or whatever. So they have to implement security, cybersecurity measures on their own system. In this respect, cybersecurity just have a controlled activity, the ownership of governance, if you like, and the one-off control, of course. So this is a kind of shared responsibility. We don't have, like you can find in other bank, cybersecurity team that operates on a technological system directly or whatever. I don't believe this is the right way to go. At least in our context, I don't want to be too transparent on this. In our context, we found that collaboration, cooperation between IT guys and cybersecurity guys is the best way to go. I don't want to evade your question. We're around 10% of our workforce -- workforce for technology, of course, and for the whole bank.

Now there is a question and -- and I'm going to answer directly. How important is your IT platform to carry on the strategy of transforming deposits into managed assets? So clearly, the technology platform is the cornerstone of our strategy. Because as we had the opportunity to discuss many times, the main -- probably, the most important driver in the absolutely amazing growth of our assets under management, net sales and so on has been continuously growing efficiency and productivity on the financial plans network. And the productivity financial plan is network only, is mostly related to the IT platforms because this -- our -- the way we're managing the data, the way we are interacting with clients is clearly creating the perfect environment for having the bank doing a large part of their jobs and just leaving them in charge for managing the relationship with clients, with the possibility to manage a much larger number products of assets. So the platform is absolutely the cornerstone of our strategy for absorbing liquidity. Now we have -- what is the expected spending growth, IT spending growth in the coming year. It is difficult to find any -- retain and skill the personnel. Gianluca, over to you.

Well, for IT spending growth, maybe Alessandro can be more precise than me, I guess, because the budget is not...

Yes, you are completely right, Gianluca. Because now -- am now enjoying the privilege to stay in the comfort zone in having such my great colleagues doing the most part of the job, so I'm becoming a little bit lazy. So totally right. This is currently with the presentation. As you can expect, the IT spending growth is not expected to change too much. But as Gianluca has been incredibly effective in explaining, we are not just doing things well, but we are doing things in a very efficient way when we were -- and this is related to the Gartner map that is saying that Fineco is in the quadrant of the value for money. So Fineco is spending the right -- a small amount of money, but spending incredibly well. Because it's not difficult to spend tons of money. And unfortunately, many frequently the -- what is claimed by banks is I'm going to spend billions of euros on IT. But if you are positioned in the top -- in the bottom left quadrant, it's probably better that you spend less than more. So we are not expecting any significant change in our -- in what we are going to spend in the coming years. Regarding the second part of the question, Gianluca?

Yes. It's a good question on skills shortage. This skills shortage in technology and cybersecurity professional skill set is a global phenomenon, okay? It's not just related to Italy or Europe. The shortage even in Asia lately, and this is quite strange. It's true that it's -- well, there are many reasons why this is happening. Digitalization of society as a whole is increasing the demand for this kind of professionals. And the supply is -- the dynamic of supply of this kind of skills is not increasing fast enough to satisfy that kind of demand. Imagine also that most females seem to prefer humanities and social sciences when they enroll in university or in colleges and so on. And -- but this is a pity because technology and the cybersecurity can offer in the next foreseeable future, maybe for 10 or 15 years, a nice place to work, very rewarding also in terms of salary and so on. What we do now on this point? First of all, I want to say that we have a very low turnover in technology and cybersecurity in Fineco. The turnover of my department is lower than the average of the company in Fineco, and the average of the company is better than the market, okay? We have here our manager, but he could explain to you that Fineco is a nice place to work in. And so we are trying to do the same in our department -- in my department, basically, technological and cybersecurity department, by giving a good place to work, to express your potential, to work without too much pressure. I prefer to get the pressure on me, not to my colleagues and so on. We have a lower turnover in terms of 2% per year, just to give you an idea -- between 2% and 3%, some less than this. And so finding new professionals is hard. But of course, if you are to replace say, 4, 5 or 10 person per year is not that hard, okay? We are looking for skilled people. I must confess that, of course, we are paying a price in Italy. You know that maybe -- the most -- many cybersecurity professionals or a niche player in technology, Italian people just left Italy to go and working abroad, for example, because they are paying much more because maybe they prefer an international experience so and so. We will use remote working, remote working in terms of maybe we try to recruit professionals with different nationality in Europe or in Asia or whatever in the next few months, I hope, or a year and thus enlarging delay in which we fish, okay, let me say so.

So there is another very interesting questions. I think that we all agree that your technology is better than the large Italian banks. But how does it compare to smaller start-ups operating across Europe, not just in Italy? Can you please give us some example of how do you keep on top of new technologies and then ensuring your technology does not become outdated over the time? How easy difficulties to track, but this is the same -- covered with the previous questions. I don't know, probably, Paolo, you are -- probably you can answer and giving you the flavor of why Fineco -- because at the beginning of the presentation, you explained that Fineco is an unusual fintech. And so now probably you can give some more color on this point.

Yes, of course, basically, we were talking about the beginning of the presentation. So fintechs, usually, they're using outsourcing massively. They had to be very fast and quick to enter the market with a single product. Most of the time, they use platform -- banking platform. Actually, they have nothing fancy. They have nothing particularly innovative. They just have simple -- very simple products, let's say, they have just a credit card or a debit card linked to a very nice application -- mobile application with a nice content. So they don't need the cutting-edge technology. They don't need to integrate with other part of the areas of the bank or the company. So it's something that is quite different from us because we have to integrate everything in one single platform. We have to ensure that the quality of the user experience is great. And so it's something that is -- we're not really searching for the best technology possible. We're just searching for the best technology for what we need. So it's not something that -- we're not -- I would say, we're not -- most of the time, we are fast forward. We're not the first to use a technology or the first to use some piece of IT. We just look around. What we see what is the best for our products and services, what we need at the moment. And then we adapt our systems to our needs, what we need in that moment in terms of new products and new services.

And probably, Paolo, do you agree that, in any case, the -- so we -- the opportunity, the gigantic opportunities related to the traditional banks. So the amount of money that is on their move is absolutely incredible. So also assuming that this -- some of these small start-up is going to be really an effective and successful in evolving in a direction like Fineco is, we are talking about an enormous amount of money that is on the move that, honestly speaking, the last concern we have is related to this small fintech start-up that this is not clearly -- they don't represent absolutely a track for us.

They don't have a particularly innovative technology. They just use most of the time technology that are from -- coming from old platform or other banks that they give them the technology. So it's not rocket science.

Then there is another very interesting -- this is for you, Paolo. So can you provide an example of half of your internal IT skills give you a better risk management control?

Okay. I will take this one. Okay. Risk management control is usually -- is heavily based in the last few years on data analytics, okay? So my colleagues in risk management, for example, just in risk management, same cyber security, for risk management, I mean, the department taking care of the overall risk of the bank. Everyone is basically using massively data to carve out information they can use, that they can feed this kind of getting their model. And then after model completes -- computes all the data, they can have a better understanding of the situation and take proper measures to keep the earnings flow, for example. As we have a big capabilities in handling data -- so I mentioned on a couple of slides that we are quite good in moving data back and forth between systems, and we are good in data analytics. Then, of course, risk control activities can benefit from this good process we have. Of course, we will invest more in the next couple of years, exactly from the technology budget to further improve our internal capabilities in handling and integrating data just to keep our risk in control, okay? We have a dedicated team that will take care of that.

Paolo, this is for you. Could you please provide some feedback from customers or anecdotes which prove that your technology either from [indiscernible] is better than your peers? So if yes...

A lot of them, a lot of them in every area.

Pick up one that is for you is...

For example, when in brokerage, where we have a fast market, sometimes we have error that can occur, of course. And we can reverse the errors -- like an order went wrong -- in a second. And it's crucial because people -- they're just looking for this. You have to be quick. You cannot manage, let's say, a brokerage platform without the possibility to reverse immediately an error. And of course, this is because we have an IT, as I said before, which is totally integrated with the customer care in back office. And every single operator has the ability -- is able to use the data and the tools that allow them to reverse the error, for example. Or another example, when you -- we have people -- maybe they just using their card abroad, and they're using -- with the merchant, which is in a black list and they want to buy anyway. And they don't know it's a black list, of course. And they get rejected -- the payment got rejected. And so we know it in real-time, and we call them real-time, and we allow the merchant. We take the merchant out of the black list to allow the client to proceed with the payments. And as I said before, these are moments where our clients becomes extremely satisfied. And just a few examples. Now look, if you have some others, but it's full there.

No, of course. But let me chime in with this. I think a good reliability on your systems and application helps the most implementing problems and issues. So you don't have to solve problems because we have less problem due to the fact that you are reliable. Imagine a company that has many incidents on the technical side, so systems go down, I don't know application crash or whatever. Lately, you -- I don't want to mention it because it was for sure a technicality breach and they solved it rapidly, but a bank in Italy showed wrong balances to their customers on the Internet, so they had to close the service. They received thousands of calls from people that had seen a negative balance and so on. So if you -- if had not have that kind of incident, maybe they do not have to solve the problems of the customers. That's the way to go. Having a few incidents possible or no incidents, but that's just an obstruction. And to solve that in a fast way, this can have on the technological side. I mean technologies -- reliabilities are built over technology, okay? So one last thing -- because this is the second question, so, on technology level between our traditional banks, fintech and so on. Imagine that technology alone -- and I am the Chief Information Officer in this company cannot solve every problem. So you have -- to have a good mix of technology, people managing that technology and the people working on processes built on that technology, like CRM, like offices, so it's kind of an integrated platform in which technology is the underlying layer. But on top of that, you must have skills, people, good processes and so on. Our back office, for example, is quite effective in solving customers' problem, and they just manage the technology by us. But of course, without them, we would not be able to give a good customer service.

Another reason, this is for me. So several domestic bank continues to prospect despite their negligible tech skills. Do you expect the generational shift to change this in your favor? But this is -- we don't expect this is happening right now. Because if you look more in depth in the numbers, we are delivering the advantage by the kind of business model we are running and then my colleagues has been extremely effective in explaining this, thanks to the technology. And the quality of services we are providing is reflected in our growth. Because first of all, there is a very clear evidence. And these are -- if you are interested in our presentation on the website, there is the speed at which we are growing in the private banking segment. Fineco is massively outpacing not just the traditional banks, but the specialized players in the growth. And this is driven by the fact that Fineco is capturing the new generation of rich people in Italy. Because the generational change is underway. And clearly, the new generation is a completely different kind of request and habits and demands. And second, the largest part of our growth is driven by the word of mouth. And Fineco is -- we are famous for not relying too much on recruiting our new financial planners for growing. And so progressively, this -- these trends are going to be expanded, and they're going to build up even stronger. And just to give you an anecdote because this is something that I experienced personally, a few months ago, I received a request by one of our largest financial planners for joining him in a meeting with a potential -- potential very big client. And this was the owner of a company that was in the process to sell a big stake to a private equity firm, and they were interested in bringing to us something in the region of more or less EUR 50 million. And at the beginning of the meeting, my first question to this potential client has been, but what is driving you to us, which is -- the answer because she was -- she was a woman. She said, "Because my son has been your client from the beginning, and when we started discussing the family, what -- which bank do you use for investing our money, I'm using a bank that is absolutely amazing, is working incredibly well, perfectly reliable, incredibly transparent. And you can use this." And so they did. So this is just an example of what's going on. So absolutely, yes. This -- the technological advantage we have is going to be exploited even stronger, stronger going forward. And the reason -- are you going to enter blockchain? Do you consider it an opportunity or a threat. Gianluca?

Neither. We've been starting blockchain a few years ago, even made a few proof of concept. We didn't find any serious use case internally that justified basically investing in that technology. This doesn't mean that the technology is not good. The technology can be applied to many context. We have just one in live in production. It's a kind of a clearing mechanism between banks in Italy. Internalized -- basically hosted by International Banking Association -- Italian Banking Association, sorry, and so on. So I can't say anything on blockchain, even if you have a look, a few banks are working on introducing blockchain to handle contract settlement cross borders and so on. But the technology, even if the technology is measured for a few context, maybe it will take 1, 2 or 3 years more to deploy in real field for us, unless something unexpected that is, of course.

But there is another question on the -- how much of the capacity do you have compared to the peak orders executed in one single day, for example, compared to the more than 4,000 execution of November 5, 2020? Could you offer an idea on that?

Yes. Good question.

The question, could you [indiscernible] your IT platform, expertise, service to the third party? So Gianluca, before you start, I'm just answering directly to the second part of the question. The answer is no. Because clearly, we have been approached by several private equity firms interested in proposing to us to spin off the IT infrastructure is creating a separated company to be used for doing this kind of business. But clearly, we don't have any interest in doing that because the opportunity we have in front of us, that is so huge that we don't want to be involved in businesses that we consider of lower than you expect what we are doing. So clearly, there has been -- clearly, we received several requests, but it will not -- it's not part of our plan. And Gianluca, if you want to answer to the peak on the spare capacity.

Yes. Let's say that 2020 was a notable year by any means. So we experimented new peak volumes, not only on brokerage, but also on more technical context like, say, network sessions, far more workload and so on. So we -- even if we didn't have any technical breach and serious technical glitch with impact, data and so, we use that kind of experience to build on our future, okay? So whenever we meet a new threshold, for example, that seems to move our -- closer to our top limit, we just try to push the limit over and over, okay? So just let me do an example. Trading platforms were really stressed in 2020. We estimated that we had a mix of a combination of spare capacity and elasticity enough to end or double the traffic. We have double, okay? 100% more. It seems a lot of room to move in, but you never know. You can have also another binary event like when Trump won the U.S. presidential election. It was unexpected event. And the day after, the market went crazy. Like in Brexit, you can remember. And so on. So we used the last 3, 4 months to improve our brokerage platform. In the next few weeks, we released a major change. And above all we'll improve or we hope to improve even further our response time and to offer us even better scalability, okay, exactly on brokerage. So that's the way we work. So when we see that the limit is approaching, we try to move before in advance to push that limit away from us. So overcapacity is not the only way to go because overcapacity is expensive, okay? You can size your system to have a big overcapacity because overcapacity we're not used is expensive. You have seen that -- I hope that -- I'm not sure I convinced you but we are efficient in terms of cost. So having a bigger overcapacity is not the way to go. You need a bit. But you need to have elasticity to change stuff and things that need to be changed in the short term. So we [indiscernible] the second...

And clearly this is possible only if you are in totally full control of what you're doing, so if you are managing directly. Because to manage the flexibility you are mentioning, for example, if you are using external platforms, white labeling solutions, it's a dream. So it's completely impossible. And...

Depending on somebody else, so maybe your priority is not their priority. That's it.

And now there is a question for you, Paolo. Have you identified any further future announcement that will benefit the clients and that prices, online experience and improve further the adviser productivity?

Yes, yes. Definitely, yes. We -- the biggest I can mention now is a project we call Fineco -- we call it internally Fineco X, which is redesigning, revising all the processes related to the campaign management and customer analytics. So we are just releasing a new piece of software almost every -- we expect the peak of the productivity of this new project probably in a year from now, and it's something that is going to give us much more grip on clients, of course, but also financial planner is going to help financial planner to be much, much more productive, probably 10%, 20% more of what they're doing now. So it's a project. It's a very interesting project, very challenging. It's something that is going to change completely the way we do marketing with our clients and our financial planners. So this is, I think, the major.

Here, there is another bankruptcy case. How do you keep your IT skill updated to have the best-in-class capabilities in an evolving sector?

Okay. We tried to put incentives on information, on self-training, for example, so on information training. We let our colleagues to have time to improve in their work time, I mean, on specific technologies. We are using the -- we are heavily using research companies that help us in understanding the trends before they happen or soon after they have started. We try not to stay too much back in the past with our technologies. That can be quite detrimental to your staff, of course, because they're using their time to work on the old technology and maybe not just effective anymore or not efficient and so on. So we try to stay in this dynamic trend. We have front that we cannot control is like a macro trend. So we need to couple that, without a chance to influence that. Maybe in Google, they can, but we can't, of course. Paolo mentioned before, we are a fast follower. It's true. We are early adopters in technology. Maybe we don't want to be on the bleeding edge of technology because that requires to take a higher operational risk, okay? Because if you are using a not matched technology, you risk that the technology is not -- technology promises will not be kept in the future or maybe that comes as -- so we try to understand where to go and train our professionals to use that new technology that maybe is not brand-new, but it has proved on the field that it works, okay? So it's kind of path we are being on.

And now we have a EUR 1 billion question for you, Gianluca, which is the main challenge ahead from an IT point of view?

Well, the -- okay, the main challenge -- we should distinguish what is a challenge from what is, for example, a threat, okay? So in my mindset, operational risk is always there, okay? So cybersecurity and stuff like that is always in our mind when we work. It can be a challenge in the future to stay away from cybersecurity incidents. We have done that in the last 10 years, but is it only for, it's not a guarantee for the future. So we have to continuously work and improve our system application, cyber hygiene and so on. On the technological side, remain cost-efficient and effective at the same time. I showed you in the presentation maybe is the most worrying thing, of course. Imagine -- just to give you an example, 2 or 3 or 4 years ago, going to cloud was considered absolutely a cost-efficient way to manage our technology. But lately, in the last couple of years, for example, major cloud service provider, Microsoft, AWS and so on, they simply raise your -- the bill you are paying each month, okay? So that was not expected a few years ago. So if your pricing model changes and you can't control how it changes because it's simply you have a big difference between you and, I imagine, Microsoft. You can't negotiate more than -- a fixed rate, I don't know, 2% per year or whatever? If they decide to change the direction to bill you more, then your [ hands and food ], inside their cloud, then you have a problem and you are -- okay, so in big trouble, okay? So you could define a multi-cloud strategy. So you have something in Microsoft, something in Amazon, whatever. And this makes things more complicated and so on. So maybe on the cost and effectiveness, that will be the most worrisome thing for us in the future, for everyone, I guess.

Do you have any insurance protection for cyber risk?

Yes. More than one. More than one because depending on the context, we are talking about cyber, but cyber is a family of environment landscape or whatever. We have different insurance companies that protect us, which we can transfer the risk of, for example, major hacking breach, whatever, over a certain threshold. Of course, by the way, we are paying each year a low fee to lower fee compared to others to the insurance companies because our incident history is quite good from their point of view, okay? So we have shown in the past to be effective encountering fraud or cybersecurity instance and so on. So we are paying less to be insured. But I can confirm that we have more than one. And of course, the only drawback is that they won't protect you below a certain threshold. So -- but if a massive incident -- should a massive incident happen, we will be at least protected from a certain threshold in the upwards.

What do you define a major cyber risk issue? And what is a minor cybersecurity issue instead?

For issue, I don't know if the question is oriented to understand what is a major incident from what is -- to tell them apart, a major incident or a minor incident. Usually, you find a major incident when you have a tangible impact, okay? On your reputation, on the regulation, on the regulator. Imagine a breach, okay? They steal your data and you have to go to Bank of Italy or to ECB and then to the data protection authority and so on, they can find you if they find that you didn't -- that was not -- so you didn't invest enough in cybersecurity procedure technology and so on. So your reputation will be hit, for example. And the risk, when you have an incident, it's a materialized risk, okay? If they steal your data, so you have a bad incident it's because the risk of data been stolen materializes, okay? So what is the major risk we are facing? Somebody like [indiscernible] Italian people in the audience, [indiscernible] is a government entity that was hacked in July. If I remember, they -- basically, it was a ransomware. They lost all the data, and they were not able to provide any services to citizens in -- millions of citizens in their region for weeks and weeks. It's a major risk materializing, okay? Imagine a private company in the same condition, a bank. You are not providing services to your customers for, I don't know, 1 month. It will be catastrophic incident, of course. So that risk is major, okay? Minor risk, okay, I don't know you lost a laptop somewhere or maybe you have to represent a system that went down because of hacking and so on, so on, the classification, the formal classification internally in our government volume, of course.

So what percentage of your IT investments are allocated to maintenance? And what percentage is to development? What is the absolute amount of IT investments per year?

Okay. We have done this exercise to estimate what we use for run, say, so for running already existing technology services, and what we are using to develop new systems or to update old system. The main issue here is that you can find usually a clear definition of what is run and what is development. So everyone basically uses the best practices you can find here and there. We have done the same. We estimated that we are devoting 70% to run services. Remember that we are here since 20 years ago, more than 20 years. We have plenty of services, and we are offering our customers based on multi [ non-regional ] bank with all the product portfolio we have. So investing in brokerage, say, banking, we are not specialized, okay? So it's 30% development, 70% running, even if I can say that percentage depends on how we distinguish one from the another, okay, both past development and maintenance. So the figure cannot be compared as is with other companies, unless you know what methodology they used, just to be clear. The other question was the absolute amount of IT investment. If for IT investment you mean CapEx, capital expenses, so money that we use to buy, say, physical hardware, for example, to buy certain types of license or software that we can develop and then capitalize. That figure, our CFO is not here, is between EUR 11 million and EUR 13 million per year, depending on the situation, projects to be done and so on.

Now there is a question for you, Paolo. So you've seen by far ahead on the curve in terms of technology relative to banks, not to speak about insurance companies. Do you plan to enter a distribution, also non-motor third-party liability products. So Paolo?

I'm not sure I understood the...

The question is if we are considering to enter directly, considering that we had other banks that they are becoming extremely active in distributing insurance products, not life products, but related to the damaged products and...

Yes, basically, it's something that we are -- everybody is trying to make this kind of things working. It's quite difficult to make money in these products because you have to -- you had to -- basically, it's difficult to sell it online, first of all. And it's difficult to sell it with the financial planner network because they're doing a different job. So that would be making -- changing basically the scope of the financial planner network, at least a little bit, to try to service products. And we think -- we thought in the past, and we think now it's not worth the case because we have so much to do, so much to do with investment products, with clients and new clients in these days. It would be non-sense for us to enter this kind of segment.

In any case, Paolo, you agree that we made from the beginning an strategic -- we took a strategic decision that we want to keep our financial planners concentrated in doing just one single job, that is to manage the wealth of our clients. So it's possible to use financial planners for selling other kind of products like, for example, insurance products, mortgages and so on. But the downside that, clearly, there you have to expect a lower level of productivity on the investing side. And we see much greater possibility of creating shareholder value in increasing the productivity of financial planners in investing than using their resources for running for distributing other products like, for example, mortgages and insurance products. And so given the strong operating leverage that technology seems to grant, would not make sense for you to engage into aggressive acquisition campaign? So from a purely technical point of view, the question that is raised is the right one. Because if -- so because we adopt -- there is a continuous discussion on the possible integration among asset gatherers. And then the point on asset gathering industry that to go for an integration between 2 asset gatherers makes sense only if you are able to extract real important hard synergies. So practically, that you are hit from -- you have 2 operational platforms and you can -- you are managing the 2 companies with just one single platform. From a technical point of view, clearly, Fineco is by far the best positioned company for doing that. But saying that, we said that we -- as we confirmed to the market several times, we have absolutely no interest in moving that direction for a very simple reason, because the organic growth we are experiencing so strong and our expectations of the continuation of this organic growth is so strong that to enter in such kind of transaction would mean, in any case, to slow down the process of growth of the bank, freezing our -- the evolution of our platform. So at the end of story, clearly, it doesn't -- we -- if the situation was different, so situation characterized by an sluggish growth, this could make sense, but this is not absolutely our case because we are incredibly positive. And we think that the opportunity is so huge that, despite the fact that we are, by far, the best positioned company for an theoretical consolidation in the industry, we have no interest in doing that. If there are any negative angle to run a closed IT system like yours, for instance, the outsourcing of -- they got these activities in the underwriting mortgages. So I'm not sure that I correctly -- because I don't understand if the question is if we have -- if the suggestion is to outsource that they got these activities in underwriting mortgages. But in any case, talking about -- for us, mortgages is an ancillary business. So it's not absolutely very relevant in what we are doing. And so it's not part -- it's not the top end of our attention when we are talking about our IT infrastructure. But in any case -- I don't know, Paolo, Gianluca, if you see any possible negative in such a closed and directly run IT system like yours, so I leave the floor to you if you...

Just -- I take this question. Thanks for the question, by the way, because it allows me to say this that I didn't mention in the presentation. When we say that we have a proprietary back end, that means that we have developed that back end, but we use the standard techniques, standard programming language, standard design and also adopted the best practices basically to do that. So even if the system can be considered close in terms of that, it's not a market solution you can just buy on the market, a simple and off-the-shelf package, for example. We fully control, usually, more or less, that technology we have developed, so we can change it, quicker usually, than migrating to a standard package, okay? We do this example. You can have serious problems if you are using closing system -- closed systems and you don't control the development of that system. Imagine if you buy a package from somebody in the Internet. You can change it usually when you like or how you like, okay? You have to ask, and maybe they won't do that, especially if the package is very popular. They won customers, it's for you and so on. So I'm not worried about using internally developed software, not even for or others. Because as we control the technology and the data -- and the data, we are using standard databases, for example. And so you can take the data in our databases and migrate those data in standard packages. We have done that before several times a year, for example, when we migrate from our internal technology to a standard package we can buy. Just to give you an example, when we were deconsolidated from UniCredit, we had the sourcing program internally to migrate the part of the technology we had there. We didn't use any technology from UniCredit for customers of our business, but we have many applications for, say, HR, for real estate, for compliance, risk management and so on. So we have in front of us hundreds of applications to migrate, and we have done that timely and not spending too much money. And sometimes, we have to take our data and then to migrate in standard packages we have bought because we didn't want to invest in that kind of technology. Remember that I mentioned we internalize only if it's core to our business and we have the capability to do that. Otherwise, we just buy, as everyone else. So no, I'm not worried about our technology in case of migration or outsourcing data.

Excellent. So now we don't have any more questions. So we hope that has been an interesting overview and journey in our technology world. Clearly, we are, as usual, at your disposal in the case you have the need of digging a little bit more in depth, particularly if there is someone that is particularly tech-savvy and want to enter in a more precise detail regarding the infrastructure. Clearly, we are completely available. Please feel free to make us a call. We can arrange a follow-up on the tech. And thank you for your participation and for the extremely interesting questions. And see you soon and in the next few days and weeks. Thank you again for joining our IT Day.

Thank you very much.

Good evening. Bye. Thanks.

Thank you.