Wells Fargo & Company (WFC) Earnings Call Transcript & Summary

All right. Great. And so now to kick things off. So I'll be talking to Mike Balsam from Wells Fargo and Antonina Skrypnyk from Softserve. Welcome. This is our panel on Reimagining an Innovation Culture for Your Digital Transformation. We have, with us, our 2 speakers Antonina Skrypnyk from SoftServe and Mike Balsam from Wells Fargo. I would like to welcome them. Thank you both for being here. So before we get started, I'd like to do some quick introductions to give our audience an additional context and background. Antonina, if you don't mind, I'm kicking that off. Just tell us a little bit about your role at Softserve and what your expertise and background are?

Yes. Thank you and I'm very happy with you all having me here today. And I work in Softserve in financial services vertical. I actually oversee the business of our financial services client in EMEA region. And I also am the head of the Financial Services Lab. So this is the internal decision, focused on developing the innovative product inside our company with the focus on the financial services market. So this is like in a nutshell, what I'm responsible for.

Excellent. Thanks so much for being here. Mike, what about you?

All right. Thanks. First of all thanks for having me back on your conference, as you love these engagements. My name is Mike Balsam. I run Wealth Digital and Innovation Group here at Wells Fargo, I'm based in San Francisco. My team's focus is on working across the organization to help build out the experiences for our clients in the private bank and clients with some of our complex financial products. So really, we try to work to deliver good client facing solutions, while also making sure we have those things and connect them with our team because we are in relationship business. So we try to make sure we're there to support that line of business. Thanks.

Thank you. So again, we're talking about innovation and the facilitates to draw transformation. And we've seen the kind of disruptions that -- or the way that the industry has responded to all of the disruptions in the past year. So my first question to kind of set the stage, I want to hear what you -- what innovation means for you, for Antonina, from your clients, Mike, for your organization and your team? Antonina, I'll start with you. When you think of innovation, what does that mean for you? What does that mean for your clients?

Yes. So in general, like this year was a very interesting one, right? So -- and from other perspectives. And what we hear from our clients and what we see that our clients are interested in, in regards of the innovation is being able to be flexible, but at the same time, the one step up front of the challenges that emerge in the market, right? To be the first to respond in the most sufficient way to the -- in view of interest of the clients and be able to adopt the cutting-edge technology as quick as possible to the new use cases to grab the cherry on top of the market because the first -- the market is the one who grabs the biggest stake, right? The first and the second one actually, according to the theory. So innovation, yes, this is like being flexible enough, but at the same time, been able to combine the super technical skills. The innovative culture of the organization and been able to absorb the emerging needs from your customers at the market. And this is all like on the spot in the ideal world.

Yes. How do you think about innovation?

So I think it all depends on the way and you [indiscernible] mentioned my team and the organization. So I think we kind of bring a different lens to it. I would say, as an example, if you think about the large organization for them, I think immediately, especially, again, with the recent times being what they are, innovation was, "oh, well, we are pretty relationship and paper base and in person base, how do we pivot," right? So for them, innovation was, how do I get my day-to-day done differently. So they're thinking e-sign and stuff like that. From my team, we're rather thinking about the things, that's what we do, right, as part of what our operation is here. But for us, we're thinking even a step beyond? We're thinking about tools like digital humans as innovative engagement models, right? So same problem, but a different level of thinking about it. They're thinking about what can we do today, we're thinking about also when we think innovation, what can we do tomorrow.

And you touched on this a little bit. And then Antonina, I want to start with you on this again. But how do you think organizations are going to be able to maintain this culture of innovation when teams aren't able to physically be together? There's so much sort of disturbance and this -- literally like separation, right, of the…

About this question. And actually, it was like one of the main topics that everyone literally in one -- like immediately in space, with the lockdown and everyone is going like into the distributed things, but in a forced manner, right? Like immediately from day 1 and on. And for at least for the near term, right? So -- and especially, this is very relevant to the huge organizations and like multinational companies, having innovation now in different location, in different continents, right? And even though they have a very like may have strong innovative culture and distinguished a solid processes for managing the innovation internally. But they were used to have that like in the -- not in the distributor teams, but in 1 specifically play from location or a hub or generated our innovative lab, whatever you name it in your organization. And is that being forced to get like remote and the distributors from like in an immediate time. This is the challenge that we all face. And it depends on how actually the company responded to that because of the internal culture they had. More flexible they are, the interest rate was the most neutral with transition. And we have a whole bunch like different -- of the tools that we can do for maintaining this collaboration in the distributions, right? We have businesses that have been actually built the business model is built -- based on the distributor team, right? And this is normal for them. This is their daily basic routine. But at the same time, if the organization was focused on the having like direct B2B communication on daily basis for environment innovation management process, it might have been an issue. But again, we have a whole bunch of tools -- like not naming all of them, like there would be not enough fingers on both of the hands. But yes, this is the challenge we all face in 2020. And it depends to manage it super successfully or like successfully at least, yes, this is very interesting.

Like I say, I'm nodding. How does this factual like physical separation impact your innovation team or your innovation initiatives?

Sure. No, I was laughing because it's so common, how common the challenges are amongst everybody. And everyone feels like, "oh, my poor world is collapsing," but at the end of the day, we were all facing the same goals and all responding a lot in the same way, which is the exactly the way I was nodding along and laughing. And I would echo what Antonina was saying. I think for us, I think the key was, our team was pretty fine, right? We were already somewhat virtual in nature. I mean some people were co located. But in general, the team and the people we partner with, they were global corporation technically and we have partners across the country everywhere. So for us, specially, my -- it is a little bit more of a small skip and a beep, but that was pretty much it. I think what helped us, though, as a company and certainly as an organization, is, first and foremost, we're strength-based organization. So first and foremost, looking at what are the similarities? What can we kind of set our foundation on? What is anchoring us? Right? So again, we have some -- we already had [ Ginnie Mae ] in place. We already had a lot of virtual work going on, and we had virtual conference room. So it was really about going -- don't panic as much. We've done a lot of virtual work. This is more we get it. We're not saying it's the same, but realize we're not maybe as flat but as you realize. And by saying no panic, let's build on what we have, "oh, this is -- so it's a little different, right? I'm taking my meeting from our living room then my cube." But in the end, I'm still talking to someone in L.A. and someone in Charlotte. I think that ability to kind of bring people back to center a little was what kind of made our ability to pivot in this time successful. And I mean we're not back at 100% everywhere, for sure. But I think those types of things help us kind of probably be like 90% surely out of the gate. So I'll pause there.

And I would also like to comment in here that actually absolutely agree that no panic just lead to our business, right? Because the show must go on and…

Stay focused.

Yes, expect on existing conditions, it just comes to you down and the team, and this is like the first reaction is, of course, the competition and the panic, and then you just settle down and do the work. And what we had is, you just introduce more interaction, more sync up, more digital communication. And of course, it may be like a little bit of too marginal in an absolute material efforts, right? But at the same time, when you are like speaking at this curve and then it's pleasant, and then it goes down with the -- or the panic regulated Mike is saying, and it goes back to normal, almost normal. And I would even like to say that for businesses like ours, for example, we were designed to work like near-shore and offshore and in different teams. So for us, what was surprisingly actually for everyone that in the first quarter, the velocity of the team, you can see this is the metric that we measure all the time constantly -- on monthly basis. So project, the velocities went up 15%, with everybody like when we -- to -- we love to fight, but the creativity of the team and the performance, again, was going up, and it was describing because like it's always emotional, pressure and everything. You people felt that they were all in the same boat and this is nice. And if you have a strong culture, it actually helps to win your teams. So this all depends on you and if everyone having the same circumstances, it really helps.

Excellent point Antonina. An excellent point.

Yes. And then glad that you said that don't panic the show must go on because we've been talking right now about sort of internal efficiencies, how to really adapt to these changes. But I want to change the focus a little bit to things that are a little bit more specific strategies sort of tactical. And the first thing I want to talk about is around AI. So I'm really curious to hear your perspective on how you've seen AI being leveraged to reach this new level of high-quality service for the end user. And Antonina, I'll start with you on that?

I'm like always the first. Ladies first today, right? So very interesting question because this is like one of the internal [indiscernible] report that leverage in this business, like, in the top of the research. And we are -- another search, the AI and all the fuss around that. But this is not actually about -- this is already a reality. And I can say that with over this report all the research is already done there is a lot of data, like information is like 50% of huge companies already. Those who are in the top of the lead, they are already having AI as the fundamentals of their strategies, right? So this is not only like thinking about that is to do it. This is the way how to do it, in what way, not even when because they're already doing that, right? And at the same time, AI is like a very hot topic from the perspective of the business growth. Why? Because again, I don't remember whether it was like McKinsey or Deloitte or maybe PricewaterhouseCoopers. But at the same time, we mentioned that AI is like -- will add leverage in AI solutions in financial services, may add like in a few years, in like 10 years or this is like a decade. At least like this being up [ 1 trillion ] to the new business. So this is a huge part like this is huge chunk of the business, right? So it is really worth thinking that this is the same to have -- to be embedded into your strategy. And AI is helping to serve, not only into the cost efficiency and new solutions, agile technology, that this is because of the buzz. But it keep users very like system use cases, providing the very tangible results from the perspective that most user experience the better personalization of the digital products. And now everyone is going like digital reason everyone, right? You have no way out. So you have the presence in business which is so well, So yes, so this is not the point of ease. This is the point of like how, I would say. So the positive shift in -- we already have moved from this stage is like touching it. And having the POCs intent boxes or whatever, this is already the commodity for the individual enterprise businesses, having that in the like begging for those strategies.

Yes. For sure.

Anything you want to add there, Mike, to your kind of leverage AI?

Yes. No, absolutely, I would. So first of all, again, I think I'd seen a study you had seen as well. I thought the number [indiscernible], but yes, it's AI is not a fad. It's definitely embedded in everyone's minds. And I think also what's important that maybe I didn't pick up on in the answer, but what I think is also important is it is -- there's a huge customer-facing opportunity here for sure. Which we love a nice -- and for me, that's the most interesting, right? Because I'm -- I build client-facing apps. That's our job. As I mentioned, digital humans, that's an AI founded tool, something. But also the other area is behind the scenes kind of things that make the client experience better. And by the way, make team members better and happier, which, therefore, makes clients better and happier, right? So when you're using AI in risk management to make sure that we're doing a better job of capturing 500 transactions and protecting our clients and protecting the bank or they do got effective [indiscernible] to or if we're talking about improving internal operations, right? The fact is personalization can also help internal apps being more successful. It can help us have reduced error rates. There's a lot of opportunity there. So I think AI across the board, anyone who in the company, can look at AI and find a reason why it's a valuable tool for them to consider.

Yes. So lots of use cases. Whenever you are in the risk management credits for in like the very -- it all depends on the industry where the prior is formed, I mean the sub industry, I would say, whether this is wealth management, asset management, trading, right? So -- and banking. So whatever type of the sub-segment in financial services, you are, the AI has these case for you and can help you have the solutions tailored specifically for your business challenge, right? And the challenge of your end user. And that is transformed into the money, right? Either the increase -- yes, either they increase the revenue or the more like cost efficiency and the reduce of the manual work or whatever is notable. Again, flat prevention, some specific models, scoring and as you will see and all this stuff. So yes, absolutely.

And Mike, you mentioned that your role is launching clients using apps, right? So -- or products rather. Can you talk a little bit about how you ensure that you're really positioned to launch new products and change these internal processes?

Sure. For me, I think the -- sorry, Antonina you need to go first on this one, sorry. I think the core foundation to me is kind of rooted in the past a little bit, as I think about this question. I think in order for us to be successful going forward, and this is 2 of most companies, especially in our space, is a stabilization of what relates our infrastructure. We have visions, we're doing lots of things. And we are going to be able to do them, and don't get it wrong. There's always opportunity for growth and improvement. But ultimately, as you think 3, 5 years out, what we need to also keep reminding ourselves is we need to fix the core of the infrastructure and the technology, right? And I think anyone who works anywhere knows, they've got some old systems someplace, so they're not web service enabled yet or whatever. I live in San Francisco and one of the stories that here, we tell kind of the analog is, we have a huge, gorgeous building, I won't name it because I don't want to get in trouble. This huge gorgeous building and tons of engineers and all those great minds and money went into designing it and building it, and they built this beautiful thing, and they decided the foundation is going to be on land sale, packed in land cell in San Francisco by the city by the Bay, which seemed like a great idea. It worked awesomely for everyone's mindset. And then few years later in, building starts to tilt and sink in, right, because its foundation wasn't strong. In San Francisco, you need a pilot, you get into the bedrock, you need to build on that. And it's the same thing with a lot of stuff we're talking about, AI, et cetera. If you don't have a great solid technology core, you can start building how you want intervention, you're site seeing a fall and have issues and challenges, meaning spending more time solving the challenges than moving forward to the future. So there has to be a -- I think that is the key to getting ready for the future. And then the other thing I would add on top of that is we have a very unique opportunity in the last 10 months. It's been strategic for the world, but there's a positive we can take out of it. It gives us an opportunity to think about how we get ready for the future. What are we learning from this? And how do we grow and get better down the road. And I think the realization that we can be doing things differently and digital can be a factor in. We do have opportunities to do more with the same, maybe are at least some positives we can take away.

Thanks, Mike. What about you, Antonina? How do you think that organizations can ensure that they're well positioned to launch new products?

I would say that the focus is here -- should also be on having a good partner, right? If you don't have the internal capabilities because to launch it, right? And you have to be very objective to yourself and very like straight forward and like frank, I would say, right? You are ready to have these internal capabilities to properly deliver that because this like using POC or even the product, this is one point, but then launching into the market properly in the proper time, tailoring it or if it is an internal product for the internal users, right? This is the other story. You have to adopt this cross organizationally, especially if you have -- if you are a huge organization, the enterprise business. So what we hear from our clients a lot of issues there on it. The product internal, for example, like half of them is never been scaled to the whole organization, even though the product was successful, right? It started the solution whatever you name it, was successful initially. Because they don't have the latter, the -- I would say, of like not the development only the pure engineer they're like building the product -- the pure product development functions, but also the OP making like the -- whether this is MLOp the bot or whatever, like this preparations going into life and clearly in the product. So for that, if you're -- whether this is in 10 on 1 or you are launching the product to the market, proper timing and all the Ps, right? The 5 Ps or 7 Ps, whatever you the framework you would like to use, like the place, the price and everything. That is the -- that all has to merge into like one like moment and to this momentum -- and grab this momentum to have the product be successful at the market. And in that case, you either have a very strong internal expertise for that or you need to partner with supporter, who will be enhancing your queue with these capabilities. And in that case, you can -- like you can ensure that your investment into this solution would be like reasonable, I would say. So this is a decision to make when we start the development of the product. And this is very interesting like topic, this to keep in mind for the -- all the managers of all the levels, that you don't only have to partner for the engineering -- pure engineering services. But over those like profits on the business solutions go in live to the market., that is it.

Antonina, I think I'd love that point, especially because if I think about it, I did pick a moon and I focused on the fix what you have and get it ready for the foundation -- become a more stable foundation. But what I like what you mentioned is, yes -- and by the way, you have a really good foundation, you have something that's great and it's working, don't isolate it, make sure it's being shared, right? I mean there's -- I mean, sadly, not as you go back to the beginning, there's opportunity to innovate from inside the company because just because our may thought of it doesn't mean RMB did and even a lot of great opportunity there. I love that you brought that point to surface.

And with that, I'd like to go into our last question, which is -- I'm going to ask you to be a little forward looking. And I would love to know what you plan to do in 2021 as a result of what you learned in 2020? And Mike, I'll give you the floor for that first.

Great. Well, I kind of pre-answered this a little bit in the other question. But for me, one core thing, I don't mean to be kind of on the air about it is going to ride the wave, right? This has been a very eye-opening year for so many people, both our clients, our business, our peer businesses, right? And I think that -- the goal is to take that and move forward that momentum. Specifics, everything takes a little bit of time, right, bringing out chatbots and whatever, all this stuff takes time to do. But as long as you can get people enthused and keep them going in the right direction, I think there's a unique opportunity here that we haven't seen in the past. I think digital, by many, I'm not saying my bank, but many, digital is a prop to the core business. Unless you're born as a digital business, digital is a prop, right? You go in and you can go into crate and barrel and you can pick and choose all the different [indiscernible] also with the iPad, but in the end, you're in this [ 4*4 store ] with product because that's their model, the digital to props to all of that. I think the same thing, we can move digital beyond being just a prop actually being a value proposition. And I think that's what I wanted to do is make sure we keep everyone realizing the value we can bring to the business and to our clients as we move beyond.

Thanks, Mike. What about you Antonina? What learnings from 2020 are you going to take into this next year?

Yes. A lot of interest and learnings. And the first main comment, I would say, for 2021 is that we definitely plan to be pretty busy because what we see now and absolutely related to what Mike just said, the -- what we see the business is reviving, I would say. So we have learned our lessons. And everyone is thinking pretty optimistically into 2021 because there is a lot of opportunities to address. And the smart, I would say, the smart business owners would be the first to address them, right? And so yes. I think the loan is where you have to be -- I don't like referring to the boost or the quotations. But the added fragility is -- I mean, the concept that arise like it goes up to the surface by itself this year. So if you have been pretty flexible and objective to yourself and at the same time, being able to respond to the challenges of the -- like auto world. So you will survive and in [indiscernible] finding the new opportunities, this is what we are here actually for our clients, right? So we are doing the engineering services and digital business solutions. So we are here seeing the more -- like the revival, the interest into the 2021 because everyone have identified already the issues in their existing business models and have found also or are now searching and identifying them, like crystallizing them. The challenges and the opportunities based on that in their business model to address them in 2021. So these super successful. This is the time to do it. And I think that 2021, it would be like a year like big dip of work. So for everyone, I hope so for everyone because the market is execute, and this is what we -- the business is pushing us to do.

If I can add into that, Antonina. Also -- and I agree 100%. And I think it's a bit of an inflection point also, and that's just kind of -- I was trying to allude to earlier, there's a lot of people who want to kind of get back to status quo, right? I want to go see a movie in a movie theater. I like them in my home, I'd rather see them in theater. I want to get back to some things. There certainly could be an opportunity for people to settle back into old ways as we kind of come out of it. So for me, the other thing I think is important in the learnings is we know people can take advantage of what we do. We have an opportunity to build on it and do it for them. And if we do it right, we can keep that think we can keep that momentum moving forward. If we don't do it right, there is a chance we see some people fall back and selling people go add digital, maybe not some point. I'm going to go walk to the bank, which is great, too, but just it's really [ intingent ] upon us and the people driving strategy. To realize this is an opportunity for a path forward, and don't take it for granted. It won't -- God forbid it, it should never come back around again this opportunity, right? So that's what we have here, I think.

I think that's a good note on. So thank you again to our speakers, Antonina Skrypnyk with Softserve and Mike Balsam with Wells Fargo. This does concludes Reimagining an Innovation Culture For Your Digital Transformation, and we'll be right back with their next session.

Thanks for the opportunity.

Thank you, everyone.