The vision behind the Banorte-IBM partnership

The vision behind the Banorte-IBM partnership
Banorte and IBM announced today in a press release a “10-year strategic agreement that will allow the Mexican finance institution to create a new customer-centric banking model.” For years we’ve been discussing best practices in bank transformation; but few have actually been implemented in more than piecemeal fashion.  Three aspects of this US$1 billion alliance strike me as noteworthy:
  1. Banorte has decided that the time is right to undertake a radical restructuring of its relationship to, and view of, its customers. Now the number three bank in Mexico, with 20 million customers, Banorte realized that delivering value could more effectively come from existing customers, rather than expanded market share. They aim to create value from increased share of wallet, cost take-out, and improved risk management.
  2. The transaction is structured as a true partnership, with risk sharing baked into the pricing, and is structured to self-fund incrementally over time.  IBM will realize upside potential if it over-delivers on a set of specific KPIs.
  3. Senior management was not only involved in the structuring and approval of the deal, but will be heavily enmeshed in the details on a week to week basis. Banorte and IBM recognize that this is much more than simply a technology play, but instead encompasses every phase and level of the bank, from platform, to organization, to process.
While this transaction, five months in the making, is clearly in its early days, Banorte and IBM are making all the right noises about how to execute on a well-structured vision. True partnership, risk sharing, and a professed commitment to true customer-centricity are necessary, if not sufficient, conditions to a potentially extraordinary deal. In the spirit of full disclosure, I worked at IBM from 2001 until 2009.
Dan Latimore About Dan Latimore

Daniel W. Latimore, CFA, is the Senior Vice President of Celent’s Banking practice and is based in the firm’s Boston office. With a wide range of experience in industry and as a consultant, he brings examples from outside financial services to help banks improve their customer relationships, with a particular emphasis on the importance of technology and culture.

Dan's coverage areas include the banking ecosystem, digital and omnichannel banking, and innovation. He has a passionate interest in behavioral economics and exploring why consumers and humans make the decisions they make, and what the implications are for banks.

Dan has been widely quoted in the press, including the Wall Street Journal, American Banker, Boston Globe, CNBC, and CNBC Europe. He is also a frequent speaker at industry conferences and client gatherings, having addressed audiences ranging from intimate meetings with CEOs and central banks to keynote conference speeches in more than a dozen countries.

Prior to Celent, Dan led research groups at Deloitte and IBM, worked in industry at Merrill Lynch (where he lived in New York, Tokyo and London) and Liberty Mutual, and was a consultant at McKinsey & Co.

Dan received a Masters in Public Administration from the John F. Kennedy School of Government at Harvard, and an undergraduate degree from Dartmouth College. He holds the Chartered Financial Analyst designation from the CFA institute.

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