Rip Out the Core

0:00Brett King: The biggest conversations in banking happen at Money Live North America. Join over 900 leaders from banks, fintechs, and technology providers this September 14th and 15th in Chicago for two days of insights, networking, and innovation. This is the conference designed by banks for banks. Visit moneylive-insights.com slash breakingbanks.

0:26Brett King: well welcome to this very special edition of breaking banks and paulo the banker's bookshelf exactly so uh paulo seroni and i of course uh are good friends we just recorded an episode recently for the release of his new book quantum sapiens which is being photographed all around the world. It looks like it's going fantastic, Paolo. It does. It's more entertaining than Pokemon because it leaves something with you. And I'm happy that readers are picking it up worldwide. It has been one month since release and it's going very well. Awesome. Well, you know, it's actually good that we had that conversation because I think there's an element of that sort of consciousness and intelligence we're definitely going to get into today.

1:19Brett King: But let's jump straight in. The reason we decided to do this as a podcast mashup between Breaking Banks and The Banker's Bookshelf is both Paolo and I are good friends with this guest that we're going to introduce next. And of course, you probably guessed already, it is reviewing a new book that's coming out for the fintech and banking sector. So without further ado, the host of Fintech Dreaming and the author of the Rip Out the Core, a brand new book, going to be launched on the public very shortly, Paul Krogdell. Welcome to Breaking Banks and the Banker's Bookshelf. Thank you very much. It's fantastic to be here with you.

2:04I mean, it's like three friends getting together for a chat. Exactly. It's nice. And it's, to some degree, been on the backburners for me to be on Breaking Banks, although we did a mashup as well between Breaking Banks.

2:18Brett King: We did a mashup podcast. Yeah, we did. So, and first time on a podcast. Yes, exactly. And I've had you both as guests on my podcast, so it only makes sense for me to come on and be a guest with you guys, right? So, long-time listener, first-time guest. Exactly. Yes. I didn't realise you hadn't been on the show before. That's crazy. Well, it's good to have you on the show. And you're coming to us from where, Paul? From at home here in Finland, Helsinki. I'm not Finnish, as you know, but over my movements across Europe, I've ended up here in Finland for the time being. I call this home. Let's see if I end up staying here for the rest of my life or not.

3:08But for now, it's a nice place of the world to be.

3:12Brett King: Well, I'm not Emirati either, but I know I'm in Dubai, so that works for both of us. So, all right. So, first of all, I guess we should start with the obvious story, you know, because it does appear in the opening pages of the book, which is how is it that a disaster in your kitchen with the dishwasher turned into this project that's been multiple years in the making of writing a book on ripping out core systems out of banks? Well, the first thing I want to say is the book does not advocate for ripping out the core. I made the title of the book provocative on purpose um so my the the underlying premise is don't just you just gave us he just gave us the plot device bro you know like come on i know i did leave us hanging yeah yeah paul actually actually i thought you were even more mischievous because the first time i sort of covered the book i didn't read it correctly and i read rip the core rest in peace that would have even been a better title right rip the core but yes though i thought you wanted to pass in a book oh yeah no no but i mean you always have to try and find a title that's going to grab people's attention and rip out the core is something that definitely provokes provokes the attention but uh so no the underlying premise is to do things progressively and to do it managed in the right way but back to to your original question Brett.

4:49The two parts ended up joining each other almost by accident. So everything that's in the book, the experience, my scars, the history, everything else on how to do progressive modernization or progressive transformation, more importantly, I'll make a distinction between the two. And the book focuses more on transformation than modernization. was something that was boiling in my head as initially a couple of white papers, etc., then started becoming the idea of a book. I have to admit that the whole fiasco around the dishwasher just sparked the thought that there was an analogy here between what kicked off as a disaster and then turned into a modernization transformation journey for me in the kitchen.

5:44And I realized I could actually take what many people see as a very dry, heavy subject and turn it into something that becomes a little bit more interesting and fun to read, but having still an underlying, quite important message to it. Just like with my kitchen, I couldn't rip the kitchen out. I couldn't say I'm going to rip the kitchen out of the house and wait three months and have a new kitchen because I still had a family that had to live there. I still had to make dinner. I still had to do everything else. So it brought it very clearly down to how do you transform a bank, but keep the bank operational at the same time in one way or another?

6:21Yes, you have to make some compromises, but how do you do that journey? And the kitchen...

6:26Brett King: It's that analogy of trying to change an engine on a jet aircraft while you're at 30 ,000 feet, right exactly yes and that that actually is a line that's in my book towards the end so you're absolutely right yes it is there you go well i'm sure i'm good with that but i don't advise um so paul um when did you actually get started on this like you know what what was the the writing process because you know i find that interesting for every author obviously paulo and I've done it a few times. But what did you learn out of this process that you would have never known about publishing a book previously?

7:12Oh, I learned an awful lot. And I have to admit that I could not have done this journey without the support of a couple of close friends in this journey. Let's be transparent. One of the sparks that actually got this big started was you and I, Brett. we actually sat in my kitchen and had a discussion, right? If you remember back nearly two years ago. With your family, yeah. Exactly. So then the dishwasher broke down. Yes. No, no. Yes. Yeah, the dishwasher broke down exactly the same time. No, not quite. But, and also I'd, the idea, like I said, had been going around in my head. I spoke to a couple of other people, Leerdaglyptis being another one.

7:57And everybody said, write the book. If you can manage to write the book, write the book. And that gave me the motivation to do it. Once you get started, it's actually quite easy. The flow just comes. That's what I found. You start writing. You do question yourself as you're writing along. Looking at this now end to end in totality, I think the two things I learned, speed for me is very different than what it is for publishing companies. They tend to think in weeks rather than hours. and I think in hours. And the second one is actually writing the book was not as nerve-wracking as getting the book delivered because suddenly then I realised when I opened the book and I took the book out or opened the box with the book and took the book out and went through the pages, I suddenly thought everything is now cemented on these pages.

8:50I can't change anything anymore. It's set in stern. People are going to buy this, they're going to read it and it's fine.

8:56Brett King: They're going to find the typos. yeah oh yeah i i already found some errors so maybe i should start a competition right but yes so to me it's good there is a typo yeah yeah exactly so it's to me it was it was opening that box getting the book out and seeing it and saying there's no turning back now it's it's there so paul let me tell you why i believe this book is relevant um i've been having for a few years I would say 100, one-on-one meeting in person with CIOs and CEOs of banks worldwide in every continent. And in very recent years, I realized there is a conversation within the room that is different from the one outside the room.

9:40Outside the room, everybody's successful. Within the room, everybody says we didn't really get the value we thought of having after investing billions in transforming our core through a cloud-native capability. And so I published a research very recently, the 94 % scorebacking problem, where we found out that never more than 50 % of the CIOs declared they got the business value out of these billions invested across a variety of different value definitions. And that's a pretty traded state of the industry. and of course you know we also researched on the reasons or what they had to do differently right in order to advance so i think that this book is very relevant because it is the moment where the industry is waking up to realize that some of the assumptions they had in the past to work with their core and become fit for the modern world were not correct so what can the reader find in the book that basically give them a light at the end of this tunnel where everybody has to travel through anyway, but they might decide that and learn that to travel in a different form to succeed.

10:51So for me, the book, the fundamental thing that I wanted to get out was to some degree, what I would call a field guide. It's a guiding compass to help you on that transformation journey. I'm not going to tell you what your target state is going to be. I'm going to help you to be able to define your target state, give you some guidance on how you can define a good endpoint that you want to get to, give you some recommendations on how you take that journey. But most importantly, it is that field guide, that journey rather than anything else. The other thing that based on my experience and research and you, Paolo, we worked together at IBM for a long time.

11:34If we look at, like you said, in the boardroom, one, very often the metrics that's being used to measure a, if we say, core transformational modernization project sometimes tends to be wrong, right? Very often the transformation has to happen because it has to happen. And therefore, the starting point should not be based upon how much am I going to save in the next three years. It should be on what is the business value that I want to try and drive for my strategic intents in the future. So therefore, I believe that, first of all, the return that you're going to recognize or the business value you're going to recognize is not going to be in months or directly after you've done the project.

12:19It's going to be about how you're driving new business value in the future going forwards. That's the first part. The second part is transformations of core banking projects to me should not be about let's focus on how can we replace everything completely and we can only claim success once we've ripped out everything we've got and replaced it with something completely new it's a ongoing journey that actually to me never ends because the minute you say i've got legacy and you put something new in you've got legacy again. So really, this becomes an ongoing journey, where you actually put yourself into a mode of I will transform continuously from now on, I will not say there's an end point that I'm getting to, except for the fact that you need to have points set in the ground, where you can say, I've reached this now, now I'm going to go to the next one.

13:15So there are fundamental parts that I try and bring out that says it's not a technology project, it's a business project, it should be aligned to your business strategy. You should stop looking at whether you're talking about banking products or you're talking about domains in your IT system. You're talking about business capabilities. Do you want to be able to recognize and deliver in the future to be able to still stay relevant and align with whatever disruptions are coming?

13:39Brett King: Paolo, I think that, you know, I wanted to challenge your question there as well, because, I think part of the problem is that rather than looking for ROI on a technology project and then saying, oh, we haven't got the ROI and questioning whether you should be investing in AI, which would be ludicrous in today's age. If you see it as just ongoing investment in an ongoing transformation that, as Paul said, is never going to end, doesn't it become about the mechanisms by which you're optimizing investment in technology in the future, rather than having a question about should we be investing? I think we need to be careful about that because I don't think you can realistically in this day and age not invest in technology transformation continuously.

14:35Brett King: It's not an option, right? No, still the value needs to be generated. And in this case, it's a variety of things. Even the user experience in terms of program experience needs to improve because you want to get into a state where they're faster and more capable to act. And even that definition of value, which is a simpler one, was not attained by more than 60 % of the banks. The other problem is that, of course, everybody is declaring now that business value is the thing that we need to chase, but still for many banks, technology and business are divided. So in the end, we see that there's not even an alignment between the two, right?

15:12There's not a common ownership to basically move these things forward. So that is not just a technology transformation, but it's a transformation of the way the bank does business in front of clients. So in this one, I wanted to ask you, Paul, I listened to a wonderful podcast where they interviewed Margie Guest. She's the CIO of NetBank in South Africa. And apparently the bank has been going through a transformation of their core for five years. And then she said that the project derailed, but she was asked to join at the fourth year and she managed to, you know, to flip over and to go successful to the end.

15:53But the thing that she says that they were mistaking is the fact that many did not understand why they were doing that. So essentially she said, in the end, the transformation is about the fact that money and value will have to move instantly around the organization and outside the organization. And many even just thought that it's just about being more modern, being on cloud, you know, applying this tool, but that misses the point. And I think this is relevant because if it is true that the majority of the banks that tried to to modernize their core, they don't really fulfill that promise. Among the few that managed to do that, thinking about tokenization, the majority of these few still are not modern anymore because things keep on changing, right?

16:39So what would have been considered a modern core like three years ago is not modern anymore. So it's a continuous process. So how do you think that banks can basically get into that mindset in a way that they review the way they invest in technology with the lens of the continuous transformation that they have to master? First of all, technology is just an enabler to enable the bank to do what the bank wants to do as far as business is concerned, right? So when you start saying you're going to transform the core or you're going to transform the technology that you've got, it needs to still be driven by business.

17:15It needs to be a business decision and it needs to be business owned. The technology, again, is just an enabler. So one of the things that I think is quite critical and you pointed to it is that very often the banks will not really know why they're doing the transformation apart from it's a technology-driven agenda. We need to get to cloud or we need to modernize because we want to stay ahead, whatever the case is. again, you're then becoming technology-driven, right? The second thing is, like you said, I think you said that she turned up after four years or whatever the case may be, right? Yes.

18:04Very often when you're doing a transformation project like that from beginning to end, you set too wide a scope of what it is you're trying to solve and what it is that you're trying to get to the end point of. And reality is that very often, particularly the board, particularly the IT department, generally absolutely everybody, they end up with two big expectations. They assume they can do too much. And in reality, everything that they want to try and do is not actually going to move the pendulum for them to get to the end result that they want to get to. So, Paolo, we are learning that you basically try to wash your shirts together with your dishes.

18:51That's why the dishwasher broke down.

18:56Brett King: Not quite, no. You're into these unusual analogies, Paolo. But, you know, I want to sort of jump in here with some thinking. And Paolo, I know this is going to be an interesting one for you, based on the previous discussions we've had. But one of the things I talk about in terms of next generation agentic banking, and I know we've got like five minutes before we have a break here. So I don't want to sort of throw this in, but it is definitely in line with this conversation, is that if you think about this continuous transformation, And one of the things that I would put in there is that this contention that a core replacement is a long, drawn-out project in the world of AI, what we're seeing with the SaaS market is that a core replacement could become very rapid and very doable with AI in a much shorter timeframe.

19:59Brett King: frame. So that's one thing. But secondly, is that if we look at the way the frontier models are going, and this conversation about recursive self-improvement, which we had previously, Paulo, is I think when you start thinking about what a true agentic bank looks like in the future, it is a recursive self-improving organization. And that's ultimately the sort of technology and cultural angle that we want to get to by the end of this decade. That's my proposition. So I think you have to completely reframe these decisions is that it's not about a core replacement. It's not about a technology transformation program.

20:43Brett King: It's not about building these specific capabilities. It's how do you have an organization that is continuously improving? I think there's an entry into that, Brett. I, with your futuristic mind, I can agree with you that there is a point out there in the future where everything is going to be AI native, it's going to be, you know, but we need to get onto that journey. And I don't think it's a switch. So therefore, the banks need to start having that iterative transformational journey towards that endpoint, because they're not going to be able to just turn up and say, I'm now going to take the frontier models and recreate my whole environment in 24 hours.

21:24It's going to take a long time to do that. And I also think that banks are getting disrupted so much anyway, that they should be focusing more on what is the unique value and the differentiation that they deliver to keep them relevant in the future. And that's where they should be putting their focus, not on the IT. So before we go to the break, my little take, my little two cents. The real problem that we are facing is the fact that technical debt that every institution wants to resolve is not about a certain infrastructure or a certain way of coding, which of course can be modernized. But it's about the fact that the monolithic code contains a lot of business logic that lost causality because people went from 10 lines, 100 lines, 1000, 10 ,000, 10 billion lines rest of code.

22:16So the people that did the coding are living or they're not even capable of understanding it anymore. So it's not just that they're going with the COBOL capability. It's the logic that is too complex inside. And so now with Agentec AI and with AI, you can extract that business logic, abstract it right in the way that you can own it. And then you can reposition it somewhere else where more automation, Agentec AI can power it up. Of course, as I think Paul mentioned before, making sure that you don't create a new technical debt because you need to have the competencies to manage those environments.

22:49But the point is that why did they lose causality? Because the business, they don't have any causality any longer. So the complexity of the business of a bank keeps on forcing technology to address the complexity at the higher level. So if you now imagine a world where you can program and develop much faster than in the past, but the business intentionality of the institution remains complex, you can reach the event horizon where basically it collapses. And this, we were very clear in the IBM papers to discuss, to say, it has to start from an understanding of your business logic so that any piece of automation you add with AI adds a lot of value instead of trapping into another problem.

23:29And still what I'm seeing is that that discussion about the simplification of the business model is not there and it should be received any ambition to transform with technology in the core and lead the bank to the shore of modernity. I agree with you completely and that's one of the key messages that are in my book because if all you're doing is just using AI to reformat your COBOL code, you're doing a modernization. You're not doing a transformation. You're not looking at what are the new business models that you want to implement. What are the new business processes? You're basically just taking new technology to deliver the old version of the bank.

24:07That's modernization of the technology. It's not transformation of the bank. And if you want to do a true transformation of the bank, You need to reimagine what the bank is and implement that new vision of the bank into the appropriate technologies and technology stack rather than just modernizing the old. And Brett, I guess you're ready for a break.

24:27Brett King: We are. So let's go to break. You're listening to Breaking Banks and The Banker's Bookshelf as we interview Paul Crogdall on his new book, Rip Out the Call. We'll be right back after these words from our generous sponsors. This September 14th and 15th, the leaders shaping the future of banking won't be watching from the sidelines. They'll be at Money Live North America in Chicago. Join more than 900 senior executives from banks, credit unions, fintechs, and technology providers for two days of game-changing ideas, honest conversations, and invaluable connections. Hear firsthand from leaders at M &T Bank, BECU, BMO, JPMorgan Chase, Citi, Bank of America, American Express, Wells Fargo, Northern Trust, and more as they share the strategies transforming banking and payments today.

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26:07Welcome back from the break. We are actually entertaining ourselves with a combo edition of Breaking Banks and The Banker's Bookshelf. And it's a competition because we are with us, Paul Krogdal, the author of Rip Out the Core, a wonderful book that features well the Bankers Bookshelf, but as well an expert about technology and business transformation in banking, which is a perfect fit for Breaking Banks, Brad King's show. So, Paul, thanks for the conversation we had before the break. We talked about quite a few things from authentic AI to the need of progressive transformation to the fact that changing the core means being capable of changing continuously.

26:50It's not an end of state you want to reach out to, but it's a capability for continuous transformation. Now, that doesn't happen just because you have flexible technology or open APIs. That happens because the organization is capable to embrace change. Technology is a reflection of the organization. Sometimes we do it wrong. We try to reflect the organization on top of technology, which doesn't have the educationality. So what do you believe is the key and most important element that an organization needs to have in a bank to make sure that the technology follows a suite and delivers the value that this adaptability demands for all institutions, from all institutions worldwide now?

27:34Get rid of the hero culture. That's the first starting point. Get rid of the hero culture. Stop thinking that the IT department is driving the bank. The IT department is there to enable the bank. Stop looking at everything from a short-term perspective and start understanding that any change you make has to be towards a longer-term success plan. A lot of the discussions that I've had with banks, particularly as you get higher up, is obviously executives are very focused on their time in the bank. My job is for the next three years or the next four years, why am I going to engage in a large transformational project that is going to be realized after I leave?

28:20Or worst case, we're going to start declaring it as a failure before I leave, which therefore is going to impact my success when I leave or anything else. Well, the first thing of that is back to what we talked about before. Don't look at this as a five-year transformation project. Look at it as an ongoing journey where you're delivering capabilities or successes on an ongoing basis. But the culture has to change across the board with inside of a bank to do this.

28:49Brett King: In your experience, and I'll ask this of both of you actually you know um which uh banks that really truly have this culture in in my view um i think you know jp morgan chase for example is attempting to build this culture but i don't think they're there yet um and uh but i do think that new bank and revolute would share this culture as an example. I think, you know, Ant Group would share this culture. But from a banking perspective, you know, who could you guys identify as banks that have this type of culture already in place or a best place to build that out? Well, let me say, I don't typically discuss names, but I'm using the two examples that you just mentioned that to stay frame to there and the reasons.

29:42JPMC is definitely interesting. And even though they may not have attained the status that they would expect or we would expect, if you look at their financial performance ratios, they are an outlier within the banking community in the U.S. So that's already reflected in their numbers. They have 10 % less cost income ratio compared to the other big banks in the U.S., which is quite something to be achieved. Nubank is also very interesting. I did a lot of conversations with them reflected in our research. And I've always was impressed by the openness of the discussions. For example, we published a three-party talk between myself, the chief risk officer for Brazil, and the head of AI product and strategy as they were inquiring themselves how to bring the two pieces together in a way they can scale further.

30:32And there is recent research and identify them as exceptionally positioned to lead AI, if you like, evolution in Latin America, as they may invest more and be more progressive about that. But when I asked them, of course, what made them successful, they said 50-50. 50 % is that we were good. 50 % is that we were lucky, right? Like, we're in a major success, like scaling so much. Not many banks can be in a country with 200 million customers, right? They're at the start of a pandemic where everybody wants to enjoy more digital banking. So it's always a mix. But I think for these two reasons, one had the cultural capability to basically adapt very fast to the new world.

31:19And the other one instead, the incumbent was managing to basically wave this capability inside a more traditional bank to transform it from the inside out the journey continues but so far they had very positive and good results. I also don't necessarily going to mention bank names I can say that there is a bank that I've worked extensively with that has tried very hard to bring in this culture and to me they've done it certainly to a certain degree wrong very often things like let's create an innovation team that sits outside. It doesn't drive any of the capabilities. They look very much on how do they transform the IT capabilities without thinking about the business impact.

32:11That's a bank in Northern Europe. There's a bank in the Nordics, which I know, Paolo, you have spoken to as well, because they helped you with one of your papers, that actually have taken substantial steps towards this sort of cultural approach. So they're doing some fantastic work. And to me, I would say that they are demonstrating how to transform into this way. There's also a bank in Spain, which, you know, we probably don't need to mention them, which also, again, are demonstrating steps into this sort of cultural shift. So I think there is, we've got examples of banks going in the right direction, banks that are still not managing to make the transition.

33:00But obviously, like you said, Brett, as well, the neobanks are natively already to a certain degree in this space. The other interesting thing is going to be neobanks today are going to be sitting on legacy in the future. Of course. Are they going to be able to bring that culture with them? Are they going to inadvertently drift, ending up into the same model as where the incumbent banks are today, but just with a more modern stack? So it's going to be interesting to see how this plays out going forwards.

33:28Brett King: I mean, culturally and technically, they remain agile, right? So that's, I think that's... Also, where they're competing, having conversations with some of them, like they must start competing with the incumbents as those manage to digitalize themselves, right, a bit more. So the 11-plane field is made more even now after a few years of investments. But Paul, if I can, I can mention this one because it's public and published a conversation with Nicola Rai, the city of retail banking of D &B. The Nordics are very interesting because if you look at the European continent, the banks there are not liars and D &B is not liars.

34:06They have a cost income ratio, which is as low as the one of a new bank, essentially 10, 15, 20 business points, even more compared to the German banks. And when I asked him and his public in our research, what made them different? One of the One thing you said is as they acquired other institutions and other businesses, their decision was to keep the technology that made more sense, not the one that reflected the politics. And one thing that is also important, they always applied an approach like zero trust, for example. So if you work on APIs, every counterpart is treated like an external event or an internal.

34:42Why does it matter? It matters because the moment you change your organization, you don't have to reinvent the will to make sure they can be possessive business or touch on the wall. Instead, I'm seeing that there's some banks which have been, if you like, exiting some markets, selling the business to somebody else. But the problem is that those entities have a technology which is so much entrenched into the mentorship that just separating it wipes out all of the benefits in terms of cost, right, for making this transformation. So the diligence in working with technology doesn't pay out immediately, but in the medium to long run pays out.

35:18And for CEOs, that's an important level of understanding because that means that the benefits go across the quarters or the annual report into next one. So they need to get into the right mindset to justify that improvement starts from the top. If they understand that, they can master it. If not, everybody's trapped into trying to, you know, demonstrate the next quarter, the next semester, and, you know, they can get to the end in the right way. Which actually leads directly back to the point we almost started with in this podcast and the discussion. Very often in the past, when we've looked at core banking transformations, they've been very often framed in the notion of we're going to do a project over five years and we're going to be able to see reduction in cost almost starting from day one.

36:04You know, the traditional, there's a downwards cost element as we are starting to save money because we're getting off the legacy, which to me is farcical. It's never going to happen. The minute you start into a transformational project, you're actually going to have costs going up because you're dealing with that transformation. You're dealing with a progressive transformation that brings in multiple different capabilities at the same time. So you need to not look at where am I going to see my results in a quarter or in half a year. It's about what are we going to realize as an organization further down the line.

36:41So yes, some things are going to cost more, but you're actually making an investment in the short term to ensure success in the long term. And I think that's one of the main differentiations that I try and bring to the table when I talk about doing a progressive modernization is the fact that don't start off with, we are doing this to save money tomorrow. We are doing this to make sure that we can make more money in the future. Yes, it's going to cost.

37:04Brett King: Or we're doing this because otherwise we're going to lose significant market share to someone else who's done it. Which also means you're not going to make money. So it's the same thing. True. So I understand the book does not advocate for a big bang approach. Absolutely not. No, in actual fact, I say it's an anti-pattern. Unless you're a very, very small bank and it can be done in a very controlled manner, then yes. But no, doing a big bang is on every single levels to me the wrong way of doing it. Bottom line. Yes. So give the big bang to the big bang. Exactly. Yes. Yeah, no, from my perspective, if you want to, obviously you're going to engage onto a program that's going to take multi-years.

38:00In the book, I talk about something that I call the point of diminishing returns, right? You've got two different forces that act against you as you start onto a transformational program. The first one is what I call the scope of choice, which starts high and comes down. If you think about it on day one, you've got all the choice in the world. You've not made any decisions. You've still got open flexibility in deciding what you're going to be doing. The other one is what I call the scope of unknown, which starts at the bottom and goes up over time. Today, when we are standing here, we know the industry, we know what's going on.

38:36But as we start moving down the program and as we start looking down the program, the unknown changes. So you don't want to end up in a program where you've set yourself on a target for five years that you cannot move on, right?

38:51Brett King: But I want to jump in here, Paul, if that's okay. um it one of the things that we you know we're talking about this like like a core transformation program or a technology program but let's be clear when we talk about the cultural agility to do this this is leadership mindset it's kpis it's the it's the whole culture that's embedded within the organization but on the technical side the biggest challenge is that having the technical agility to do this sort of thing requires a completely different tech stack. So that's not a project. It's like architecting the foundational technologies of a bank.

39:36Brett King: And if you look at the tech stack for Nubank or Evolute versus the tech stack of JPMC, you're going to see a very, very different architecture. And that in itself is going to inhibit a lot of the things that you're talking about in a medium term sense, right? Absolutely. So that's why you have to set a roadmap that says that you're going to change both your business, you're going to change your capabilities, but you also need to change your IT stack. Absolutely, you do. But you're not going to do it overnight. So what you need to try and do is to break it all up and say, what are the speedboats that I'm going to launch?

40:11What are the capabilities that I want to bring to market to continue to stay relevant and grow, right? You want to try and if you, rather than back to what we talked about before, Paolo, rather than saying, here's my legacy, this is what my system does today, this is what we do as a business today, let's use that as a template for what our future is going to be. You hide that away, you define your future, your future strategy, and then you start building towards that. Whatever you can bring with you is great, but you build the new stack and you deliver new white space capabilities on an ongoing basis on that new stack?

40:47So, Paul, I need to warn you here because as Brett wrote the foreword of my latest business book, Banks of Intech and Platform Economies, the problem with Brett is that when people read this foreword, they don't need to read the rest of the book, right? They're already very happy. And I remember that in his foreword, he brought up the example of Ant Financial where the company managed to change their architecture multiple times through their life by adapting their tech stack completely upside down, which is an unprecedented capability that maybe many can only dream of. For a bank to change it once already, that would be a great success.

41:27So that's a good example that there's even more that can be done when the mindset is correct and is ambitious enough to be deployed and delivered. Paul, tell me a bit, what is the structure of the book? You know, if I have it in my hands, I'm thinking about all the readers and now we're going to Amazon and get a copy. So what would they find inside? What is the journey that we'll go through with you? Page, chapter to chapter, page of the page. Well, they'll find a foreword from Brett in my book as well. So, you know, they read that. Which we say this time around is not enough, okay? So we invite everybody to go.

41:59Yeah, it's just not enough. Maybe read Brett's foreword at the back, right? That's enough.

42:03Brett King: Well, look, all I can, But there's other forwards in there as well, thankfully. So, but, you know, it's nice to be able to contribute and thank you for the opportunity to support both of you. No, absolutely. And actually, my publisher got a little bit angry with me because he said, normally we have one forward and I've got four forwards, you know. So I said, well, I want to be different. So please publish all of them into the book and they were happy about that. But to your question, Paolo, the book is split up into what I would call, or you called it, three voices. I think you reviewed my book before this podcast and said there was three voices running through the book, and that's correct.

42:41I have privileged information here. Exactly, you have privileged information. The first voice is the personal voice of me as Paul and my experience through the whole kitchen analogy. So the book has this underlying red thread, which is the whole journey through the kitchen transformation from the disaster. I bring in the voice of me personally in the kitchen journey and how we did that and how it relates back to core banking. The second voice is then the what I would call the field guide part of it. That is where I boil it down to what is the approach, what is the, I hesitate to call it a method, but I've got what I would almost call a framework, analogy to a method that I've developed over the years that I align to.

43:36So I talk about the phasing, the approach, where to start. I give some recommendations, things like you need to have a good industry framework. I recommend buy-in and those sort of things. So that's the second voice. The third voice then is to try and put this into a concrete way. initially I started off wanting to write about a personal bank journey that I've been on but I realized that I was going to end up in too much trouble with potential banks and everything else so I invented a fictitious bank that I've called Knowit Bank it's a tier two retail bank based in the Nordics although it's not based on any of the banks that I've worked with in Nordics and I try to take all of the notions of the methods and everything else that I'm talking about and push it through what in effect becomes a novella.

44:38It's a story of a bank going through a transformational journey. I create the characters, there's a full list of characters working through this, and therefore we talk through what is the pain points the bank's having, how are they getting through this, and what is it that they are doing as we get through the book. So the book is split up into those three different parts. Then the last thing that I did was no one has time anymore. So no one sits down. Well, I hope someone sits down and reads the book cover to cover. But making an assumption that people won't, they maybe dive in depending upon where they are in their transformation.

45:14I've tried to make each section of the book as self-contained as possible. So in places I repeat myself, but it's to enable the fact that you can dive straight in and pick up from directly in one section or another. Sounds good. So who is the audience? Who must read this? I would say that anyone that's working in a transformational program, anyone that's about to engage into a transformational program, it is, if you're a CEO with a technology foundation and a technology background, it would be relevant and interesting. CTOs, CIOs, very interesting. Head of transformation, relevant and interesting.

46:01Senior enterprise architects, relevant and interesting. So it's for the senior level and above. I don't go into great details around how you're going to write your code or define your APIs, but I do at one point talk about, you know, API standards as an example. Sounds very good. Brett, some final remarks?

46:23Brett King: I think one of the things that I always say to authors who have been through this process, and for me, I think what I learned out of the process was particularly how to write better, with edits and references and the research and all of that. But there's a saying in the industry that everyone has a book in them. but not everyone does the work to get the book out. So I just want to say, Paul, that, you know, I think it's been an amazing journey for you. It's great. It must feel very good to hold the book in your hand. And so congratulations on that, firstly. But where does this take your career from this point?

47:14Brett King: What are you thinking about the path forward after writing the book? That's a very interesting question, Brett. I actually wrote the book more for me than for others. So to me, it was a journey of self-exploration. It was a way to get everything that was boiling my head down onto paper rather than in a whole lot of different white papers or anything else. I am still working in the banking industry. I still see myself working in this space. I am still focused on doing transformational journeys. I'll be more than happy to advise, to guide, to help, to even just have, you know, be a sounding board at the board level or at a project level.

48:12If anyone is engaging and doing this, I'll happily have the discussions and help going forwards. I've got another book in the pipeline that I'm planning on and I'll take your advice, Brett, to make sure that I write it better than the first one. A lot of lessons learned there, so I'll agree with that. But it actually, to a certain degree, follows on from this book. And it goes into some of the things we've talked about, which is moving forwards with the continued growth of embedded finance platformification. To a certain degree, maybe a spin-off from your book, previous book, Paolo. But looking at once we get into complete agentic banking, what is the implications to the banks, yet again, their IT, their capabilities, the transformation and everything else.

49:02So it's really a follow-on from that. So bottom line, Brett, I'm open for business. I suppose that's what you could say. Yeah. So Paul, Leonel Susking, a professor of physics at Stanford and one of the founders of string theory, said that figuring out the best way to explain something is almost always the best way to understand it yourself. So I see books like a possibility to clarify your own thought and then make the clarification available to the others as the process continues with the feedback, with the ideas, the opinions, so that all you can bring into the next book. But let's hold the breath here.

49:47We need to read this one first and then get the second.

49:49Brett King: No, I think that's definitely true, Paolo. You know, if you don't learn something in the process of writing the book, particularly for a nonfiction book like this, you just haven't done enough research, you know. Absolutely. But the biggest challenge for me, like I said at the beginning, was I wanted to take what is a very complicated, very dry subject and try and make it easy to read to a certain as well, which is why the whole analogy to the kitchen disaster is in there as well. Great. Well, thanks, Paul, for sharing with us the work behind your book, Paolo. Great, as always, to work with you on the pod.

50:37Brett King: And, you know, Paul will let you know when this is. But I think, you know, I think on behalf of both Paolo and I and the team at Breaking Banks and your friends and supporters around the world, your listeners for FinTech Daydreaming, all of this, I think it's a marvellous accomplishment. So congrats on that. And just before we go, where can people find out more information about the book and about you? about the book and about me paul krogdahl.com so p-a-u-l krogdahl.com the book is available on amazon you can find the link from my website you can find information about me and everything else on my website and obviously like everybody else linkedin you can find me on linkedin and most of my stuff is on LinkedIn.

51:29So, yes. Good.

51:32Brett King: Well, I tell you my strategy when I'm writing a book. The first thing I do is I do a keyword search to find out whether I can own the term that I associate with the title of the book. So, there's a little tip for you for next time. So, oh, but I do own the URL. So, you can also get, you can go to ripoutthecore.com. page. Yeah, yeah. If you go to ripoutthecore.com. All right. Well, that was the answer to my question. That was the answer to your question. IP is like... Yeah. All right. Great. Well, thanks again, Paul, for joining us. Much success with the book and Paolo. Thanks for co-hosting with me.

52:18Brett King: That's it for Breaking Banks and the Bankers Bookshelf for this week. If you'd like to hear more about the future of banking, you know, or you want to hear more about any topic related to banking and fintech, let us know and we'll try and get the guests on that can delve into that. Actually, Paolo, we should probably do a NewBank show at some point and get some of the NewBank people on from both of our networks. That would be interesting, but that's for another time. In any case, please give us a rating on whichever platform you listen to, the podcast on, put us out on social, and just generally, we're very grateful for your support for the podcast.

53:02Brett King: That's it for this week on Breaking Banks and The Banker's Bookshelf. We'll see you next week. We'll see you in the future. That's it for another week of the world's number one fintech podcast and radio show, Breaking Banks. This episode was produced by our US-based production team, including producer Lisbeth Severins, audio engineer Kevin Hirsham. If you liked this episode, don't forget to tweet it out or post it on your favorite social media. Or leave us a five-star review on iTunes, Google Podcasts, Facebook, or wherever it is that you listen to our show. those actions help other people find our podcast and in return that helps us build an audience that can be supported by sponsorship so we can continue to provide you with our award-winning content every week thanks again for joining us we'll see you on breaking banks next week