This article was originally published on Domus 1056, April 2021
“Taking stock at this time, I would say that architecture and design are of growing importance as they bring about social and industrial evolution. The manufacturer is the reference model for my sector: car manufacturers, companies providing real services in a continuous cycle and places where the attention to detail is obsessive. They may be producing simple things but extraordinarily perfect ones. This, I believe, is our way forward. A complete redesign that has so far only been touched upon. Creating very good, simple products that are easily understood by our clients, with whom we should develop a relationship similar to that of digital companies.” After five and a half years as CEO of BNL and president of BNP Paribas in Italy and now president of BNL, Andrea Munari remains unchanged, a dialectic and emotional mix of the gifted small-town guy from Veneto with bright eyes and the worldly wise banker who has come through the coding of Oxford and English finance, where “only numbers speak”. In literary terms, he is a typical Luigi Meneghello character, hovering between clear-sightedness and passion, and all in a system where the choices are rarely easy to understand. “Aligning the bank with the digital world has a far from trivial impact. The sector is not accustomed to it. Banks come from a different past and 80% of the clients use 20% of the products. We keep unnecessary things going when one thing I have learnt from the digital economy is ‘keep it simple’.
Look at Amazon and you will see it has changed nothing; it has simply elevated its service to being very reliable. That is what we have tried to do at BNL in recent years and this, I believe, must steer the course to the future.” While Munari was working on this new financial architecture, the individual and social ecosystem was also changing its architecture, accelerating the process just before it was blown away by the Covid-19 pandemic. So, the outlook from the top floor of the Diamond Tower, the Milan headquarters of BNL Paribas – 28 storeys, 30,000 sq. m. and 2,100 (pre-Covid-19) workstations designed by Studio Montero with a focus on “sustainability and human needs” – was also upended. “All true. Speedy consolidation is in progress in banking, first nationally and then at European level in the years to come. But – and here Munari repeats the conjunction in a different tone – but, in order to do this, we must complete the banking union, otherwise it won’t work.
In Italy, the sector is overcrowded, with too many banks. The real problem, however, is that the banks are still primarily driven by an incremental approach that leads to irrelevance in the long run. History teaches us that, when all is said and done, you must have the courage to create disruption and take a leap. As I take stock, I believe we have become much better at managing credit risks. Everyone, not just us. Banks will still create NPLs because they are driven by other, political, factors. Today’s bank is able to manage the credit risk as it is more easily appreciated and manageable. The problem of managing the operational risk is worse now than that of managing the cyber-risk. There is little awareness of the risks associated with the business model and model change, where we are incapable of acting boldly.”
...a world of opportunity to be seized on, while also having fun. Yet, architecture is key. I am thinking of the worlds of urban regeneration, property, mobility, transport and domestic market services...
Looking at the view from the 26th floor and hearing this, I think of Lawrence Summers and Thomas Piketty. The former is the theorist of secular stagnation and the latter of the return to the 19th century when a marriage of convenience was worth more than an Oxford degree. “Let us start with Summers. The rise in interest rates will depend on the economic agents’ ability to take more risks because these borrowing costs open up a world of opportunity to be seized on, while also having fun. Yet, architecture is key. I am thinking of the worlds of urban regeneration, property, mobility, transport and domestic market services, which present huge inefficiencies. I can also see a great deal of space in new forms of communication because it is not true that everything is now in the hands of those at the top. It is possible to create a good quality and niche global product. The threat is the failure of politics, which propelled the recourse to someone like Mario Draghi. I observed him at the ECB and listened to his honoris causa speech at the Cattolica University; I made my son read it. Draghi is a super-expert but also a true civil servant which is why I believe that, given the inflexion, the best talents – who, before the Reagan and Thatcher era, worked in the public sector and then moved to the private one – will regain a public focus.”
We have finished our coffee and we have not discussed Piketty. “I share his interpretation but not his fatalism. All the indicators say that wealth and, more importantly, income are being concentrated in the hands of the few. What has happened to wine is an example. Today, we have both inexpensive drinkable wines and overblown ones costing upwards of 70 Euros a bottle. Those in the centre ground previously bought by the middle classes no longer exist as there is no room for them. This example can be applied to everything: cars, fashion, houses. It might even provide an opportunity for Italy but we have to reposition, innovate and complete the transition. I shall say it again – this period of inflection demands a major effort of reconciliation with this new world because there will certainly be new means of redistribution, more intelligent ones than the basic income, but it doesn’t look good unless we change our approach. If the middle class recovers, rethinks itself, is brave and starts having children again, we shall be fine. Otherwise it does not look good. Domus would say: either we complete the redesign or the country won’t make it.”
Opening image: Andrea Munari, president of BNL Group BNP Paribas in Italy.