A senior banker is caught up in a changing financial world and appreciates the disruption

A leading Entrepreneur agreed to guide him through the New Age of Banking. An Interview with Mr. Boaz Barack.

Dr. Boaz Barack has served in senior positions in the International banking arena for many years. He has established a reputation and network particularly as a private banker and as leading asset manager.

Barack assumed his last position in banking as a banker in UBS AG, moving from Credit Suisse where he was for thirteen years a Member of Senior Management, Head of Key Clients Desk and a Market Manager for Israel. He retired in early 2014 from UBS where he was a Member of Senior Management (Managing Director) and a Senior Advisor. His previous private asset management and risk-management company was acquired by the Rothschild Group in 1990.

Barack, Villiger, de Klerk, Saidler / ZVG

Yet Barack is an unusual banker and we recently found him working as a key consultant in the offices of a technology company in Zurich. This company, Centralway Numbrs, is the No.1 independent mobile banking platform in Germany. It enables its users to manage their financial lives on the go.  It offers much more than your traditional bank branch: Account management, categorization, instant search, budgeting, money transfers, first finance store and much more.

We conducted a long interview with Barack which we could sum up in clear statement; The modern world economy is in the early stages of a profound change in the shape of business activity. Two centuries ago, dramatic shifts precipitated the Industrial Revolution. An upheaval of equal proportions is about to be triggered by unprecedented changes in the economics of interaction.

The Interview

Why instead of retiring after a thirty years career as a leading private banker would you engage in a project of a digital banking platform?

The business model of conventional banks is outdated, says Barack, and the challenge is integrating every stage of the value chain under one roof to create global banking services fit for the 21st century. This requires putting in place the technological infrastructure to provide a comprehensive service across the board - the full stack. By upending traditional banking with an innovative approach tailored to provide simple but elegant products for the rapidly-growing user base. I am taking part, says Barack, in creating new bank branches. Barack is convinced that the old rules no longer apply, the world has moved on. This seismic shift is happening across all industries. Only the organizations that are able to adapt to this new paradigm will thrive.

Statistics show that banks in Europe are shutting down branches at a pace of 15% every year. Today's clients want to execute their banking transactions fast and preferably on their smartphones, accurately and on the time that suits them, not the bank. The human touch is relevant for few clients only and most people can do without it. Behavioral innovation (psychology) succeeds in characterizing the clients and their personal financial status much better than the Bank's consultants and custom tailor solutions and services almost immediately. In many countries, it is already possible to make payments from each one of the client's accounts to anywhere in the world with a click of the button or obtain a tailored loan within less than a minute with no need for collateral.

The age of comfortable traditional banking is over. It is now clear that banks which continue to operate in the traditional format are losing the trust, impact and clients at a faster rate than ever before. The traditional banking is trampled over by the wheels of our smartphone apps. Soon enough, the world in which the future banks operate will look very different from anything we have grown accustomed to.

Guided by this realization, I joined a technological Swiss group which for the past three years has been building the future model of banking. Some 150 technological professionals from different countries are led in this venture by an entrepreneur with impressive experience and record of success.

Amongst the private investors in this project are European banking families. They, of all people, are the ones who decided to promote this massive endeavor and to the best of my understanding, they will establish cloud based, mobile-digital banking which within a short while will be deployed across the globe and recapture the trust of the disillusioned clients of the traditional banks.

Moving from the spacious rooms of the big banks at the Paradeplatz into a digital and technical environment must have been a big change for you. Who guided you during this transformation period?

I actually owe much of my curiosity and understanding of this new world to an incredible entrepreneur, Martin Saidler, to whom I was introduced through a client of mine. Martin exposed me to the new rules of the dramatic change we witness in the financial industry.

Martin’s family office Saidler & Co. is the main shareholder of Centralway Numbrs and developed it to become one of the largest fintech ventures in Europe. Beforehand Martin successfully founded, developed and exited over 100 internet companies.

I was, therefore, very lucky to find a mentor, fully devoted to digital banking, who could take me behind the scene of a new disruptive world which bankers hardly knew about.

I appreciate Martin for his personal success story. He transformed his own family business from a midsized company to a substantial enterprise with assets across the banking, internet and real estate industries. In 2013, Martin established the global family office Saidler & Co., to consolidate his assets, which are a result of his entrepreneurial and investment activities. Saidler & Co. is active in Zurich, London and Tel Aviv. I am honored to be one of its board members.

Martin’s view, which I fully share, is that the establishment of call centers, modern branches with online terminals, mobile payments and access to price screens which are updated continually are no more than an extension of the traditional work methods. By contrast, digital banking involves a new worldview and significant evolution in the client's vision of the world. To succeed in digital banking you need to transform your worldview and thinking completely, not engage in patchwork that attempts to combine the old and the new worlds. Martin’s vision is: we’re creating a new standard in wealth management, investments & development, continually innovating to inspire and motivate partners and in new ways, using stimulating technology and elevated platforms to help them lead more sustainable, healthy, productive, and connected lives.

Being a traditional Swiss private banker what is your forecast for this profession in the current environment?

It is an interesting question. Many of the traditional banking functions are now moving to entities outside of the banking system.  I recently joined the Advisory Board of ZWEI Wealth Experts which is a new Swiss company with a system that provides consulting services in wealth management.  Unlike traditional bank advisors and asset managers, ZWEI Wealth Experts do not manage client assets themselves, allowing them to identify the perfect match between client and solution provider in a completely unbiased manner. This strict separation is the only way to ensure that clients receive independent recommendations regarding their wealth matters. The company was founded by Prof. Dr. Klaus W. Wellershoff who is managing the Wellershoff & Partners which is a boutique consultancy focusing on economics and financial markets.

The other developments outside of the banking system are of course the digital banking platforms. Digital banking excels in providing clients with a broader range than the traditional banking in the way their money is managed. Clients want to be updated in real time, respond quickly and interact with the systems that control their money in a continuous and reliable manner. Gone are the days in which we were told to wait until the consultant will return from vacation or sick leave or that he simply has no response to our needs.

Digital banking has emerged as a practical alternative for existing banks some 10 years ago, when the distrust clients felt towards the financial institutes was at its peak. Losing billions of their fortune within a short period of time was inconceivable for the Swiss banks which specialized in private banking. Already then it was clear that banking will never look the same again. However, the roadmap to the future has not been drawn yet and seemed full with obstacles. The transition into digital banking is especially difficult for traditional banks which are required to change their strategic direction concurrently with psychological-mental change. As it turns out, it is very difficult to build new infrastructure and become truly digital when the foundations are still those of a traditional bank.

Saidler, Shimon Peres

Do you see any wider social message in what you currently doing? I refer to points which the banks could not provide for?

Certainly. One of our lead investors in the company is Sir Ronald Cohen, the founder of APAX Partners, a colleague of mine for about 40 years. He is considered, amongst other titles, to be the “father of social impact investments”. When joining the group of investors Sir Ronald said: "Driving down the cost of personal finance is a key priority everywhere across the world. Centralway Numbrs uses technology to achieve this internationally at scale. The Numbrs Finance Store enables individuals to meet their financial needs at the lowest possible cost."

In that respect Sir Ronald’s values and his public standing align precisely with Martin’s aim to make good with Centralway Numbrs. Martin has met with global leaders to discuss this aim and its implementation. He met the then the retired president of Israel Shimon Peres in his newly built Peace Center. At the end of a very long private conversation with Shimon Peres Martin stated:  we are committed to demonstrating that our work is making social development more effective at improving people’s lives. We engage with clients to measure the impact of our support, and we use these findings to strengthen our own programs. We are using our proprietary system to achieve impact. Through this proven process, we deliver cost-effective evaluations and practical recommendations to advance the impact of global development.

Martin is supporting and contributing funds to the activities of the Global Leadership Foundation, headed by Dr. F. W. de Klerk, to cover in its activities many of the risks and challenges facing the world today. Martin’s Family Office Saidler & Co was elected this year to the GLF’s International Council. This Group consists of former Heads of State and is structured to encourage active participation from all over the world looking at the effects of different development on world affairs.

Do you engage minds from the outside world and from different perspective to contribute to your ambitious target of “changing the world”?

Indeed. Martin and I invited a few leading personalities to spend time with us at the office and discuss the social outcome and implications of digital banking. Marin hosting the noble peace price laureate F. W. de Klerk and Mr. Kaspar Villiger, previously the President of Switzerland and the Chairman of UBS for a very elaborate discussion on such issues. Martin has also invited the President of the Weizmann institute for Science in Israel to our offices in Zurich to spend time talking to our investors about the directions into which Science and technology are developing. As a result of this last meeting not only that Martin Saidler has donated funds for hosting event of the Weizmann Institute in Zurich, but has also entered an official commercial agreement with the Institute Computer and Artificial Intelligence Department to jointly develop a unique new computer operating system.

You are Israeli born. How do you combine the enormous growth and development of technology in Israel with your current activity?

This is indeed a pleasure of mine. I convinced Martin to travel to Israel already a few time and in each trip he had invested in Israeli startups and in technology companies. In particular Martin has developed close ties with the University of Haifa where he constantly search for tech innovation to invest in. Martin supported the University by setting up a large event in his office to introduce local Swiss businessmen and investors to the University ventures. One prominent figure who came over to Centralway Numbrs’ offices for a keynote speech was Prof. Dres .h. c. Manfred Lahnstein, who is Chairman Emeritus Board of Governors of the University of Haifa and Former Federal Minister of Finance, Germany

One striking phenomena is that about one quarter of the existing investors in Centralway Numbrs are leading Israeli families like Leon Recanati and Shlomo Nehama who was the Chairman of Israel’s leading bank. Yet this did not prevent the Investment Corporation of Dubai to invest recently alongside with the Israelis into Centralway Numbrs.

What is your most important lesson so far out being so close to a successful entrepreneur like Martin Saidler?

In his daily activities Martin is demonstrating that with knowledge, persistence and discipline one could build at least one Unicorn company in a sector which currently going through disruption. If you follow the rules of building a digital platform correctly you can win big. In building a digital global platform the following framework and rules should be observed.

Platforms are empowered by digital technology that annihilates barriers of time and space and employing smart, sophisticated software tools connecting producers and consumers more precisely, speedily, and easily than ever before.

Digital connectivity and the platform model it makes possible are changing the world forever. The platform-driven economic transformation is producing enormous benefits for society as a whole and for the businesses and other organizations that create wealth, generate growth, and serve the needs of humankind.

Platforms beat traditional companies because platforms eliminate gatekeepers and scale more efficiently. This elimination also gives consumers greater freedom to select products that suit their needs, consequently platforms unlock new sources of value creation and supply. (See Geoffrey G. Parker’s Platform revolution for more details)

They disrupt the traditional competitive landscape by exposing new supply to the market.  Finally, platforms beat pipelines by using data-based tools to create community feedback loops.

Martin and his team at the Family Office know how platforms work, the varying structures they assume, the numerous forms of value they create, and the almost limitless range of users they serve. If a partner of the family office is interested in starting your own platform business— or in modifying an existing organization to take advantage of the power of the platform— they can you navigate the complexities of designing, launching, managing, governing, and growing a successful platform.

You are also a board member of Saidler & Co. in what way is this office unique?

The Saidler & Co. Family Office is gathering in its network investors who are wishing to act together to the biggest opportunities of our time. This Circle is composed of a community of sophisticated wealthy investors working toward a common purpose, gaining instant access to valuable investment information, acting on a hidden power of interactions between the members and adopting new mindsets and new investment measurements.

Associated partners are dedicated to work with the Group with a view to ensuring investment opportunities and making sure that the conversation between us is really around value, that untapped opportunities are being fully explored, and that we are raising the bar in respect of the business community.

The secret of the success of a family office (in this case) are:

  • Powerful networking with like-minded successful entities
  • Improve in their and our knowledge and performance as investors
  • And getting first access to extraordinary investments

The challenge will be to uncover the asset classes, the models of investing, the distribution channels to offer investment products, and the technologies that will enable the next generation of investors to be successful.

We advise our close investors about how to gain access to top performing managers and businesses in different sectors. The result is a portfolio of assets with a high degree of protection against a multitude of market scenarios but with the ability to generate relatively consistent returns not overly dependent upon the broader equity market’s performance.

Dear Dr. Barack, thank you very much for your time.

About Dr. Boaz Barack

Barack / ZVG

Boaz Barack has a Ph.D. Degree in International Law and Economics from the University of Cambridge, England; Diploma in Common Market Business Affairs from the European Community college in Bruges, Belgium; Diploma in International law from the Academy of International Law in the Hague, Holland and a Master degrees in Law and Business Administration from the University of Tel Aviv, Israel. He is a member of the Israel Bar and has also lectured on international trade issues at the Hebrew University of Jerusalem and Tel Aviv University.

Barack is a member of the International Board of The Weizmann Institute. He was a Board Member of the University of Tel Aviv, Director of the Israel Philharmonic Fund and Chairman of its finance committee, a Member of the Board of Local Patrons Management of the Israel Museum and a member of the Board of ALMA (a Business for the Art Organization in Israel).