Sandro Pelaez: Innovating in the Financial Services Sector - A Roadmap to Success

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Leszek

My name is Leszek, and I will be talking with Sandro Pelaez about innovation in financial services and leadership in tech. Could you give us a brief overview of your career and maybe just highlight some key milestone or experiences that shape your journey to becoming a chief product officer at IMTF?

Sandro Pelaez

Yes. Perfect. Thanks, Leszek.

So well, I think I'll start probably with my studies because I think, the big impact on my career. So I studied mechanical engineering, and during my studies, I, well, I did some internships because I didn't really know what I wanted to do with my life and my career. And then I discovered the world of consulting, but specifically consulting in the tech area. And, I started with Accenture doing basically digital transformation consulting after my studies. And, very soon I started working with financial services, which initially I didn't like the idea as a mechanical engineer. You can imagine I wanted to, well, I wanted to work with cars and the airplanes and things like that. And then we had the transactions financial transactions instead.

But, to be honest, it was a wrong first impression. When I started working in this world, I I realized that it's actually an amazing world. A lot was happening. And, well, the rest is history because I I basically stayed in that industry for the last 15 years. So first 10 years at Accenture, 5 years more or less 5 years in Switzerland, and other 5 years, in Singapore, which was one of my major milestones as I as we discussed this international exposure was had a big impact on my career. And then I decided to move to the product side. So consulting was fun.

I I love it, and honestly, I could imagine myself going back at some point. I think it's an amazing world and gives a lot of opportunities. But then I, I decided I wanted to try the product world, so I I got this opportunity at IMTF, and I've been now with IMTF for 5 years. I'm heading the product department as the CPO, and, yeah, it's a it's a lot of fun, different world than consulting, and, equally entertaining and, with with a lot of challenges. Mhmm.

Leszek

Let's talk about your role. As the chief product officer, what are your main responsibilities? Can you also tell us a bit about your team and how you work together with, the people that report to you?

Sandro Pelaez

Yes. Of course.

So well, as as a CPO, I'm basically responsible for defining a product vision for the company, a strategy for for the product, and with that comes also a road map. And, of course, making sure that it is aligned with the company's mission, values, and goals. And, well, I manage a team of 15 product managers, designers, engineers. Sandro would say some of my main main tasks are really very people focused and ensuring that we have a culture of collaboration, of innovation. Customer centricity is really at the core of our values at NTF. So ensuring that that my team really lifts these values and develop in this direction. So my team steers, and and overlooks, the whole product development for MTF with around 150 engineers.

So you can imagine that is one of the the major challenges for our team to ensure that we are all rowing into the same direction and and doing things according to the product vision, which, of course can change every once in a while. So this agility is very important as well. Well, we we collaborate a lot with internal and external stake stakeholders. You can imagine sales, marketing, customer success, partners, customers even customers are very important. That's also where the biggest changes to the roadmap happen. It does the people using our software, and they have really good inputs and feedback. So we try to integrate customer feedback really actively into our roadmaps and prioritization. Mhmm.

Leszek

Could I ask the full could I do a follow-up question to that, which is basically, who would be your biggest or most important aspiring partner? Is it are these people from sales, marketing, or maybe customer success? Who do you work who's the closest, sort of sparring partner?

Sandro Pelaez

Yeah. Yeah. No. It's a good good question. I, well, I I I probably now put one as the most important. The productization is in the center of the company. Right? So we are producing a product that, at the end of the day needs to be able to be taken up by sales.

So obviously sales is a big Sbering partner, so they need to be able to sell this product to our customers. But on the other side we have, for example, R and D, the oil engineering department, which we are responsible for prioritizing their roadmap, and so on. We have customer support, also again, post sales support. This is very important as well at the end of the day because that's where the people responsible for making our customers happy. We have professional services in INTF as well. So as you might have seen, MTF doesn't only deliver our product, but we also help our customers and partners implement projects. So we see professional services as a big sparring partner as well.

So you see there is many different sparring partners, and maybe last but not least as well, our partners. So we have a broad network of partners that implement projects with our product, and, of course, they are also heavily involved in the discussions.

Leszek

Sandro we covered, many details of the responsibilities, how the team is structured, but we haven't really talked about the IMTF. So, could you provide an introduction to IMTF for our listeners? What is the company mission? You've mentioned the company mission. What are the key products, services, you guys offer? And maybe how does IMF impact the financial services industry?

Sandro Pelaez

Absolutely. Well, so MTF's mission is really to empower financial institutions to navigate the, what I would say, complex and and dynamic regulatory landscape. Right? Sandro try to protect them, try to protect their reputation and assets Sandro, enhance well, at the end of the day, enhance their customer experience. Sandro, we do so by providing a comprehensive anti financial crime platform. So, it's, by comprehensive, I mean, it's really a one stop shop for compliance needs at a bank. We include solutions that address very important topics at banks like anti money laundering, counter terrorist financing, KYC or know your customer Sanction screening, so maybe you've heard, I mean, especially after the Russian war, sanctions were really at the top of the priority for all financial institutions.

Nowadays a lot is happening around fraud prevention. I think with the incursion of AI, of generative AI, we have seen as well a raise in fraud, and that's definitely as well a focus point. So this is really one solution to address all these different compliance needs. You asked about the impact, on the industry. So, well, the industry, if you look at it from a historical perspective, has changed a lot in the last 30 years, I would say. So we come from a very well, the classic banking, at the end of the eighties, nineties, where basically most of the business went offline, computers started already picking off, but, there was also not a lot of surveillance, there was not a lot of, of how do you say, checks and balances in the industry. Well, that happens in the early 2000s where we run into a financial crisis, we had different terrorist attacks as well.

9/11 was a big impact. And, all these happenings really shaped the industry for the years after. And, that's why regulators have become more and more active in trying to enforce the law and the the rules. And banks need to be more careful nowadays than they were 30 years ago in ensuring that they are doing also good for the society. Financial services is really the core of the society. Everything runs through financial services. So it's really important that they they behave in the in a way that helps the society.

Leszek

Sure. I I also believe that the besides the the the the events that occurred, there's also this one big event, which is financial services or basically yeah. Basically, the financial infrastructure, at least to my understanding, were not really designed for the Internet. And that also sort of, like, triggered, avalanche of problems that didn't exist in the past. That's at least my understanding that that the the the redevelopment of, of the Internet, specifically in the nineties, also changed a lot. And the scale, the the of or the volume of things that, materialized, it was not central anymore or become even less centralized. And, would you agree with that's that point of view, or how do you see that?

Sandro Pelaez

You are absolutely absolutely right, Lisek. So, yes, I mean, the digitalization of the banking industry has had a huge impact as well on how banking is used. I've been doing that, as as I said before, almost 15 years. And, the speed at which things have moved has been incredible. If we if we imagine, I mean, when we were kids, there were no or there were the 1st mobile phones, and, and back then banking was mostly than offline. Then e banking started, access, to e banking via mobile phones, and then the first Fintech or or purely digital banks started to appear as well. And and you're right.

I mean, many banks that have been around for very long, which are very substantial for for our economies, they were struggling with adoption Sandro some of them are still struggling with adoption of technologies, to some extent, but I have to say most banks have really taken the challenge very well Sandro and they have been advancing a lot. There is a lot of, what we call legacy, around in this world, which comes out of this very rapid development. And, it's true that this has an impact on what can be done and what cannot be done nowadays in banks. So if you look at this new Fintech, they're purely digital banks. It's true that, of course, they are, they have been built up from scratch without any tech legacy, Sandro, they have, they are different a different kind of speed when it comes to adoption of of new technologies.

Leszek

Okay. Let's get technical then, or just dive into the tech side of things. How is technology and financial sector distinct from other industries? We touched that, we touched on that subject the last time we spoke, and I'd like, get a little bit deeper in that. What unique challenges or opportunities do you encounter when developing tech solutions for finance?

Sandro Pelaez

Absolutely. Yeah. Well, I I think, from from my perspective, I think financial services industry in terms of tech has some differences to other industries, maybe some other industry or share some some some things as well with other industries probably. So well, first of all, I would say it's highly regulated. So there's other industries as well that are highly regulated. Financial service is one of the industries that is highly regulated, which means technology solutions must comply with rules and standards. There is rules around data privacy, security, and transparency.

And so this is definitely has a big impact on how to develop new software because we need to always go through these quality checks to ensure that we also compliance with the regulators. Then I would say the highly regulated part and maybe to to come, you said challenges Sandro, opportunities, I think this also is helping us. I mean, due to this high regulation, as well, there is opportunity for us to bring software that helps with these regulations. So this is one of the things which we as a company as well benefit from regulation is actually good in terms of driving, in this case of driving technology for making a more secure financial sector.

Then it's very competitive. As a financial services sector, there is others as well that are very competitive. Financial services is really competitive Sandro this means, that, the technology solutions that we provide need to create some value. We cannot just produce any software that is shiny and fancy, but it needs to be creating value for the financial services industry. It needs to be differentiated from competitors and create really a competitive advantage. It also forces us to keep on our toes. So again, on the, how we say, opportunity side, it is telling us on a daily basis, hey, we need to innovate, we need to bring in new stuff, we need to try to improve our processes every day.

So that's probably pros and cons again from the bar. It's dynamic. So despite, I just said before, some parts of it are slow Sandro now I'm coming with the opposite, it's dynamic. Actually, despite it, or some of the things being slow, the industry is changing at incredible speeds in the last years. If we think about, the incursion of blockchain, of online trading platforms, during COVID, do you remember there was this, these, well, these trading platforms taking over parts of the market from one day to another. Sandro this is all things that are being enabled by technology, so a lot is happening. But also, on the other hand, we have a big complexity and diversity in the industry.

So we have all different sizes of banks. Some of them move faster, some of them move slower, some of them are big, have a big transaction volume, need to be high performing. Some of them are maybe smaller private banks, are still working in a very slow fashion. Some of them are still working on prem Sandro back to tech, on prem is still in big, portions of the world is still predominant. Although there is a big move to the cloud happening in the last 10 years, but some of them are fully on cloud, digital. So you see there's this big, both dynamics and complexity, happening in this market. And, this is one other challenge because, of course, we wanna be able to address most of these different banks and the different phases of their business.

On the other hand, again, I would seize as well as an opportunity. If we innovate fast, we can also help them advance, and provide value to market. Mhmm. Sure.

Leszek

Before we talk about the future, could you tell us a little bit more highlight maybe some specific solutions to prevent, financial crime? I mean, it's very interesting for me, myself. I've been working at AML or meaning, anti money laundering unit, one of the banks in the past. So, like, it's personally interesting for me, to talk about some solutions that you guys use, to a degree, of course, you can share.

Sandro Pelaez

Yeah. Of course. No. I I think I can share quite a lot. But if you have been working in the AML, then, well, you know you know some of the challenges. Right? So in in my view, and that's my personal view, nowadays in 2024, to fight financial crime, we need what we call collaboration between 3 agents really.

We have on one side, we have, of course, top notch financial crime professionals. So professionals that really know what they're doing and and know how to detect financial crime, but they need to be supported by technology. Because without technology nowadays, as we just were discussing before, there's just too much happening out there. So they need a digital platform, data centered platform, with, with which is highly configurable, to be able to adapt it to their needs. And, so this would be the 2nd pillar. And the the 3rd pillar, this has come really, we have been working on that for the last 8 years, but it has really become very important really since ChatGPT was launched, which is AI. And, AI is probably the future of of financial crime prevention.

Nowadays, it is really helping in combination of a rule based, kind of digital system and, and this, of course, the professionals. And I see this combination of these 3 three components really working on on the financial crime. Maybe I I maybe to bring an analogy on on AI. Right? So we are talking now about this hybrid approach Sandro if we take it as analogy for example with cars, we we come from gasoline cars Sandro already I remember when I was studying mechanical engineering, and you see here my my background coming up again. We were already discussing that the future are electrical cars. Sandro, I think there is pretty much no doubt out there that electrical cars are a big part of the future.

But we weren't able to move directly to to to electric cars. We had to go through some hybrid approach first. That's when all this Prius came out, the hybrid cars, and and they're the dominating part of the market for the last 10, 15 years. And now slowly, the the electrical cars are taking over. And the same I see really in this in this tech. We see rule engines have been the the really the classical way of addressing financial crime. We know probably AI is going to take over some part in the future, but we are not ready for it yet.

The technology is not ready yet to fully take over what a rule engine and a digital platform can do. So that's why at the moment, at least for the next few years or many years, we will see this combination of of room engines and PI. Mhmm.

Leszek

Interesting. So, my understanding is that it impacts the financial crime prevention from both sides. One is, is helping sort of prevent, but is also a tool for, for the criminals to actually, enhance their operations. That's at least my understanding of that.

Sandro Pelaez

You are absolutely right. And I say always, I mean, at the end of the day, it's an arms race, right? Exactly. With criminals, we people sometimes think about them like these students in their free time hacking computers. Criminals are highly professional, really, enterprises, and, they know what they're doing.

And, it's always really a fight trying to find the latest technologies and trying to find it. It's for me incredibly interesting to try to keep up and try to find the new ways how we're using, but it's true that it's, we are, we are at the end of the day, everyone is cooking with water and it, it always depends who is capable of adopting the new technologies quicker and being able to, to move on quicker. Yeah. Yeah. Absolutely.

Leszek

I'd like to shift the gears a bit and talk about mergers and acquisitions. We touched on that the last time we spoke, and I wanna sort of deep dive into that. And my specific question is, because IMF has some experience in the various acquisitions. Maybe you had some experience with that in your previous career. And I want to manage what is your experience advice or maybe good practices for integrating different organizations' cultures post m and a. This is difficult, but it's important to ensure, you know, that success is there. So I'd like you ask you for advice in that field.

Sandro Pelaez

Sure. Let's say so I think it's a really interesting topic indeed. IMF has gone through 3 acquisitions since I joined it, and, this is part of our bet on on investing into new technologies Sandro, and growing the platform. And even previously in my career as as a consultant, of course, I've been participating in quite a lot of, mergers and acquisitions or post merger integrations. And as you say, it's not an easy topic. It's always difficult. I would say for me, and and you mentioned that in your question, culture.

For me, people are always the core of a merger and acquisition Sandro the and the the most also the most challenging part. But also they are the enablers at the same time. So I think for me, best practices, of course, starts with the due diligence before the merger and before acquisition. Is the company, the culture of the company, can it be adopted? Does it make sense together with the company? So apart from all the NPV calculations that happen in Alberta as well, it's important to look at, does the company the people, will will it be possible to integrate?

Leszek

The values, things of that sort.

Sandro Pelaez

Exactly. Very, very, very precise, Alex.

And then once once a merger decision is done, it's it's really about working together with the people. And and, you know what? You know, they I also still learn on a daily basis. So the last big merger we did one and a half years ago, in my view, it was a very smooth merger. Of course, not without problems. There was a cultural clashes. We had 2 companies mainly based in Switzerland and one based in Germany, which you could think, hey, culturally seen is not that different, but there are differences of course in the company culture.

And, I would say the culture that we have today is different from what both of the companies had previously. So we have created a new culture, out of this combination, and I think that's important part of it. I think if you ask me the important thing is, well, talk talk to people, involve people from both sides, to shape the new processes, the new company, how the company behaves, Sandro, keep adapting. It's this continuous improvement. And that's a culture that we have been living, every time is this continuous improvement. Continuously look at, okay, what went wrong? What do we want to improve?

How can we improve it? Let's involve the people, talk about different ways, and step by step, keep improving that. I think that's that will be the the some of the work. And again, I I measure it again, but I I always repeat this. It's it's talking, communicating, and and listening to the to the people. I think this is really important, along the whole process.

Leszek

To your point about people being enablers of their success, but also, it's the people problems. One of the sentences I I have, heard and one I don't know if I read it or I heard it, but was basically that the problems, the majority or 90% of the problems when it comes to merging acquisitions or mergers specifically is, problem right people related problems. It's 10%. It's, these are systems, data, but actually the most most of the effort goes to dealing with fear, empowerment, context, or lack thereof, etcetera, etcetera. So Yeah. Any specific advice with it like, or things that you attribute success to, in your past, acquisitions? I know you've guys, acquired, for example, CYREN compliance, Sandro, from n I AML, from FICO, and then, and many other, companies in the past.

And I was wondering whether some, you know, key things, key tactics that actually work from you. If you could be more specific than, you know, talking with with people, which is obviously the key thing, but, like, bring, like, all hands meeting. I don't know. What did work for you guys?

Sandro Pelaez

Absolutely. No. I think I can go and get more concrete on that. I can tell you some of the things that worked. For example, one thing that, in my opinion worked very well is mixing teams. So this is one of the mistakes that I've done previously trying to keep the teams. You say, look, we have working teams.

Let's keep them as they are and try to try to not move people around. In my opinion, if you're trying to create a new company culture, that really doesn't work in the long term. So one thing that we did is really mix the teams, shuffle it around, say, look, we are gonna now take out of 2 separate teams, we're gonna now make again 2 teams, but with mixed mixed people from each side. Sandro, that is, it creates some conflict. Right? Because you're but you're enforcing this conflict early on and you're trying to find solutions Sandro you're better off in the long term if you do that early in the process. So that was one of the things that we have done.

Then, I think what we also ensured is that we have people from both sides in the in key propositions. So it's important to acknowledge that both sides, when you do a merger or acquisition, at the end of the day, there is a reason why you do the merger Sandro big part of these reasons is people. So you also need to acknowledge that. So something that, some mistakes that I've seen in the past is to say, look, since we are acquiring the other company, we are going to lift the whole management and middle management in the acquiring company, and everyone in the acquired company will just report into that. It usually, in my opinion, that's not an ideal situation. Usually you want to find a way of bringing these people in because of course there is some connections, personal connections that have been built over the years. And it always helps to have this middle management involved as well in important decisions.

And you mentioned all Sandro, yeah, the communication, that's one big part, right? And this is something honestly, I'm sure we could have done better as well. And this is one of the things that always we hear as feedback and we try to improve on a daily basis. It's very complicated, of course, you're growing as a company Sandro that's another part of the challenge. So it's not only that you have different cultures, but also we doubled our size in the company, meaning the channels that worked previously didn't work anymore. So we had to come up with a new series of town halls, all hands. We started doing, for example, weekly demos, company wide demos of the different teams where they would showcase the last sprint's deliverables features so that everyone in the company would get involved Sandro say, oh, that team is working on that specific thing.

I didn't know that. So we had all of these new learnings out of these meetings. And I think that helped also to create this culture of belonging that everyone got involved somehow into into the different parts of the company.

Leszek

Very, very interesting. I I I can only imagine this is really challenging process to to to lead. Finally, I'd like to talk about leadership, and specifically, what is your approach to leadership? Can you share share some core principles that guide your leadership or your basically describe your style of leadership.

Sandro Pelaez

No. Yeah, of course. I mean, I will maybe start with the basics, right? I mean, in my view as a leadership, especially in a position like a chief product officer, one of the most important things is to share a vision for the company or for the product, for the future, being able to inspire the company with this vision Sandro with a vision always comes a strategy, how to actually should this vision be implemented, to align, as I said before, also with the company values, with the mission Sandro that helps coordinate actions, right? But along with a vision and a strategy, I think this is only the starting point. Then, of course, one of the main focus points is in the execution. And it is important, and I have to always put a lot of weight on that, to stay consistent in the execution of the strategy, try to be transparent, and demonstrate results early on, but also continuously. Right. To create also this belonging.

Sandro, in order to do so, and that's, I think, again, the most important thing, and I've said it before, is people. And I think in order to be able to execute, you need to have people on board. So this is really, if I think about what I do, most of my gray hair comes from, focusing on people and, being, being, ensuring that the team can do their work with their best capabilities, building relationships with people, trying to live as well by example with with showing the values, but, also having the some of the tough discussions with the people. At the end of the day, it's all about empowering the team, a very capable team, to to do their work in the way best we possible. And, and, yeah, I I think maybe one of the big things that my personal, learnings or my personal focus points to be able to achieve all this is is learning. I think it's something that I value a lot. I enjoy learning and I enjoy learning on a daily basis. Nobody's perfect.

We all make mistakes. I do mistakes on a daily basis, but I really trying to learn on a daily basis, trying to to listen to people, getting feedback, and, and improving on a daily basis. Sometimes we do one step forward, sometimes we do a step back, but it's important to keep this continuous improvement as well on a personal basis, to, try to, well, to be a better leader at the end

Leszek

of the day. A 100%.

On the related note, you've meant you mentioned that international exposure. In the very beginning, you mentioned that it has been one of the crucial factors in a career. How has working in different countries and cultures influenced your professional development and approach to leadership if that's the case?

Sandro Pelaez

Yeah. Thanks, Lesik.

I saw that I I was looking for for that question, and and, I think this has been very impactful in my career. And so, as you know, I I grew up in Spain, moved early on to to Switzerland. I've been studying during my studies. I spent time in Sweden, Japan. I worked 5 years in Asia.

Leszek

Japan. Right?

Sandro Pelaez

I I worked as well in Japan. Exactly. I had some projects in Japan Sandro worked in Singapore for some Singapore. Yeah. Sure. So, yeah, I I think, of course this had a big impact on a personal level. And to be honest, I would recommend to everyone to have this experience.

I know you have been also you have also had international exposure Sandro probably you can confirm that. But on a professional level, I think it has profound impact. And some of the thing some of the important factors that I learned was to acknowledge that there are different cultures, different ways of of working, Sandro, that, there is not one fit one size fits all. There is, you need to adapt at the end of the day to the context where you're working in. And at the moment, at MTF, we have, I would say over 40 nationalities working in the company. Sandro I don't think I could work as efficiently with all these people if I wouldn't have had that background and understanding as well, how different cultures interact.

Leszek

Nice. Nice. Sandro, thank you for for the wise words and sharing our experience. It's it's been a pleasure.

Sandro Pelaez

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