Q&A Profile: Marco Arcaini – AltoPartners / Executive Consulting Group Partner (Wiesbaden, Germany) : Financial Industry Division Executive Consulting Group

As Partner of the Financial Industry division at Executive Consulting Group, our AltoPartners alliance partner in Wiesbaden, Germany, we profile Marco Arcaini as the Financial Industry Subject Matter Expert. Over the last 17 years, Marco has directly and indirectly developed solutions for over 600 assignments and advises banks and financial service institutions in the search for and selection of specialists and executives. His clients are national and international banks with activities in the fields of corporate and investment banking, equipment finance, asset management, wealth management and retail banking.

Marco shares his insights into the current state of the financial services sector in Germany and details the trends impacting executive search within this sector.

Q&A with Marco Arcaini: The Current State of the German Financial Services Sector

Are you still seeing an impact from the economic crisis/downturn on the German financial services sector?

The economic crisis from the past years did not have a very significant impact on Germany. Following the substantial reforms on a national level in 2004, Germany only had a short economic setback in 2008/2009. Since then the volume of the German stock exchange index (DAX) has almost doubled up to 11.000 points. The financial service sector, which I have covered for 17 years as consultant, has seen some very good developments in the past years. Due to the new regulatory requirements banks had to restructure and to adapt to the new standards given by the European Central Bank. Products and services had to be adjusted and new opportunities emerged for banks to make business.

What are the recent developments in the German financial services sector?

In traditional banking many national and international banks have rediscovered the German “Mittelstand” – the small/medium sized enterprises in German speaking countries – as a key client segment to offer established and also new products. For example the old fashion product Factoring has had a very strong growth in recent years in Germany. Further, the securitization business is again attractive to banks, particular for medium sized companies, which is interesting as the securitization business was the main cause of the global financial crises in 2008.

Apart from banks there is the development of financial technology, also known as “FinTech”, which is a line of business based on using software to provide financial services. FinTech companies are generally start-ups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software. New technologies such as e-commerce, mobile-payment, crowd lending, crowd investing and business intelligence are about to revolutionize banking. The question behind it is: “Does money really need a bank?” which also illustrates upcoming challenges for this industry. Some companies are very promising, particularly for executive search and leadership consulting business development, as they need visionary managers that have an affinity and understanding for financial services but also have the ability to show technically advanced thinking.

What are the biggest challenges facing financial service executives at present?

Frankly, the requirements for risk management and reporting of the European Central Bank are getting too extensive currently. Just recently, several bank executives addressed this problem at the Handelsblatt Annual Conference “Banks in Upheaval”. Most banks are currently in very good condition; they have made their changes and paid their dues. However, the regulatory requirements increase almost daily and take up much of the resources they actually need grow their business. Another big challenge for financial service executives in the years to come will be the developments from FinTechs – Bill Gates ones said „Banking is necessary, banks are not“.

Over the last 5 to 10 years, have there been any notable trends impacting the way search is conducted in this sector?

According to the German Association of Executive Search, there are more than 6.000 executive search consultants working across the local market. The German market is highly competitive and there are two main trends that have developed in the past 10 years. One is that consultants needed to concentrate on specific sectors, even those consultants that predominately focus on board advisory. Clients as well as candidates expect that you know a sector thoroughly and that you can act for both parties as advisor on strategic questions in that industry/sector.

The other main trend we have seen is the way we now search for information, which has resulted in the entry level in the executive search lowering significantly due to the free information you can access from the internet. Particular social/business networks such as Xing, the largest business network in German-speaking countries, and LinkedIn have promoted this development. On the one hand, our access to a wider pool of quality candidates has increased, but on the other hand many candidates started to ignore inquiries through social media.

What are your strategies to address these trends?

We have always had, and continue to have, a strong focus on high quality process, research and a strong network of candidates as well as sourcing partners. In addition, we also extended our research capacity to gain information that is out there in order to produce a successful search. Furthermore, to keep our quality high and to offer sophisticated searches, we regularly rethink our processes within the group and work collaboratively to support each other. We have also included additional high-end consulting services, such as comprehensive candidate assessment and onboarding advisory, to meet the demand of our clients for a superior service and to avoid candidates leaving the companies unexpectedly or prematurely.

Due to all the challenges in the sector, have you had to adapt your onboarding strategies to help candidates settle into their roles quicker and find successes sooner?

For over three years I have been offering comprehensive onboarding support with any executive search project, with very positive feedback from both clients and candidates. Once a candidate has been placed, my service includes two onboarding sessions (1/2 day each). However, in several cases we have sold additional sessions to help the client and the candidate to settle into their role faster and to meet the challenges ahead. We find great success with these services and we are able to extend the relationship that we have with our clients and our candidates and really help position ourselves as trusted advisors in their minds.

How do you build trust with your clients and enhance your reputation with them?

I believe once a client has worked with me, they are likely to realize that I am very committed to a project – very present so to say – and that I am exceptionally reliable throughout a project. My focus is not only on the clients, but also on the candidates. I make sure that the reputation and development of my clients business is enhanced through my work. Further, I do not give up solving a search problem. I guess this comes from my character trait not to let go easily and so I do believe that clients who work with me might also appreciate my resilience.

What has been the most challenging, but exciting, assignment that you have worked on?

That is difficult to answer, because I like my job very much and I gain excitement from my work. However, searches in an international context are always particularly simultaneously challenging and exciting. Recently, I worked for an Asian Government Bank. They had little international experience and wanted to enter the German banking market. As conference calls regularly took place an hour early or late or not at all, my approach to this client became a lot more intuitive than structured. I had to be flexible in my business management approach and work according to my client’s ways. This resulted in a successful project and a great learning experience!

About Marco Arcaini

Marco holds an MBA from the OU Business School, UK, and graduated from Hofstra University, New York, USA with a Bachelor in Business Administration. He passed a bank apprenticeship in Germany. In 1998 Marco started as Consultant in the sector financial service with a renowned executive search company in Germany. Since then he has worked his way through more than 600 search projects. First managing searches for Partners, he developed himself soon to become Senior Consultant and successively built up his own client portfolio. Besides executive search, Marco is regularly assigned for outplacement and onboarding mandates. Since 2011 he is Partner with the executive consulting group where he covers the sector financial services. Due to his Italian ancestry Marco spends his leisure time, together with his wife and twins, most often in Tuscany, Italy.