Leadership 101: Mastery of Profession

I had the privilege to have lunch with Manuel Medina-Mora (Current Co-President of Citigroup, Chief Executive Officer of the Citigroup Global Consumer Bank, and Chairman of Banamex) and one of the key attributes that he uses to identify the quality of an individual is the person’s ability to explain complex business processes and/or industries in simple terms.

Manuel’s specific example was Core Banking, which he defined in five simple functions:

• Deposits
• Payments
• Credit
• Investments
• Insurance (Protection)

Deposits: This covers both Demand Deposits (Checking Accounts) and Time Deposits (Savings Accounts, Certificate of Deposits).

Payments: This covers all types of Consumer Checks, Corporate Payments, Payroll, Government Payments, and Bank/Cashier Checks as well as the Methods (ACH – Automated Clearing House, Wires, etc.).

Credit: This covers Consumer Loans (Credit Card, Mortgages, Automotive Loans, Lines of Credit, etc.), Corporate Loans, and Trade Services (i.e. Letters of Credit). Banks that have securities divisions this would include securities loans and/or margin.

Investments: This represents the interest on checking, savings, CD accounts, as well as the complex corporate products that provide liquidity and maximum interest rate benefits. There are secondary products that combine the benefits of deposits, payments, and investments (netting of payments between corporate entities, or payments in local country currencies).

Insurance (Protection): This represents the value (currency) that customers in trust within their bank and the expectation that there is zero risk to losing their money. Once, customers lose trust that causes a run on the bank and the other functions do not matter anymore.

Mr. Medina-Mora has recently announced his retirement from Citigroup as Co-President and CEO of the Global Consumer Bank. The above specific example displayed a great deal of intelligence about an industry (over 40 years in the banking business) that many college professors spend lifetimes trying to define in complex textbooks. Note: a majority of the people that work in banking cannot provide the same elegant explanation.