Banco Sabadell: ‘The crisis will speed up the move to digital banking’

Leaders League spoke to Banco Sabadell Mexico’s legal business director Luis Alberto Cárdenas Díaz about how the current crisis will affect the banking sector and the impact it will have on its relationships with external legal advisers

Posted Tuesday, June 9th 2020
Banco Sabadell: ‘The crisis will speed up the move to digital banking’

Luis Alberto Cárdenas Díaz

What has been key to effective leadership during the crisis?

Both during times of crisis and calm, as a leader it is fundamental to: have clarity regarding your team’s functions within the wider organization; keep in constant contact with all the members of the team; develop and allow space for the free flow of opinions and information; provide a sense of security and stability for the team; safeguard job security; support team members when personal problems inevitably arise; and, most importantly, help each member achieve their full potential.

An economic crisis always puts additional stress on the daily working dynamics of institutions and their teams, and, as a result, efficiency becomes even more important. So, during a crisis, it is crucial for leaders to look for ways of making their teams more effective and, particularly, with regard to in-house legal teams, to facilitate interaction with the businesses we support in order to understand and address their needs.

The current crisis has not only had an economic impact, it has also changed the way people live and work, almost from one day to the next. That is why this emergency is like no other we have gone through, as it has involved a significant change to the team’s working dynamics in which the health of the members of the team has been prioritized over any other consideration. This has necessitated a shift to a remote working environment.

At Sabadell, and particularly within my team, this change has been almost seamless, as we were able to move all of our activities to the home office using technological and institutional tools that allow us to continue working as before, with the same level of quality and communication we experienced in the office.

It is worth noting that during this crisis, Sabadell Mexico has been able to provide job security to all members of its legal department, and we have even expanded by hiring four new lawyers to better serve our internal clients.

What changes are you making within the legal department and what changes are being made more generally in Sabadell?

Work is a fundamental part of our lives, we spend at least one-third of our time at work, so it is really important to develop a safe and comfortable environment that helps with our professional and personal growth.

In this context, we have implemented a more relaxing working environment, where people can dress comfortably without a strict dress code (no more ties, for example), while, even before this crisis, we have been able to work from home, as long as we don’t have scheduled meetings with other areas of the bank. We also hold weekly meetings – to discuss the most important transactions – in which every member is involved, so that everyone has a good idea of the team’s performance, and we align our objectives.

We try to be a horizontal team, where everyone is responsible for their work, and responsibility is not based on a strict hierarchical/vertical structure. We see ourselves as ‘helpers’, supporting our businesses’ to achieve their goals, while keeping a very practical approach to legal problems.

Up to now, the current crisis has not forced any significant changes within the legal department but it has accelerated the use of existing technological and institutional tools in order to continue working as efficiently as we did before the crisis.

How will banking change as a result of the crisis?

This crisis will accelerate changes that have been expected for years. In particular, there will be a change from physical to digital banking.

In Mexico, I expect important changes to our legal framework in order to facilitate digital contracting and the digital operation of bank products and services, as well as the use of “banking as a service” agreements to extend the reach of financial services.

Since its incorporation, Sabadell Mexico has sought to be a fully digital bank. We have the objective of executing most of our agreements and offering most of our products through digital platforms. Of course, this implies important legal and practical challenges – that we are already addressing – because the current Mexican legal framework is not fully prepared for a 100 per cent digital experience, and Sabadell has very high standards regarding the protection of our clients’ personal information – cybersecurity and data protection are our priority.

Additionally, this crisis will also affect the internal workings of financial institutions. All meetings of their different committees – risk, credit, and anti-money laundering, for example – and even meetings of boards of directors have been held remotely using secure networks. I expect this change to endure because it enhances the efficiency of our operations.

Lastly, Mexico’s banks have adequate capitalization indexes, which is a consequence of strict regulations on capitalization and liquidity that were implemented after the past economic crisis. Therefore, I do not expect significant regulatory changes in this regard.

Will your expectations of outside legal counsel change due to the crisis?

I think the expectations of outside legal counsel have been changing since the 2008 crisis and this will accelerate as a consequence of the current crisis.

In my opinion, trust is the most important asset when dealing with any outside legal counsel, and trust is built day by day, by having an in-depth understanding of the client’s needs, and giving practical and useful advice that helps in-house legal departments to better perform their functions.

As a legal services user, I want great outside legal advice at a reasonable price, meaning that the price reflects the quality of the work done by the outside counsel, not externalities such as expensive offices and the learning curve of legal interns and new associates. Law firms must rethink their relationship with their customers and try to find ways in which their advice and resources could be more efficient and useful.

I think we are going to see more fixed fees and fee caps, instead of hourly fees, as companies want to be more able to manage their legal expenses. Law firms must see themselves as partners of in-house legal departments, even from a financial perspective.

What does the future hold for legal departments?

I think that we will see much more efficient legal departments where people will use and even develop new technologies to ensure better results. For example, we are currently seeing an increase in the use of digital platforms to perform due diligence, automate the negotiation and execution of contracts, and facilitate communication between our team and our clients.

Legal departments must see themselves as ‘helpers’, not ‘stoppers’ of businesses. We are an essential part of the organization and we must act as a support area, so we have to understand the business implications of our legal decisions and be able to explain them in an easy and understandable way.

I expect this will translate into smaller in-house legal departments that use their resources – both material and human – in a better, more efficient, and responsible way.