Six months after starting his PhD thesis on Banking Supervision, a young Michael Jordaan saw the following recruiting advertisement for Rand Merchant Bank’s (RMB) “Class Of” programme in a newspaper: “Archie and Ben were professional golfers and keen rivals. One day during a game, they had each scored 30 when Ben hit a bad shot. Archie immediately added 10 to his own score. Archie then hit a good shot and he had won the game. Why?” Jordaan sent in his application along with the answer. He recounts the story: “I thought it was interesting. I hadn’t really heard of RMB but they called me and I went through a very rigorous process. Paul Harris, the Managing Director, was there – he did the interview. I remember coming out of that thinking they will never, ever employ me. Three or four months later they made me a job offer.”

It was 1994 when 26-yearold Jordaan joined RMB, later becoming Paul Harris’s personal assistant. Some 10 years later he was appointed CEO of FNB following the joining of FNB Retail and FNB Corporate. “They chose me. I was very surprised,” Jordaan says. “I was only 36 years old.”

Interestingly enough, RMB never actually wanted FNB. In 1998, Rand Merchant Bank Holdings (RMBH) and Anglo American merged their financial services interests, forming the FirstRand Group. But the merger came about because RMBH’s subsidiary Momentum was interested in Anglo American’s Southern Life. FNB was a grudge purchase that came with the financial services bundle of companies then owned by Anglo American. But for a company that was not the focus of the original merger, FNB has contributed quite nicely to FirstRand’s results. In 2004, FNB contributed 53.8 percent to the headline earnings of the group. In 2009, it reached a peak at around 62 percent. In 2011, it was still the biggest contributor in the group of companies on 55 percent (including FNB Africa). Client numbers for South Africa have increased from around 5.2 million in 2006 to 7.5 million in 2013 – an increase of 44 percent in an industry where the fight is fierce for non-interest revenue from transactional volumes.

It is not far-fetched to say that the bank has experienced a total brand transformation since Jordaan’s appointment. FNB is now almost always equated with innovation. At its helm is a banking CEO, known to many as MJ rather than Dr Jordaan, active on Twitter – talking, engaging and joking with almost 30,000 followers on a regular basis.

A Farm, a Few Cents and the Stellenbosch Distriksbank

In a country with a distinct lack of a savings culture, Jordaan’s German grandmother, Hedwig, tried to instil such a discipline in her young grandson. During the school term, when Jordaan was with his parents in Pretoria, attending Menlo Park Primary School, Hedwig would save all her 1c and 2c coins for her grandson. During school holidays, Jordaan would go and visit his grandparents on their farm in the picturesque Banghoek Valley outside Stellenbosch, in South Africa’s Western Cape. Jordaan would take the coins his grandmother had saved for him and deposit them at the Stellenbosch Distriksbank. “I would go to the local bank and hand it over the counter where they would write up something like ‘R2.32 deposited’ in my savings book and stamp it,” Jordaan remembers. That same bank manager must have experienced quite the shock when one day Jordaan, still in primary school, walked in and told the manager that he wanted to buy shares.

Jordaan believes he inherited a solid value system from his parents and grandparents. “Everyone made an impression in different ways,” he says. “For example, my father, he is the most polite person you will ever meet. He is like an old gentleman. And my mother is such a soft person, really focused on the humanity in people. She was also quite liberal. I also had a close relationship with my grandmother on the farm.”

High School took Jordaan permanently to the Western Cape, where he attended Paul Roos Gimnasium. He describes himself as a shy, introverted child who had books for friends. “That sounds very sad but it’s probably true. I would read a book a day at the time,” Jordaan says. This changed during his years at Stellenbosch University, where Jordaan says he had the best time. He recounts that his favourite thing was probably having conversations with stimulating people at Wilgenhof residence and the watering hol9es that surrounded it. “I did well, I had more than acceptable marks but I wasn’t a great student. I was great at spotting who took good notes. You could find me at the copying machine often,” he admits. “It is quite amazing what one could achieve under pressure. If you were writing an exam in one day’s time you could actually achieve miracles,” he laughs.

Soon after graduating he began his national military service. Jordaan very candidly admits that this was difficult for him and that he shouted for joy the day it was reduced to one year instead of two. He did not enjoy basic training at Saldanha Military Academy in the Western Cape, though he fared better when selected for an officer’s course. “They still had that ethos of an officer and a gentleman,” Jordaan says. “It was a proper course where you learnt to navigate by the stars. One of the courses was on manners, when to leave after a dinner party, how to pour port.”

Though national service was not the best time for him, Jordaan still excelled. He was awarded the SAS Simonsberg trophy for Best Officer on course in his year at the Gordon’s Bay Naval Academy.

An Exotic in the Banking Industry

Though Jordaan had hoped to continue his studies abroad, he lacked the financial means. Instead, armed with a German passport, he began searching for work in Germany. In 1991, he applied to Deutsche Bank’s management trainee programme. Jordaan says he received a spot because he fit the bank’s description of ‘exoten’ – the exotics. Each year, the bank recruited several students who were outside of the norm, either German applicants who studied something totally different, like theology, or someone from a different country, Jordaan explains.

Jordaan began his banking career as a teller. He moved swiftly up the ranks to nab a post as a Corporate Banker, which he held in Frankfurt from 1992 to 1993. Then it happened. Jordaan says he remembers it incredibly well. “I was in this little flat. It was grey outside and I was looking at all these Germans doing their shopping. I just realised: I am not happy here. I typed my resignation letter and handed it in the next day and that was that. I was on the plane back and I was so happy to be back in South Africa. As I arrived here Chris Hani was shot and people thought I was absolutely crazy [to return at such a time]. For me it didn’t matter. I was a South African. And South Africa has been very good to me since I returned.”

Starting a Cultural Revolution

A year spent working under Paul Harris, often described as the ‘innovator’ of the three founding members of RMB, served Jordaan well. His brief stint as Harris’s PA was followed by a number of management positions – CEO of Origin Bank (later rebranded RMB Private bank) from 1996 to 1999, CEO of FNB Home Loans, from 1999 to 2000, CEO of eBucks.com from 2000 to 2002 and finally, CEO of FNB Customer Solutions Division – before his appointment as CEO of FNB in 2004.

The front page of the 2010 FirstRand Annual Report boldly displays the following words: “Owner-manager culture, Entrepreneurship, Innovation, Franchise value.” These words repeated constantly by RMB founders Laurie Dippenaar, Paul Harris, and GT Ferreira permeate most conversations about the leadership style or management culture of the group. “It sounds almost like a cult,” laughs Jordaan when I point this out, but he does admit that it is this autonomous profit-centre, owner-manager structure that enables innovation to thrive. “None of it [the culture] came about in an MBA-like fashion. It came in principle from the way these three people behaved.

Leadership behaviour is very important in the way it signals things.” Much of RMB’s banking success comes from the revolution of building the culture around these phrases, increasing the level of intellectual debate in the business, and breaking away from classical hierarchal modes of management.

Breeding Innovation

Innovation was always a part of RMB’s banking culture. Jordaan tells the story of how, at the time of the merger, he lead a group tasked with establishing an Internet-based commercial bank in South Africa. “The first codename was Cyberbank. It was Paul Harris’s idea and I still think it’s visionary. As it was, we felt the Internet wasn’t developed enough to merit a big bank. Cyberbank then became Origin and that became RMB Private Bank,” he says. As CEO of Origin, Jordaan had to rethink everything from step one. In 1999, he was asked to run FNB’s Home Loans business, which was posting a loss at the time. Jordaan devised a 12-step plan to turn the division around, with much success.

Then came eBucks. A virtual currency underpinning FNB’s rewards programme, customers can earn and spend eBucks online and at some retailers in South Africa. At the time it was launched, eBucks was a revolutionary idea. It was swiftly followed by other innovations such as GeoPay and eWallet. (GeoPay uses location-based services to allow customers with the latest version of the FNB banking app to locate other users within close range and make cashless payments to them, without the need for their bank account details. eWallet allows an individual to send money to another, provided he or she has a valid South African mobile number, even if they don’t have a bank account.) FNB also became the largest vendor of iPads and iPhones in the country through its smart device offering for cheque account holders. Then there was the establishing of ‘Steve’ as an icon in advertising, and being the first bank in South Africa to launch a banking app. FNB has also run an annual innovation competition, the FNB Innovators Programme, since 2004. When accepting the BAI-Finacle award in 2012, Jordaan stated the programme has produced 5,585 innovations “which has contributed towards the strategic direction of the bank.”

Jordaan wholeheartedly believes in the African growth story but adds that there are some caveats. He says the growth promise is underlined by the continent’s large volume of young people with a bounty of resources and growth off a low base. “But Africa is not one entity,” he adds. “Each country is different and the next crucial thing is leadership. Don’t they say that every country gets the leader it deserves? If that is true then it is quite sad what is happening in a lot of African states. It is not simply Africa’s destiny [to be a growth pioneer], it is in the destiny of its leaders to actually make it happen.”

Part of this growth potential are millions of still unbanked Africans citizens. Jordaan believes that for them, the future is in mobile banking. He points at my smart phone on the table. “What you have there will become your wallet,” he says. “The cost of traditional banking is too high.” In South Africa, FNB customers are already incentivised to use online and electronic banking channels rather than physical ones.

The Thing with Twitter and the Future

People have asked Jordaan about his strategy when it comes to social media app, Twitter. He doesn’t have one, he says. “I really just enjoy it. I think it is an amazing way to find out about things even long before it gets to the conventional media. I like the humour on it as well. Some people on there are really, really funny. I just think there is a great conversation that is happening out there and you can take part in it.” Would he tweet even if he had zero followers? He answers yes. “It’s the closest thing I have to keeping a diary of my observations,” he explains.

Jordaan says he still has some time left in the driver’s seat at FNB, having always publicly stated that he believes one has 10 years in the position of CEO before having to move on. Whether the innovative culture that he has helped establish will remain after he departs is yet to be seen. He does note that his management style is operationally loose but strategically tight – leaving the running of the different profit centres to the respective CEOs.

Others believe that FNB’s culture of innovation will outlast Jordaan because it is part of the culture present in many other subsidiaries of RMB. “I think the culture will remain, especially since it is most probably FirstRand’s biggest competitive advantage,” says Johann Scholtz, head of research at Afrifocus Securities.

This innovative culture at FNB, which permeates the whole organisation, is not only driven by but also embodied in the institution’s leader, Jordaan. After everything that he has achieved it is little wonder that FNB was crowned the most innovative bank in the world. And the answer to that riddle: they were playing tennis.

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