Finance

Oki Matsumoto: Advice on how to be disruptive—and stay disruptive

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Oki_Matsumoto

Oki Matsumoto, Chief Executive Officer, Monex Group, Inc.

When Oki Matsumoto, Chief Executive Officer of Monex Group, Inc., speaks in front of an audience about bold technological disruption and the future of finance, he gestures with an elegant, sweeping arc of his arm. It’s as if he is tracing the trajectory of a big idea.He has a demeanor that is brilliantly wise and engagingly playful at the same time. He is known to smile often in conversation when talking about complex concepts, making him an approachable and authentic leader.

When on stage this past January in Tokyo at the launch event for the 2016 IBM Institute for Business Value CEO Study, he beamed with genuine joy when he discussed how he gave himself a new title that starts with a C: Customer Happiness Officer at Monex, Inc. (He remains CEO, too.) He takes his new CHO role, which he gave himself in November 2015, very seriously. That’s because he takes his customers’ satisfaction very seriously. He turns to them for feedback often, and sees this as the key to effective innovation.

Matsumoto is very much the visionary. After a long history in traditional finance, starting at Salomon Brothers Asia Limited in the late 1980s, and then Goldman Sachs, he founded the pioneering online brokerage Monex, Inc. with Sony Corporation in 1999, a time when the term “online brokerage” was not a common term. He’s been recognized by industry publications, such as Institutional Investor, which consistently names him in its Trading Technology 40, a list of leaders in his field.

Here, he offers advice on how to be—and remain—disruptive. His tips are relevant not only for financial CEOs, but also for C-suite executives in established enterprises in nearly any industry. That’s because most senior leaders in corporations are facing similar challenges that he faces, such as how to compete with start-ups, how to provide unique and meaningful customer experiences, and how to predict what emerging technologies to invest in heavily.

Monex was a disruptor. How do you learn from today’s “unseen competitors”?

I am more worried about today’s digital giants that have wallet services (for example, Google, Amazon, Apple) than financial industry giants. These digital giants know how to relate with customers. It is a huge advantage.

But in financial services, not everyone can win. It’s a market, so there are winners and losers. Today’s digital giants can create relationships—but it remains to be seen if they can provide the best financial services to those customers. For us to survive, it is getting more and more important for us to sharpen our intelligence to help our customers make a better asset management decisions.

As far as financial startups…many startups will fail. A few will have big successes, similar to what we did 17 years ago with Monex, Inc. At that time, online trading was nothing in Japan, and now it represents over 90% of trading here.

My philosophy is, we need to be a good friend with startups. I don’t want to stand as an enemy of those startups. We are trying to have good relationships, whether it is investing in them, or getting involved in other ways to help them succeed.

How, as a CEO of a very respected and nearly 20-year-old company, do you retain your edge as a disruptive thinker?

Customers’ needs can actually be the key to disruption. So we listen to customers to meet unmet needs. At many times, companies think of what customers want without asking them how best to meet their needs. When I founded Monex, I was thinking, the Japanese financial institutions are running businesses on supply side logic and not customer side of logic. And that is why I pursued this idea.

Today, now that I have become Chief Happiness Officer, I’m writing a column every day to the three-quarters-of-a-million subscribers of our company’s e-mail magazine. I ask customers what they want. I receive lots and lots of emails back. In these, people tell me what they think about particular projects we do. This is valuable feedback. In the past, it wasn’t easy to get 100s of thousands of customer voices giving you feedback every day. Now we can, and I see this as an excellent way to understand what customers need at all times.

I believe effective marketing just needs the PDCA (plan-do-check-act) process. We come up with ideas for services, try them, ask for customer feedback and adjust. Over and over, do this process, and you will deliver what customers want.

What is the biggest hurdle to innovation that financial services companies face?

In the financial industry, regulation is different from country to country. If you think of other industries, like telecommunications, rules have been standardized.

From a customers’ point of view, you can buy from any brand at any time from around the world. If you want to buy shares, you want to buy from around the globe, you can’t in the same way as other things. In Japan, it is simply easier to buy on Tokyo stock exchange than on others.

In the new CEO Study from the IBM Institute for Business Value, data shows that CEOs believe that Torchbearers, the boldest leaders in their fields, are focusing on mobile and cognitive computing (systems that learn at scale, reason with purpose, and interact with humans naturally). How do you see these technologies affecting the finance industry?

Mobile tech is making all businesses different from what existed in their industries before. Not only are businesses evolving in new and different ways because of mobile, but also start-up businesses are finding that entrance barriers have lowered and are lowering faster and faster. It used to be that brokerages were owned by Nomura and other traditional securities companies. Now anyone can do it.

It is the same thinking we had 17 years ago at Monex, when we were four people with no capital. We were like a factory, assembling technologies and creating a brokerage company.

Cognitive is very interesting to me, too. What makes me most interested in it is the possibility of automating the PDCA process in marketing.

How cognitive can help marketers iterate new ways of pitching products and services?

Human beings always need to come up with strong, new ideas, whether for services or products or for marketing these services and products. But before they can come up with the strongest ideas, they could screen out many early, unviable concepts by a steady PDCA process.

I admit, I don’t know much beyond the financial business. So here is a metaphor from the financial industry. I think what happened in the financial industry, when Wall Street faced difficulty in 2008, many left and went to Silicon Valley. That influx of a supply of resources helped Silicon Valley develop more and more ideas. In a similar way, cognitive will release people’s energy and attention, because cognitive will be a new flow of resources into businesses. A larger supply of ideas, surfaced by cognitive, will create new innovation.

What advice can you offer CEOs in terms of preparing for the future?

I named Monex with the future of money in mind. I tried to design a services company that is one step ahead of how people dealt with money in 1999. That is why there is an “x” in the name—“x” is the letter before “y.”

But even the most established and respected CEOs must always strive to succeed in their business. Things are changing so dramatically today, as a CEO, you have to adjust yourself very quickly, adapt those changes, or otherwise you can become obsolete completely and very quickly.

So you bring in new blood. It doesn’t have to be young blood, but it must be new thinkers with fresh thoughts. As a CEO, you need to bring new ideas, new people, into the firm constantly. Otherwise you will very quickly be obsolete.

Never sit still as a CEO. If you do, you will fail. Always be iterative, make small changes all the time, and be the first to market.

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