As a way to kick off 2021, we had the opportunity to host an AIBP Focus session with esteemed panelists from the Banking, Financial Services & Insurance (BFSI) sector across Southeast Asia. The session was a platform for them to share their perspectives on the paradigm shift being seen within the banking and financial services, from the viewpoints of all stakeholders: regulators, customers and new-age competitors.
Sue Yuin Ho, Vice President of AIBP, kicked off the session by sharing survey results from the 2020/2021 AIBP Enterprise Digitalisation Survey, as well as some case studies on how the industry has evolved both from a global and regional angle. It’s been a challenging year with the pandemic changing our way of life, and it has become even more important for businesses to assign priorities to their digital spend. As shown below, ASEAN BFSIs have indicated that data analytics, as well as AI/ML technologies are areas of focus over the next 2-4 years. It is also interesting to note that respondents indicating that tech budgets will increase in 2021 outnumber those that said that it would remain the same or decrease.
The right mix to drive digital innovation
Santhosh, Chief Data and Analytics Officer of Techcombank, led the discussion by stating that the first and foremost factor that banks need in driving innovation is considering cloud technology. The second would be data analytics, where he pointed out how banks have all the data, but are still not aware of how to utilize it properly. Last but not least, having people who not only understand technology, but also understand the business context on how the technology can be applied, would be crucial. Understanding these would probably define how banking will be like in the future.
Kerem, Digital Platforms Transformation Executive Director of Standard Chartered Group, Singapore, highlighted scalability, reliability and trustful relationships with customers as his key factors in driving innovation. With his unique background of being in Turkey’s Garanti Bank previously, he mentioned that the Turkish market has a very high mobile/ digital penetration rate, even when compared to China. One of the huge efforts put in by Garanti during the COVID-19 situation was eliminating processes that required physical contact with clients. However, while driving digital innovation, Karem also mentioned that it’s important to keep those who still need human touch for transactions in the loop to maintain trustful relationships.
Ramu, CTO/CIO of Tonik bank, came up with a different context from a tech guy’s perspective. He suggested 3 pillars to be brought together to maintain a profitable digital innovation process, a customer centric approach, innovation with a robust strategy on security and collaboration with Fintech players as a way of building ecosystem partners. In unprecedented times like this where most employees are working remotely, he brought up the importance of protecting the data from leaking and being misused.
Digital Transformation with a robust security strategy at core
Mr.Choi, director of international sales, Markany, a South Korean security solution provider shared that banks there also face similar challenges with security. Due to digitalisation, everything is now connected, and the consequence of a single data breach can be catastrophic. From his observation, as banks expand their range of services into other business areas, they have become more vulnerable to data leakages. Traditionally Korean banks were focused on preventing the attacks from external threats, but with the development of cybersecurity technologies, they are now more prepared against such threats. The rising problem is internal threats, in the form of employees, which is aligned with Ramu’s earlier comment.
Measuring ROI of digital innovation projects
Kerem shared that from the bank’s side, there are many KPI that they should look for when creating a new project, such as number of digital active customers and digital sales. In the perspective of customers, they should look at MPS (Marginal Propensity to Save), by continuously receiving feedback and increase in engagement.
Santhosh on the other hand, thinks it’s not just about the sales number, but also about whether the customers are adopting the banks’ digital platform strategy.
Ramu shared his view where he thinks there are different metrics for different groups. For digital deposit customers, one of the important KPIs he will keep in mind is deposit balance. For the lending group, he considers things like how quickly the cash is being disbursed, and risk parameters.
Partnerships to drive innovation
Santhosh believes partnerships are here to stay, and it will happen more actively in the future. Partnerships provide opportunities for the bank to leverage existing best in class capabilities and is a viable option to consider instead of building all capabilities by themselves. One of the key things to consider is security issues, as mentioned throughout the discussion, banks need to engineer a platform that is secure enough to prevent leakages and preserve customer trust.
Kerem agreed that partnership is crucial, and banks have to be careful in choosing the right partners. Each Bank should have their differentiating factors which they have to develop independently, but for features that they are lacking, such as biometrics technology, it might be better to leverage on external parties. He also mentioned that banks have to be aware of the shift in bargaining power as time passes, and take these points into consideration when choosing partners.
Choi brought up additional points regarding Santhosh’s statement where it is important to prevent data leakages from occurring. In reality, it is almost impossible to prevent all the attacks, however banks can make sure that even when abreach happens, the data that was leaked can’t be accessed by the third party by implementing new security solutions, such as DRM (Digital Rights Management)..
In conclusion, it was interesting to understand some of the common challenges that the panelists faced - from utilizing and protecting the data to choosing the right partners to drive digital innovation. We were able to understand some of the considerations resulting in a bank's digital transformation journey. The importance of new and emerging technologies, data security as well as collaboration with other parties to expand the digital ecosystem, all boils down to increasing customer satisfaction and exceeding customer expectations.
It was a great pleasure to be a part of this enriching session, and, I look forward to having more fruitful discussions in the future.
If you’d like to watch the highlights or full video of the session please reach out to me at email@example.com.