What are your views on digital transformation trends in the region?
There is a lot of action and a lot of changes happening in the fintech as well as electronic payments space. We have seen the emergence of services such as AliPay and UAE Exchange enhancing their digital service capabilities.
Additionally, a lot of digital products and services are increasingly being adopted by regional financial institutions. The majority of these banks are mostly going digital in their retail offerings because on the priority banking side, it might still be early to do so.
However, I am sure that banks will use some of the aspects to update their investment execution and because some of these things are already be digitalized, it would be a fast process to implement.
Another three aspects are value, variety and veracity. When you really look at it, when you are exposed to high value accounts, the focus really needs to be on providing value for your customers and this is very much possible, because as a bank you have the economics to provide that kind of service.
What do you see as the greatest challenge for financial institutions in realising their digital transformation agendas?
The main challenge for financial institutions in realising their digital transformation agendas is not necessarily investment in technology. For instance, you can develop a good-looking website or a mobile application that is highly rated in user experience, but it is all about investing in learning and the ability in doing business digitally.
When you said learning to do business, does that involve strategy?
Of course, one is strategy and the second thing is understanding the dynamics within the local market itself. How people will react to the call for a digital product? For millennials it is easy because they are already accustomed to using social media like Facebook, Instagram, Snapchat and will adapt quickly to a digital-only pack.
However, a businessperson who is used to physically visiting a banking hall to get work done, for them to accept digital banking, the products should be designed appropriately to ensure that they feel secure using digital services and products.
What kind of major flaws do see in the implementation of digital services?
I do not classify them as a major flaw— they are looked upon as investment problems that needs to be addressed as a strategic business transformation problem and banks are moving to address these strategic business transformation problems.
And by strategic business transformation problem, I mean in the same set you are looking at an ROI of investing in a mobile app it is way too complicated than that. The ROI in itself is challenging in the sense that these are moving from a single channel to a multichannel and that journey moves back and forth.
For instance, you might start applying for a Credit Card on your desktop, on your way home you in the Metro train or a cab you finish the rest of application on your mobile. So, to do that, the business thinking should be implemented when you are breaking down your work and product.
Additionally, there is generation of a lot of data, there is a lot of valuable data in the process, for instance when filling a bank account application form online, it’s not only a customer’s information that is available there, but also the time spent to complete it, options chosen, as well as more information from third parties such as how to work with Google SEO, mine this data, and correlate it with how your system is behaving—collate all the information and create a customer 360 degree view—this is where the main challenge lies.
Data is the fuel, just like in the way you mine and collect data as well as make it available to individual points of distribution.
In your opinion, what are the cornerstones of a successful digital transformation exercise?
Banks and financial institutions surely need to invest in digitalisation but in more than investing, they also need to take care of financial assets, develop a focused approach starting from the top level to create the asset base of the data.
What do we know about our customers? What do we know about competition? What is the information? What assets can we get from the open market and what are things do our partners bring to us? There should be clarity—it is not about people talking about data being commodity or data being available, but banks need to understand how data drives business and that is the critical part.
In doing things differently, we approach data from the domain side with all these tools, tools allow to work on large bodies of data, distribute it in API, mobile or any of the channels. But how and what will be put through a particular channel?
In digitalising their services and products, banks and financial institutions should take a customer’s journey and break it into what likelihoods are, as well as prompting them to experiences that making business sense both for the bank and the customer.
That is where the investment should be and a bank approaches the data, the level of data quality, the value of data and the variety of data is important. Other open source and third-party tools are also crucial to ensure that infrastructure and other components are made possible. So it is more than leveraging data, it is using data as a tactical tool.
How do you envision banking in the next 10 years?
There are two to three things that already happening, and people in some circles are already talking about three or four things that banks serve. Banks provide you a store of value that is, a place where you keep all your financial assets.
They also provide liquidity—that provision of long and short-term loan as well as acting as transaction driver for instance, in places where banks were not domain centric that will get commoditized and fintechs will come and take it away. For example, in money transfers, idle banks will lose the margins and they have to invest in new technologies and let go of the traditional way of operations—that is one area where the banking industry will change.
Additionally, banks will become store value and one type of bank will come up—that is what’s currently being seen in the form of open banking, API, micro services, amongst others. Banks will tend to outsource even core services such as underwriting, risk assessment, etc.
Similarly, some banks will specialise in certain services—most consumer banks will gain most out of e-commerce related services—so it’s possible to see a local player such as Amazon, partner with a consumer bank and conduct most of the services related to payments, short term credit, unsecured all that will get pulled into one because it’s a data storage, why Amazon.ae because it knows your spending pattern and are able to take it.
As a store of value, banks will continue to serve customers because of their deep-rooted trust in these financial institutions. However, they may not use their bank for everything—customers are bound to migrate from one bank to the other which again is related to regulations and open banking.
In terms of retail banking, more and more branches will vanish, even call centres will be reduced and it will be taken over by digital means. It is going to be about how you find sources of data and how you find opportunities.
Banking is a service which is not consumed at the place of purchase. For instance, you take a credit card you can use it anywhere, but in the future a credit card may not be needed because of identity issues and newer technologies such as facial and fingerprint recognition takes away the credit card from being needed.