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Digital banking with ecosystem thinking is the way for the financial services industry

New technologies and disruptive innovations are reshaping the way financial services are structured, provisioned and consumed. Banks need to recognise the growth opportunities stemming from digital technologies to initiate new platforms, new value propositions, and intelligent business models.

The ability of financial services providers to identify the demands of their customers and broaden the usage of right technologies will determine who will ultimately gain the much-coveted competitive edge.

Leading ICT executives from financial services industries in the Philippines and Thailand participated in OpenGovLive! Virtual Breakfast Insight to discuss key challenges surrounding the rollout of digital banking capabilities and strategies to enhance the customer experience.

The session witnessed an overwhelming response from the audience in terms of diversity and engagement. Comprised of senior FSI sector digital executives from banks and financial institutions, the attendees were eager to discuss, debate and determine the best practices to achieve fast and convenient product innovations and efficiency within the digital bank.

Knowing your customer is the key to enhancing customer service

Mohit Sagar: Banks need to understand that it is the customers who are changing the landscape

It is no surprise to see customers of today waiting impatiently for seamless services. They demand prompt services and immediate solutions to any problems they experience.

This notion of customers being time-starved was made by Mohit Sagar, Group Managing Director and Editor-in-Chief, OpenGov Asia in his opening address.

Mohit talked about how the new wave of millennial customers are “born digital” and are demanding simple, fast and convenient digital experiences. The open banking approach is shifting the entire ecosystem at a rapid rate, where the requirements for traditional banks have been changing drastically.

Mohit stressed how it is crucial for financial services to deeply understand their customers and constantly reinvent their services as customers are always reinventing themselves with technology.

He stressed the importance of using available technologies like Artificial Intelligence and Machine Learning as it enables the banks to focus on the customers and services, not a product.

Mohit concluded his presentation by encouraging organisations to collaborate with experts and partners who will help them accelerate their innovation journey and innovate to stay relevant in the current environment.

Key frameworks to assist financial institutions in digital banking journey

Annie Ong: It is important for banks to implement future-ready core banking architecture

After Mohit’s presentation, Annie Ong, Head of Business Development and Product Management, OneConnect Financial Technology, gave the welcome address of the event.

Annie began by expounding on the background of OneConnect Financial Technology and how they are exploring growth opportunities across Asia and the Middle East. She explained that OneConnect, as an organisation, has been dedicated to spearheading the financial service ecosystem, fully equipped with advanced technologies and data centres across the region.

She briefly explained the key digital solutions that OneConnect is spearheading:

  • Digital Identity Verification
  • Smart Lending Platform
  • Digital Bank-in-a-box-Solution
  • Insurtech Solutions

Annie also shared the digital banking frameworks of OneConnect solution which encompasses all the essential digital components to embark on a digital banking journey. Apart from key technology enablers such as eKYC, Anti-Fraud, Micro-expression, and Open APIs, she confirmed that OneConnect focuses on innovative technologies with the wealth of financial service industry experience that they have.

Product-focused to customer-focused

Keeping in mind the key frameworks of digital banking, Dhana Damodaram, General Manager Service Management & CIO Asia Pacific, Westpac Banking Corporation, offered his perspective to the delegates.

Dhana Damodaram: Banks should be embedded in the customer journey

Dhana started by stating the fact that banks were originally known for products such as cards, wealth and mortgages. The industry is now seeing a drastic shift where banks are moving from product-focused to service-oriented. Banks are starting to bring the services to where the customer is and thereby, aiming to provide any channel, anytime and anywhere banking.

He explained that this trend can be seen from rebranding exercises, as many of the traditional banks recently have been changing their taglines to align to customer-centric and smarter banking services.

Dhana asserted that banks should be deeply involved in the course of a customer journey and built into the process to provide seamless customer experience.

With this, as the banks move from product to service-focused and getting embedded into the customer journey, business-to-consumer (B2C) relationships are also changing from business-to-business (B2B) to B2C.

Dhana also claimed that with banks adopting the business models of digital banking, the revenue is expected to grow by 20%. Whereas banks that fall behind in digital banking disruption stand to lose an estimated 30% of revenue.

On the issue of ecosystem-based banking, Dhana emphasised the importance of portfolio management whereby banks should be certain of the specific segment of customers that they want to attract, and start building an ecosystem around them.

Polling Questions and Discussion

After the presentations by the three speakers, the session transitioned to an interactive discussion time with polling questions posed to the audience. The questions revolved around the main challenges and drivers of digital banking.

On the first question regarding the top priority in 2021, a majority of the room voted for removing frictions from the customer journey and improve their digital experience (68%).

A senior executive from Maybank Philippines shared that he voted for the use of big data, AI, cognitive computing and advanced technologies. He finds this increasingly important especially in times of current digital journey, as it enables the banks to onboard a customer without a physical presence. Such technologies are driving the need to remove physical presence on the premise of enhancing customer experience where the majority has voted for.

On the next question, delegates shared many different perspectives when asked for the primary business reason for offering digital banking. The audience was divided among business model (35%), attracting new customers (22%), competitive pressure (17%) and increase revenue (13%).

A delegate from CIMB Thai Bank voted for the business model as the primary reason because he felt that other options are the usual drivers for all banks. In digital banking, the concern is leaning more towards networks, partners and pricing model, and also streamlining the operation with automation. He believed that this would bring a competitive edge in the market and the rest are the subset of the business model.

On the same question, another delegate from UOB Thailand shared that the ultimate goal of banks is to increase revenue. Digital banking enables the banks to not only attract new customers but also to retain existing customers that will ultimately boost the revenue.

Nicholas Tan: Getting a stronghold of an ecosystem and driving digital banking is crucial over the coming two years

When asked about the biggest challenge when orchestrating an ecosystem, 35% of the delegates voted for security concerns, while 29% voted for prioritisation of ecosystem roadmap and creating an ecosystem mindset/culture.

While delegates agreed that all the challenges have to be addressed, one delegate shared that he voted for security concerns based on the experience he faced when expanding an ecosystem with partners from different industries. He learned that the concept of security was very different from the banking perspective.

After the completion of the discussions, Nicholas Tan, Head of Ecosystems and Partnerships, OneConnect Financial Technology addressed the audience with the closing remarks.

He shared the journey of Ping An group and how they have built adjacent ecosystems to support core business growth. Nicholas claimed that OneConnect was able to increase the number of users who interact through different digital channels 11 times over 7 years, and migration of financial customers also spiked from 8% to 35%.

Based on OneConnect’s experience and case studies, he stressed the importance of customer engagement through ecosystem for banks and thereby bringing the customers back to the financial services.

Nicholas thanked all the participants for their enthusiastic participation. Nicholas urged the delegates to reach out to the OneConnect team to explore ways of taking their ecosystem and digital banking journey forward.

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