“Democratisation of wealth, getting data right outweigh crypto uncertainty”


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At Heads of Retail Finance Meeting 2021, Ravi Narayanan, Axis Bank; Raymond Sia, Canadia Bank; Winsley Bangit, GCash; Herman Cheng, Hang Seng Bank; Girish Sehgal, ICICI Bank; Supaneewan Chutrakul, Kasikornbank; Kalyani Nair, Maybank; Dang Cong Hoan, Techcombank; Joyce Gonzalez, UnionBank; and Jacquelyn Tan, UOB shared their insights on democratising wealth, new asset classes, and payment transformation in the second year of pandemic.

The following key points were discussed:

The following is the edited transcript of the dialogue:

Foo Boon Ping (FBP): A very warm welcome to the Excellence in Retail Financial Services Annual Meeting 2021. Wilson Chia and I are very happy to be your host this event. This year’s Excellence event is very special in that we are marking our 20th anniversary. We have been benchmarking and trailblazing the best in the world of retail financial services for the last 20 years. Now this is the second year that we are holding this event virtually, this is the second year of the pandemic that has caused so much disruption to lives and livelihoods. For the industry, it has disrupted your operation, it has also accelerated in many ways, the way that you work. It accelerated the digital transformation agenda that you have, especially in the area of e-commerce, it has effectively brought the world of e-commerce and e-payments to life. There’s a lot of disruption happening in that space, at the same time, governments are doing a lot to help the population, the workers, and small and medium enterprises (SMEs) with their quantitative, easing measures, and that has impacted the interest rate in the operating environment with interest rate compression. But on the positive side, it's also contributed to an exuberance in the capital market. 

Many of you have pivoted, your business have benefited in the wealth management business and we’ve all seen positive impact like the rise of the capital markets, as well as the rise of new asset classes. Now, as we enter into year two of COVID-19, there are challenges we are facing and these are some of the things that we're looking to discuss during our Heads of Retail meeting later. And now, a very warm welcome and shout out to our International Council of Advisors, starting with Wilson Chia here. Wilson has many years of experience in the industry in commercial, retail and SME banking. More recently, he has been involved in getting licensing for some of the digital players in Singapore, and our advisors with this program who’ve made it possible that we have done this for the last 20 years. 

Wilson Chia (WC): It has been more than a year since the pandemic struck and created unprecedented global challenges. We hope you and your families are continuing to keep safe during these extraordinary times. Amid the destruction caused by the pandemic, the financial services industry in Asia Pacific has proven to be resilient and strong. This is a strong testament of measures as mentioned by Boon Ping taken by the respective governments, businesses and people across the region to navigate their way balancing between health safety and economic wellbeing. In particular, the wellbeing of small SMEs, that have been hard hit in recent times. Efforts in accelerating the digitisation of key economy sectors have also facilitated commerce and life to continue as normal as possible.

FBP: This year, as part of our Excellence Program, we have over 280 banks and non-bank retail financial services players vying for over 61 awards in five categories across 24 markets across India. And since last year, we have also invested in digital consumer feedback channel bank quality.com to survey customers on their engagement experience and satisfaction with their main retail banks and how you have helped them during the pandemic.

WC: In essence, this year's award results and rankings are influenced very much by the voice of the customers. We have also collated substantial benchmarking data on the operations and performance of the industry in the course of the program. 

FBP: The industry is going through a deeply transformational time. We have seen how COVID-19 has disrupted lives and livelihood, transformed how you are doing business, accelerated your digital transformation, especially in the area of remote connection and e-commerce. At the same time, it has brought about personal challenges, as I mentioned earlier, historical low interest rate from government quantitative easing, which are not all bad, because some of that has fueled exuberance in the market and has caused a rise in performance of the capital and financial markets and the emergence of new asset classes in the digital assets area. Many of your wealth management businesses have picked up as a result.

WC: In the course of the pandemic, some leading institutions in Asia Pacific have reimagined their costs, their operating functions beyond just ambitious cost management programs and risk management measures. The pandemic has been a catalyst for the transformative changes to operating models, which have been embedded into new ways of working, making the bank a more intelligent-based institution. As part of the annual Heads of Retail Dialogue data, we will discuss the challenges that leaders face in achieving sustainable growth post-pandemic and how to compete, deliver customer experience, manage workforce and security, given the challenges in the dynamic environment. 

FBP: At this point, I'm happy to introduce the chairman of The Asian Banker, Emmanuel Daniel to say a few words to welcome our heads of retail and our guests on the awards ceremony.  

Emmanuel Daniel (ED): Greetings from Beijing, China. I've been living in China since November last year. I thought I'd actually show you the view of the east side of the city from where I live. It's very beautiful. I've been able to learn a lot more about China than during the years that I've been traveling to China every month, where we have an office, and we have a very lively business. We are very much a part of all the transformation that this country is going through. The one interesting thing about China, to be in China, is to experience firsthand the huge dichotomy between what all of us learn about China from the international media, and what we experience if we were to be living in China. The first thing I'd like to point out to you is what a beautiful day it is outside. In fact, spring was a little longer this year so if I were to go out for a walk, the weather is fantastic. There were times many years ago when they used to count the number of sunny days in a year. There used to be only about 50 sunny days a year. In fact, now it's just the opposite. Every day is a sunny day, every day is a beautiful day. The days when pollution builds up have been reduced to less than 50. Not more, not less than any of the other major cities in the world. 

Sometimes we do not get an accurate sense of the progress that this country is making in the context of global development. Some of us are used to Western media belittling just about everything that China does. It is not a country without problems. It has issues and as someone who comes from a more liberal environment and who sees all of the developments taking place anywhere around the world, there are issues that you can immediately identify that are unique to China, and that might build up into global issues in the future. But at the same time, it's a country that is hard at work, transforming itself from within. A lot of the infrastructure that this country is building for itself is something that all of us would wish for our own countries that if we only had 20% or 50% of the civil structures, the digital bandwidth and the social freedom that people have to be economically active, and to raise families that already is a major reason to understand what China is going through right now. 

I'm also spending a lot of time and I would like to draw your attention to a book that I will be publishing very shortly, called ‘The Great Transition’. Just in exactly the way that we try to make sense of the China phenomenon that is relevant to each of our lives, it’s one thing to talk about geopolitics and the US-China relationships. That's entertainment. That's something that doesn't touch us individually. Or if it does, it touches us from an economic point of view. But all we have is an opinion, we are not able to influence or be influenced by issues at that level. But there is a level at which it does touch us. There are many things that China has achieved in a very short time that many of us would wish for the countries that we come from. There's a lot to learn from that. So in the same way, the book that I'm writing is the great transition from the platform economy to personalisation. 

As we put in context everything that is happening around us today, even as we celebrate yet another year of Excellence in Retail Financial Services, it is not a normal year, for many reasons: there is China, there is the COVID-19 experience, and then there is the US capital markets, and then there is the rise of cryptocurrencies. What should that mean to us and all of the new technologies that it is creating in its wake? So the great transition is about yet another dimension that is being built into human societies, that all of us, especially in retail financial services, should take note of. The industry that we are part of is no longer going to be the same: the way in which we measure our performance in the industry, our interaction with customers, the way in which our balance sheets are configured, and the strategic dimension of the business models that we need to build. All of these is going back to the drawing board. Even as we assess all of the retail financial institutions, as you are as traditional businesses with a licence in your respective countries, we also want to take note of the new dimensions that are creating competition for you and will be transforming you in the near future. 

So one of the things that I'll be looking forward to the research presentation that we put together every year as part of this annual Excellence Regional Financial Services meeting is to understand what are the new dimensions that are shaping the competitive landscape in your respective countries? It used to be a simple thing like a website or a platform set up by a non-bank player that would be able to capture deposits much better than a traditional bank can. So that was in the platform era. Now what's that going to look like in the personalisation era. The interesting thing about the price of bitcoin going up to $60,000 and then falling to $30,000, it's not the outrage that it caused. The real dimension that we need to come to terms with is the fact that each of us can create a Bitcoin of our own. Each of your customers can create a token of their own. Each community in your customer pool can create a token from which technology can be built and even funded into the future. So everything that we imagine to be in the realm of application programming interface (APIs) and blockchain that the way in which financial institutions have been configuring them was going to be thrown out of the window, because more power is going to be handed down the line to the end customer. The way in which financial institutions will need to be configured to reach that customer will be changing, will be transforming in a revolutionary way. Some of that transformation has already started happening. They look a little amateurish, they look a little bit like a crack in the wall, but that crack is going to shape the very foundations of the financial services industry. We had the GameStop phenomenon in the US where retail consumers were able to push back institutional investors. That is the kind of power that we are looking at that we will have to come to terms with in a very short time, maybe in the next year or in the next two or three years. 

I want to get a sense from you how you are dealing with the transformations underway in your respective marketplace, what you see the dimensions that you're being confronted with and what you think your responses should be. So let's make this session a valuable session where we can hear from each other what we need to understand in terms of the transformation that is underway.  

FBP: Thank you, ED, for outlining some of the dimensions that we'll be discussing in greater detail in a moment. Before we get to that exciting conversation. Let me introduce the chairman of the Excellence Program, Philippe Paillart to say a few words as well.  

Philippe Paillart (PP): This is the second year we are coming together virtually under the cloud of COVID-19 pandemic. It has been an unprecedented time in our lives, however, as ED just said, I believe that we have to face some of our biggest challenges yet. I also believe that on the whole, we have emerged better and stronger. I am Philippe Paillart, chairman of the Excellence in Retail Financial Services Programme and I have the pleasure to welcome you to the 2021 Heads of Retail Finance Virtual and Excellence award ceremony. This year marks the 20th anniversary of the Excellence Programme. Indeed, for the last 20 years, The Asian Banker has been the industry-defining body in recognising every year players that demonstrate exceptional excellence in retail financial services in Asia Pacific, the Middle East, and Africa. It is arguably the most rigorous, transparent and prestigious award programme for consumer financial services in the world. This year, despite the pandemic, we have received 490 submissions from more than 280 banks and retail financial services players in more than 25 markets across Asia, the Middle East and Africa. We continue to make every effort to ensure that our Excellence Programme remains the most rigorous, comprehensive and transparent program for consumer financial services in the world. We continue fine tuning our scorecards, streamlining our focus on your financial performance, your digital journey, your customer experience and engagement. We continue widening our program to include alternative service providers to reflect the rapid transformation of our industry. We also continue to invest in our digital consumer feedback channel BankQuality, to incorporate the customer Net Promoter scores in our evaluations. 

This year, the bank quality survey on retail banks involved more than 11,000 customers in 11 markets across the regions. Award winners can be assured that our selection is also a true reflection of the voice of the customers in your respective markets. In the process of our research, we have captured significant shifts in consumer adoption of digital and contactless transaction, as well as the e-commerce and e-payments. We can also attest to the resiliency and the agility of the industry to respond to changes in customer’s behaviour and operating environment. The last period was marked by a tremendous pace of change. 

The pandemic has been both a catalyst and an accelerator in the revolution, the way we live, but also the way we work. You and the consumers have responded remarkably well to the social changes and the working arrangements. You have also demonstrated exceptional operational resilience and agility to provide almost uninterrupted safe and secure access and services, coming up with innovative remote modes of access to complement existing physical ones, while fighting the escalation of cyber risk and fraud. You all have accelerated your transformation and responded well to your respective government's efforts to bring financial assistance and reliefs to individuals, as well as small and medium size enterprises. You have also leveraged open API and banking technology and industry partnerships to build ecosystem platforms to connect businesses with customers. You have also understood the new demand of consumers and governments who want you to operate on a more sustainable basis to take into consideration environmental, social and governance factors in not just the way you do business, but also with whom you do business. It's such an evolving landscape. We at The Asian Banker will continue to track, evaluate, and calibrate your journey to transform yourselves into even more competitive and sustainable digital players. Thank you. 

FBP: We are very pleased to have with us leaders from the financial services industry who have been charting the course of their industry up until now and will continue to break new grounds. Every year, we use this very important session to put down the markers, the stake in the ground and touch on what are the important issues that confine that industry that will transform and drive your agenda going forward.

WC: We are covering a few areas and we’d like to have a healthy discussion with you in the areas of payments transformation, payments being commoditised. What's your reimagination in this aspect and also during the pandemic, there has been a lot of demand of information as the pandemic has caused destruction in the market. Investors, especially with wealth management customers are concerned about impact and with the rise of capital markets and emergence of new assets, cryptocurrency and digital assets, so how are we bringing this to ordinary retail customers? Given that the dynamic has put a spotlight on the need for digitisation, transformation, we are moving from the first year of the pandemic into the second year. A first response by most banks has been how to address the needs of our customers, how to comply with the requirements of the government, to assist the bank customers and to assist the community at large. But going to the second year, what would make it different? What have been done? Because the pandemic has acted as a catalyst to drive digitisation, moving banks closer to be an intelligent bank. So these are issues that we would like to discuss with the panel and their thoughts and their institutions’ initiatives and reimagination. What kind of strategies are they going to implement and how to navigate the landscape in the execution of these new strategies? 

FBP: Now there is a lot of action on the digital front. So I would like to call on Herman Cheng, head of digital banking from Hang Seng Bank. It is an interesting market, you have seen the entry of digital-only banks. But the area that we are interested to speak to you about is the areas that have seen the greatest impact from COVID-19, which is the payments area right now, how payments in itself has been commoditised. But at the same time COVID-19 has moved everything to digital. There has been an uptake in e-commerce and there is an integration between e-commerce and payments. How are you rethinking the payments business amid COVID-19? And how would that shape the future of Hang Seng Bank?

Digital payments transformation

Herman Cheng (HC): Everywhere we’re seeing the same trend as we have seen in Hong Kong, which is that a lot more people going online during last year, whether it’s e-commerce or any other kind of surface because essentially a lot of the places were locked down or closed. So we are seeing customer behaviour moving on to the digital platform regardless of the industries. For us, we definitely saw an uptake on people on their payments side, they're using online services a lot more. But more interestingly, we are actually seeing a big uptake in people using transfers or just using payment for their banking services to transfer money to friends, to businesses, etc. Because of the situation in Hong Kong, we saw a number of people that are using this service and also the frequency of them. Using the services have actually quite a sizable increase over the last year. 

FBP: These are very transactional in nature. But how do you make a profitable business out of it, considering how payments is with competition and with third party aggregator or gateway. There's really very little money to be made in payments today. 

HC: That's a big question in terms of how we will make money off that. For our Hang Seng Bank customers, you need to continue to give them good service on our transactional banking. You need to really enable the customers to be able to actually do a lot of their day-to-day banking needs first, which is why we focus a lot of our efforts into putting better experience and building products that enable people to do whether it’s transferred bills or bill payment, or whether they can transact with their credit card more easily, look at that transaction more easily, etc. so that people are actually sticking to your platform. Once they're sticking to your platform, you have more touch points with them. There's when we are actually producing information that trigger needs, whether it's for investment, whether it's for other types of products that we offer. It’s in that general context that we are engaging our customers.

WC: Given the volume of information, given the volume of transactions, its flow through accelerated by perhaps the pandemic, how you use the data, do you use it in a different way as was used previously? Leveraging on new technology to leverage on the data. 

HC: It is a continuation of what our strategy has been, which is leveraging all the transactional data that we have. So the way that we're using it, it's no different from everybody else, which is you're trying to use the data to understand customer behaviour, what their preferences are, what are they doing? What we are doing a little bit more than just looking at that transactional data is we're using artificial intelligence (AI) engines to analyse and to predict. We're doing more prediction in terms of building models to try to guess what our customers are going to be doing based on their behaviour or based on their demographics as well. A lot of that is still on learning. We're learning on a daily basis but we're building newer models that are predicting more things for us. We use these information to trigger the relevant messages for our customers. But still, we need we need to engage our customer first before we can actually pass on these messages to them. So the two kind of go hand in hand.

FBP: So monetising data, using data to create more profitable business. I want a different angle – rethinking the payment business. I’d like to ask Joyce Gonzalez of UnionBank to give us her perspective of how she is rethinking the payment business.  

Joyce Gonzalez (JG): Even though human communication and interaction cannot be replaced, customers now expect to interact via digital channels. By making all channels, digital processes and procedures of conducting know-your-customers can be completed online. The aim is to become more digital. Prior to the pandemic, customers wouldn't think twice about handing the cashier a credit card, or signing with a store pen or swiping a debit card. But now it's different. You can just wave your credit card over the payment terminals. So with a pronounced shift of customer behaviour towards digital, which we believe will stay for the long haul, UnionBank is going full throttle in its transformation journey. It is also imperative for us to continue our explorations and experimentations as we keep a close watch on the long-term evolution of the banking industry.

FBP: Here we have a non-bank provider, in the payment transfers area. I'd like to call on Winsley Bangit, the CEO of GCash, to give us a perspective of the payment business. How you are creating a new business model and why you compete?  

Winsley Bangit (WB): In that space, we want to be differentiated and provide really good experience when it comes to the payment ecosystem. That's why we work closely with providing experiences for customers and solutions for businesses. But what's good about it here is that we view the market not as competition, but we partner with a lot of industry aggregators, even banks, so definitely the model that we're looking into is partnership when it comes to growth, assisting both the ecosystems, the merchants and even our partners, it may be banks or other aggregators. What we've seen here in the Philippines is that we're able to support, especially during the pandemic, not just the traditional merchants who are migrating from traditional to online payment solutions, but we're able to open up to a bigger ecosystem of developing entrepreneurs. We call them informal online sellers, who've opened up to this new technologies, especially in the payment space. The growth is coming from both our own ecosystem push and with partnerships.

FBP: I’d like to call on one of the emerging markets or frontier market, Raymond Sia of Canadia Bank to give us your perspective on the dimension that is transforming your bank.  

Raymond Sia (RS): For us here in Cambodia, we want to keep the customer at the centre of what we do. Essentially, we're looking at customer's needs. As an emerging market, we know the pace of growth here in Cambodia is certainly catching up with a lot of other countries in the region. If you look at the payments itself, this is a very important gateway for us to reach our customers. We are also exploring partnerships with selected payment gateway owners, as well as vendors in terms of how we can accelerate that particular growth to our customers. The regulators are also doing a very good job in bringing together and getting all the banks, using some form of motivation to keep a single platform in the long run. 

WC: In the past, banks were able to gain competitive advantage because of the extension of the footprints as well as pricing. However, today, given the advancement in digital technology and analytics, leading banks differentiate by leveraging data, using artificial intelligence, applied analytics, and the power of cloud computing to innovate and deliver personalised engagement in real time in the area of wealth management. In this particular area, in the competition, some are making good inroads, some are still falling behind. We want the views of some of our panels on this subject, at the same time we would like your views about rights of the changes in the capital markets, the emergence of new asset classes, such as cryptocurrency and how we are making it simple for retail investors to participate without getting into trouble. We have Kalyani Nair from Maybank.

Kalyani Nair (KN): When we speak about wealth management, I would like to rephrase it. I would like to call it a wealth democratisation. There are naturally two segments of customers. You have the ones who have money, they are a bit more affluent, they are able to save. And you have the ones, whether we like it or not, who are struggling. In this COVID-19 situation, you find a lot of that happening within various countries. So when it comes to those who have a little bit more, the mass affluent and above, what we have done in Maybank is that we have digitised the whole experience. 

There is a handful of customers who will always get a relationship manager (RM). I've got a client advisor attached to them. But we've got a huge pool of customers who may not have that sort of privilege and yet we're able to now reach out and we're able to give advice a little bit more machine learning-led, so it's a little bit more neutral. That's what we have done for the affluent customers and even to those emerging affluent customers. Then you've got a whole pool of customers. Whether you like it or not, they struggle. We need to help them in some way or another. This is why I like to use the term democratising wealth. How do you help them analyse their spending? How do you help them save a little bit better? This is where the new app that Maybank has created allows a customer to look at their spending, whether it's online shopping, or whether it's groceries, it allows you to get real-time information, especially these days with COVID-19, we've all gone a bit crazy with our online shopping experiences. This then helps the mass customers who are struggling to start saving up. That's the way we’re looking at helping customers manage wealth. 

FBP: We want to get your thoughts also on the new asset classes. Are banks and financial institutions in danger due to the rise of cryptocurrency? Perhaps we can get Kasikornbank’s Supaneewan Chutrakul.  

Bridging the gap between cryptocurrency and traditional finance

Supaneewan Chutrakul (SC): In terms of the cryptocurrency in Thailand, currently we have the exchange platform. In terms of the bank, we also collaborate as partners with them to be able to put the money in exchanges, in cryptocurrency. But for the Thai people, when you talk about wealth, investing in cryptocurrency, what they actually ask after they invest is how they can use that cryptocurrency to pay for things in Thailand. So that will be the link between the cryptocurrency to the payments that we are in the process of talking about in terms of the regulations and also in terms of how to make it work. Because to make cryptocurrency make sense to the customers, it needs to be an investment and then it has to have value for the payments at the end of the day. In terms of the Thai banks, which is with our Kasikorn Business-Technology Group (KBTG), our information technology (IT) company, we have a collaboration to build the platform, to do digital-like token offerings via the blockchain as well. So those are the other areas that we are trying to get into.

FBP: So you're building bridges to digital currencies or digital exchange where your customer can buy and create all those exchanges. You provide the ability for them to convert them back into Fiat, into baht. In the future, perhaps to have the ability to offer security tokens as well.

WC: How do you know that you are really rethinking in crypto versus speculation? How do you guide your customers to make the decision? How do you guide your customers who come to you and know they are speculating? How do you make sure that you guide them to make sure that they are suitable for such investments? 

FBP: Are you facilitating speculation or actual investments?

Diving deeper into cryptocurrency

SC: We have some customers who would like to invest but they don't know how to do it. We do have customers who actually want to invest and they know how to invest but they don't have risk appetites to get to some of the assets. The highest tier, they know what to do, they want the high risk, high return but some of them are going into a market which they don't really know about. So when we are talking to our customers, we have to divide our customer into each of these segments. We have to remind them a lot about the risks of each of the assets that they are involved in. That will be a huge education platform in Thailand to make the whole wealth management system be democratised to the lower tier and also educate them for the high-risk investments that we are talking about.

WC: How wealth management can transform in line with new technology using data so that you could proactively help your customers, whether they are high-end customers or the low-end customers and how you are also helping the democratisation for retail investors to uplift the game in investing in more aggressive asset and traditional mutual funds. 

Jacquelyn Tan (JT): With regards to the wealth management space at UOB, we look at it in two portions. In terms of our risk-first advisory approach to ensure that when we review the customer's financial needs and goals to at least these have core basic strategy of building the core before technical which is safeguarding their assets, protecting their loved ones before they build passive income and before taking market opportunities. Now, consumers throughout this one-and-a-half years, aside from the expectations as well as what's on top of mind, has pivoted quite a bit. There was also acceleration of adoption when it came to digital capabilities. 

We saw a surge of customers searching to review their wealth portfolio, their insurance coverage, and from the adoption of channels and engagement with banks as a whole. We also did a survey understanding consumers engagement preference, especially when it came to wealth management needs as well. What we do see, aside reviewing their portfolio, their insurance coverage in terms of engagement channel, more than two in three customers have expressed the value of having adviser-based conversation and hence, our strategy on an omni channel strategy. That means both in additional capabilities as well as enable advising via non-face-to-face engagements to help our clients review their portfolio. 

Through the pandemic in the last one-and-a-half years, what we have also seen is that last-mile capabilities that are needed to be built. We were quite pleased with our ability to engage the customer on their wealth conversation. We saw that one-third of our customers, even today, still engage digitally for their wealth management needs even in the first quarter of this year. For us, aside from our risk advisory approach, understanding the customer's preference during the pandemic, how their priorities have changed, the ability to engage them both digitally as well as advisor-based using digital advisory tools, these have enabled the entire landscape for us. 

WC: Can you elaborate a little bit more on the subject of how you use new data and machine learning to hyper-personalise your advice to your customers?  

Hyper-personalised offerings to customers

JT: At UOB, we have leveraged quite a bit of advanced data capabilities, both AI as well as machine learning. We have productionalised more than 50 models across our four business lines, deposit wealth management, secured lending or even unsecured lending. The models have different ranges. We have been on this journey for the past three years. We've been testing and learning through the productionalised model. These range across whether is product recommenders, whether it's from deposit products or even cut products, wealth profiler, recommenders, as well as merchant recommender or network analysis. How we push a lot of this data insights through our RM pools or even through our mobile banking app, which is called Mighty. For example, it can be that same all-in-one mobile banking app. But that mobile banking app is different for everyone because the dashboard that you would see is hyper-personalised based on your past transactional behaviour and the dashboard will be different for everyone based on the data that we understand for you, and how we have profiled you from the recommended perspective. 

The other ability that we have is not only on the data but also from the technology point of view where we also use a cognitive engine to understand the digital footprint and how the response rate has been to be able to serve you better on the next round when you engage with us either through your mobile phone or through your relationship manager. So it's a combination of a few things coming together. Using data as well as technology to be able to customise hyper-personalised contextual offer to the customer and to be able to learn from the way they interact with you to better serve the next best insight to them, whether they get in touch with us through our branches, our RMs, or whether they come to our mobile banking platform, which is UOB Mighty. 

FBP: We'll move to the next area of concern in terms of a dimension that will impact the future of the industry and your institution specifically. Now we are into the second year of the pandemic, how is it different from year one? We hear that the pandemic or COVID-19 is not transient or it’s going to be endemic, it's going stay with us. So it's going transform for good. What kind of impact is it having so far? How are you responding to it? What are the dimensions that you are monitoring, keeping a close eye on that you think that will make an impact on the industry? Now we are seeing a lot of movements in the digital currency, electronic payments area, central bank digital currency. Will that transform the very nature of the industry? We will ask from Axis Bank, Ravi Narayanan.

Ravi Narayanan (RN): On COVID-19, yes, the distinct difference between last year and this year has been in the virulency and the mutation of the virus. What it has done is that it has put a sense of fear in a lot of people, as compared to last year. Last year, it was an unknown entity. This year, there is too much information available. That information has started playing on the people's psyche. I say this on behalf of the customers, or on behalf of all of us as staff in various banking, non-banking fraternity. But what is more important is the underlying economic status and situation of various segments. Let's look at manufacturing. Manufacturing has been the most impacted. If you add certain elements of chips, which are the underlying essence and critical component of anything that we use today, it only amplifies the situation that COVID-19 has put on manufacturing segments. Second is in terms of the mobility parameter because of the various restrictions that have been put in. The mobility parameter has also ensured that trading as an activity has come to virtually a standstill every time there has been an impact on the restrictions or lockdowns or curfews, etc., that have been put across the Asian territory. The third, but on a positive note is the entire segment of healthcare, whether it be pharmaceutical manufacturing, the delivery of healthcare, or export elements related to healthcare. That's one segment which has been seeing a positive uplift around the world in terms of the fact that it is the only segment which is helping the affected economic strata.

This is going to become a way of life – vaccination, as it gets rolled out across all our geographies. Over the next one year, there will be multiple waves of both COVID-19 and economic slowdown, which will happen. The way we should look at it is to be very calibrated in the roadmap that we take, be very cognizant of the fact that there will be a stop-start kind of situation over the next 12 to 15 months and that it will be necessary that all of us are well prepared. What it does is it puts the lower segment of the economic strata at peril and a lot of pain. That's where the problem starts. Because these are the people who help grease the economy in various ways, whether they are workers in manufacturing, or are daily wage workers providing trading facilitations. It's a social economic issue that we are facing and COVID wave 2.0 has only exacerbated and amplified the situation that we are in. All the governments, as well as the private sector corporates are doing the best for us in the banking industry. We have to be cognisant of whether we are able to take care of the money which is in our custody, because ultimately, we are trustees and custodians of the people's and the public wealth. That's what we have to stay focused on. These are some of the underlying structural thoughts and changes that have come in over the last 15 months. 

FBP: Are you also pivoting towards the wealth business looking at how you better manage and guide? What areas are you focusing on? Obviously, during this discussion, we mentioned this whole area of new asset classes. Is that an area that you're looking at as well? Obviously, it's for the higher and the more qualified investors, not for every investor. 

RN: I will agree with Kalyani when she talked about democratisation of wealth. It's very critical to understand that affluence is an evolutionary item, it continues to emerge. It's very important to understand that affluence is described differently in different parts of the world. But what is more important for me as an institution is to see whether I can protect the money of the people that we deal with, which means that I have to ensure that I am also advising them not as an advisory, but as part of my fiduciary responsibility to see that they take care of their money also in equal measure. If you were to refer to the emerging new financial assets like crypto, we have to be very careful because we have to understand and calibrate whether there is a regulatory umbrella which is available, both in terms of the regulator of the country or any self-regulatory mechanisms that are available for any of these exchanges. These are all emerging items.  

A need for regulation

RN: One of the points which was discussed earlier in the discussions was about investment versus speculation. It's a very fine and thin line. You will never know when an investment becomes speculation. For that, we need the cover of regulation. We need the cover of self-regulation. We need a crystal-clear definition of what is exactly investment and what tends to flow into speculation. It is an emerging area for wealth management. But there is much more that we can do in the traditional wealth management before we start focusing on crypto and other digital assets. It's important for us to understand that can I create mechanisms and use the emerging technology, the computing speed, the data bandwidth, etc., to ensure that usage of artificial intelligence data lakes as well as machine learning, is able to help the current set of wealth customers, utilise and get the best deal out of their wealth and protected this also. 

FBP: You have this whole world of DeFi that are providing competition or access to customers who want it. Now, the question of customer relevance. A customer who wants it and wants to have access to it. If you're not providing it, he will go somewhere else. How do you weigh that customer relevance? I'll ask this question to Girish Sehgal of ICICI Bank. 

Girish Sehgal (GS): A few things that have really been a blessing in disguise, specifically for the affluent set of clients during pandemic is clearly these clients are digitally far more evolved. The adoption on the digital platforms have increased far higher. We realised that anything and everything has to be available digitally – all products, all processes. We came up with something called ICICI Stack, where S stands for start relationship instantly, T stands for transacting digitally, A stands for availing instant loans, C stands for care and K stands for knowledge. Protection is becoming far more critical in the present scheme of things. And K being the knowledge stack, where we are trying to reach out to clients and give them important knowledge about retirement planning, financial literacy, goal-based learning, asset allocation, which people normally are not very much aware of when we engage with them. If you speak about the relevance of clients, clearly the affluent set of clients or the clients which are at the higher end of the spectrum, typically, we have made it a point that we reach out to all of them. We increase the frequency of engagement, the dealings become far more with empathy, with emotional connection. The engagement has been of the highest order, the quality of engagement has to be very precise and very good. We have tried to reach out to all of our clients and provide them our entire stack. 

FBP: We want a chance for everyone to be able to share their thoughts on this area of wealth and new assets and COVID-19. I just want to go around and pick your name and tell you to share your comments. Techcombank, Dang Cong Hoan, do you have any comments? 

Dang Cong Hoan (DCH): We are trying to use a more prior solution. We diversified investment product to meet a specific need and with different risk appetite and investment expectation from our customer, it's the rising of the cryptocurrency, we find it creates more opportunity to provide exciting new products to our customers. However, there is a lot of problem regarding the regulation and security so we tend to take a more prudent step to implement these to make sure that we follow and we stick to our Vietnamese law and there is a need to set up the regulation. The second point I want to make is regarding the payment transformation and I have some idea about it. The current transformation is really happening. Payment has transformed from very traditional mode to the digital mode. So it's the emerging channel with very high influence which is the way to set up and run our business in the future.  

FBP: We have our key learnings presentation and our advisor, Richard Hartung, has been waiting for a while to give his presentations. It summarises a lot of the discussion that we're having today. 

Richard Hartung (RH): There are some interesting trends that we're seeing within banking. One is in terms of what we're seeing in terms of awards and what people are applying for. That shows how the banks are changing, what they're doing to financial institutions. Ecosystem open banking is something that is new and we're seeing more of that. When we look at which banks are doing relatively well, these are the top 10 retail banks this year in Asia Pacific. I want to highlight a couple things. 

One is that you'll see, a number of the banks are in Northeast Asia. So China in particular has been leading and they've used a lot of AI. They've used machine learning on their products. But what we're also seeing is a few surprises in here. The Commonwealth Bank in Australia, CBA, has a wonderful mobile app very popular. They've moved towards digitisation, their X15 venture office is bringing in new people. ING Direct as well in Australia and then UnionBank of the Philippines is focusing very much on the customer experience. 

What we've seen is the ecosystem is building and banks are building platform-based models. So they're selling automobiles, they've got food apps that are in there, they're helping people with housing and building that broader ecosystem. The pandemic has increased digital sales, as we've heard in the last few minutes. However, that is not compensated for the revenue loss. 

Risk is increased for incumbents and the neobanks amid the pandemic. Financial education, we've heard about from several banks that are focusing on that both for the broader base of customers as well as for wealth management, focusing on savings at the bottom end and some wealth products at the upper end. There's a rise in small ticket lending and in several ways, one is with payments, the buy now pay later Yell services at the counter have gone out and are being used much, much more especially by people in their 20s. This started in Australia and has spread throughout South and Southeast Asia. Although millennials don't think it's lending, it is lending. QR payments are going cross border. So PromptPay and PayNow are allowing cross border payments and we expect that to increase within the Association of Southeast Asian Nations (ASEAN) for QR payments. 

Blockchain is becoming commercially viable, especially in China, moving out elsewhere as well. Depending on the regulations, more banks are moving to cloud. The bank quality survey was mentioned earlier and we're seeing much more of a focus on that quality of experience and more support for customers, especially during the pandemic and the cloud-based infrastructure has allowed many banks to do that. We've seen it across the board from Northeast Asia with Taiwan, the Philippines with UnionBank and Security Bank. So really across the board. 

The top 10 digital banks are in Northeast Asia but also Australia and Singapore as well. Several things stand out on that, over 45% of sales are digital at many of these banks. Customers are coming in for the ecosystem. So they're being referred from property brokers or automobile sales. It’s very different than the past and cloud is being used for that. 

For mobile banking, you'll see some shifts from before. The active mobile users are 80 to 90% of total users at the leading banks. Whereas you used to see four or five logins per month, you're now seeing an average of at least 13. Mobile deposits collections have also risen where people are sending money into their account from their mobile phone for time deposits. 

SME has a much greater focus than in the past. Over the past year or so, there's been much support for SMEs to ensure their survivability, process flows internally have digitised to make it more efficient. Marketplaces are available at the banks as well. So banks are able to offer legal services, insurance services, products, accounting, any number of services through their marketplace with full end-to-end digital onboarding as well. Mass outflow for the broader market is a key priority because the average contribution to total bank revenue is between 10 and 20% of total bank revenue coming from wealth management. 

Mutual fund sales are increasing digitally and the net promoter score at the top banks is relatively high because of some of the engagements that we just heard about. If we look at some of the banks that we especially like around the region that have leading products, Ping An Bank in China has done especially well with open banking and APIs. They’ve got more than 1,300 APIs available. Kept by Krungsri Bank, which we heard from earlier, is providing a practical tool to customers to help them save more and CTBC in Taiwan is using Line to increase digital engagement. 

As we go forward. several areas are especially important. One is personalisation. We heard about that from UOB for example, that every dashboard is different for each customer. They're using predictive analytical tools. If you don't have that, you're going to be left behind not just in the developed markets like Singapore or Hong Kong, but in the developing markets as well. It's being powered by technology, 5G, Internet of Things, and bringing those technologies together with data to disrupt the markets. Those platforms that we talked about are growing as well where banks offer a full suite of financial services. So what retail players need to look at going forward is amid the continued disruption, they need to rethink their payment strategy because that's often the lead product for the financial institutions and they can bring the customers into other products through that. Their new asset classes that Boon Ping and Wilson talked about such as crypto and digital that are attracting customers and the central bank digital currencies (CBDCs) are being rolled out gradually. China is leading on that and other markets are following. That, as well as things like the cryptocurrencies, are going to change how it's done. Big tech companies are coming in. Financial institutions need to look at whether it's Google or Facebook or others competing against those retail banking platforms or collaborating with them and figuring out how to have an effective strategy to compete against a whole new raft of players. 


Keywords: SMEs, Covid-19, International Council Of Advisors, APIs, Gcash, Kbtg, Mighty, PromptPay, Paynow

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