Fintech collaborations evolve for seamless customer experience

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Leaders and senior executives from various financial institutions in retail, wealth management, digital, and SME banking, discussed the current trends that are transforming the global retail financial services industry.

Chipo Mushwana of Nedbank, David Roi Hardoon of Union Bank of Philippines, Dick Ho of Bank of China (Hong Kong), Salim Dhanani of BigPay, and Sam Everington of Engine by Starling discussed the current and future digital finance trends, as well as the key developments in the retail finance industry.

Hardoon discussed that the collaboration within an open ecosystem will lead to financial resilience, where banks can deliver advanced financial services and products in a regulatory environment.

Ho discussed the integration of data with productivity, efficiency, and investment in an open ecosystem. He said, “partnerships within the ecosystem will create a superb customer experience that could bring new revenue streams, while keeping costs low and mitigating risks.”

Mushwana stated that as a legacy bank, Nedbank realised that it must invest heavily in digital capabilities as the competition is growing with neo banks. He said, “banks need to offer a seamless customer experience but also ensure the customers’ safety in the ecosystem or in the national payment system.”

Everington talked about the importance of real time payments due to the shift of consumer behaviour while utilising technologies and innovating to improve the security and prevent fraud across all digital channels as customers are migrating from cards to alternative payment methods.

Dhanani highlighted how the fintech ecosystem is evolving and investing heavily in technologies, however, he warns that fintechs and traditional players should invest in technologies to boost customer experience rather than increasing revenue.

Key discussion points:

The edited transcript of the session:

Foo Boon Ping (FBP): Welcome to The Excellence in Retail Financial Services Convention 2022, incorporating the International Heads of Retail Annual Meeting and Dialogue, as well as the Excellence Awards 2022 Ceremony.

I'm very happy to see all of you from across Asia, the Middle East and Africa, joining us via Zoom, as well as through live streaming on Facebook, and LinkedIn. Thank you for attending this important yearly gathering of leaders in the digital consumer and retail finance industry, as we chart the course towards supercharging retail and embark on the next phase of digital finance transformation. We hope you're keeping well despite the challenges of the past few years.

We are now into the third year of living with COVID-19, and we are at the tail-end of that journey. We hope you are continuing to keep safe, as we turn the corner on the pandemic. The situation worldwide appears to have improved considerably, especially in the West. I was in London just last week, and in the UK, things are back to normal. There is no more need to wear masks around, so you'll feel a bit out of place if you still have your mask on.

In Europe, the US, and some parts of the Middle East like the United Arab Emirates, most restrictions have been lifted and borders are open. Vaccination rates have increased recently in Singapore, as well. In Singapore, restriction has also been lifted. There are a lot more social gatherings happening. Life is back to almost normal, and this will probably be the last entirely virtual Excellence Annual Convention we will hold and we look forward to meeting in person and having more physical events close to where you are in Asia, Middle East and Africa.

Now we're saying that some countries have been more cautious and conservative than others in dealing with the pandemic. Restriction and borders are taking more time to come down despite increasing vaccination rates. Nevertheless, the momentum is building for more economies and the livelihood of the people to quickly get back to normal, and it is getting back to a new normal that has become increasingly digital, as the pandemic has accelerated the adoption of digital transactions, and of digital services and processes.

Meanwhile, banks and financial institutions have been accelerating their digital transformation. The rise of digital challenges facilitated by regulatory changes across the world, especially evident in Asia, and shifting consumer behaviours have pushed traditional players to respond as well. Not in just modernising your technology, architecture and infrastructure, but, fundamentally in how you do business, especially how you partner and collaborate with each other through digital and cloud-enabled platforms, and application programming interfaces (APIs) to support open banking and embedded finance.

To track the increasing array of stand-alone virtual, neo or challenger banks that have come onto the scene, The Asian Banker through our research arm, which we have just recently rebranded to TABInsights has launched the world's first comprehensive assessment of global digital-only banks to rank them according to a balanced scorecard derived from an objective and transparent set of evaluation criteria.

Now, there is no shortage of coverage of digital banks, today, but, there is a lack of a clear and specific definition of what a digital bank actually is. We attempt to define what a digital bank is and set a set of objective and transparent criteria to assess and rank them. This annual ranking aims to address this gap by assessing them on a more consolidated and consistent global basis.

The Global Top 100 Digital-Only Banks Ranking covers digital banks from 37 countries across major regions in the world. It caused the digital bank's ability to grow its customer base, through superior experience, their robust market and product coverage, as well as their sound financial performance, strong balance sheet and their success in fundraising. Scale does matter, so does profitability, operation efficiency, resilience, as well as the ability to build a sound capital buffer, and how they grow a healthy loan book. Key insights from the rankings will be shared during the Heads of Retail Annual Dialogue, where we will also do a briefing of the key findings from the Annual Excellence in Retail Financial Services programme.

Meanwhile, here's a glimpse of some interesting facts and data. Out of the Global Top 100 Digital-Only Banks, only 29 are profit-making enterprises. Digital banks will focus on personal finance, wealth management and small and medium enterprise (SME) lendings are amongst some of the most profitable ones. Asia Pacific as a region takes the lion's share of digital banks hosting about 55% of them. About  52% of these profitable banks are represented by first-generation players, who can trace their origins back to the internet or.com boom period of the late 1990s and early 2000s.

In the interim, they have transformed quite dramatically from what they were originally. Even as we dissect the profile and performance of these digital banks, we continue to check and benchmark retail financial institutions under the Excellence programme.

This year, we received as per the previous year, over 200 submissions from more than 40 banks and non-bank retail financial institutions, retail financial services  players in Asia, Middle East and Africa. Vying for over 44 awards in 57 categories across retail financial services, and digital banking.

This evening, we will be recognising 19 institutions in 22 categories. We have many leading institutions from China and Hong Kong, who will be recognised in a separate event probably in August, as details are being confirmed given the uncertainty in the country. The Retail Product and Process Awards will also be announced and the award ceremony held sometime in July, so details of those will also be forthcoming soon.

Since 2020, we have invested in our digital consumer feedback channel, BankQuality.com to survey customers on their engagement, and experience with their main retail banks, and how banks have helped their customers during the pandemic. We believe that consumers will ultimately determine the winners and losers in this digital era, and BankQuality provides a rigorous, standardised and transparent platform to measure and benchmark this voice of customers.

We incorporate Net Promoter Score (NPS)-based ratings that we call the "BankQuality Score" into the winner evaluation, and selection for the Excellence Awards to reflect this voice of customers. I congratulate in advance all the institutions who will be recognised later in the evening.

Each year, it is harder for our research team, our TABInsights team and our Council of Advisers to decide and agree on the winners, as competition heats up with new fintech and digital players and incumbents, who have also very aggressively pursued their own digital reinvention.

Despite the disruption caused by the pandemic, the retail financial services industry continues to be resilient, contributing a relatively bigger share of banks' revenue and profits in the past couple of years, despite low interest rates and margins. Thanks to your ability to understand your customer needs, deliver value and generate fees, especially in wealth management and personal finance.

With the growing focus on digital services, the industry has already started the process to rethink the pace and effect of digital innovation. How you create digital platforms, ecosystem and value chain. How the banks do not have to manufacture all your products. Some banks are very good at distribution. How you can work within a bigger ecosystem, either through banking-as-a-service (BaaS) or banking as a platform to work together to provide value to your customer.

Economies worldwide are also pursuing a wider and more diverse range of policies toward digitalising their economies, sustainable development, as well as integration and cooperation with each other to help each other become fully-fledged digital economies. The financial system will continue its digital transformation, as consumers increasingly prefer online transactions. This will likely continue even after COVID.

The Asian Banker through TABInsights will continue to track, evaluate and calibrate financial institutions. They are on this journey to transform themselves into more competitive and sustainable digital players.

This year's Excellence virtual convention will have a number of insightful leadership dialogues and panel discussions on the accelerated use of data analytics and artificial intelligence (AI), machine learning (ML) in finance, innovation and next-generation payments in the retail industry, as well as challenges that retail and digital finance leaders face in achieving sustainable growth post-pandemic and how to compete amid these current waves of uncertainty that's shaping across the world.

This session will be moderated by our esteemed colleagues, Mobasher Zein Kazmi, who's our head of TABInsights, and Richard Hartung, one of our international resource directors and a member of the Excellence Council Advisor. They were experts in their field in the region and beyond, such as David Hardoon, chief data and AI officer at Union Bank of the Philippines, Chipo Mushwana, executive, emerging innovation and payments of NedBank in South Africa, Sam Everington, the CEO of Engine by Starling Bank in the United Kingdom, Dick Ho, deputy general manager for customer management at Bank of China Hong Kong (BOCHK), and Salim Dhanani, CEO and co-founder of BigPay, the fintech arm of Malaysia-based Air Asia regional budget carrier. We want this to be interactive and immersive discussion with you, our audience. Please avail of the chat functions on your Zoom, Facebook or LinkedIn platforms to raise any questions or to share your perspective or start a discussion.

In conclusion, today's Excellence Convention is the culmination of months and years of intense research to discover best practices and benchmark that can set high standards and shape the future of retail finance.The Excellence programme is the most established programme of its kind in the industry. It started in 2000 and in 2001, over the last two decades, we have built a strong repository of research data, benchmark, case studies, and profile of banks that we like. Up to recently, a lot of the data have been in The Asian Banker generic website, and to help our users and our readers, and our community of banks, this year, we've decided to make our research more accessible to create a stand-alone website called "TABInsights" that will house this rich repository of data through working groups, like the retail and digital finance working group. It's a membership programme where members can access country profiles, bank profiles, the rich repository of data that I mentioned, on case studies.

There'll be more information on this later, as we go through the briefing and how you can use those. We have been working with banks to do performance review, benchmarking, and also even in the area of financial technology implementation. How those data can be used in the process of selecting the most suitable solution, as well as solution provider in something called vendor selection.

For the Excellence research process, it is one that is thorough, objective and impartial.It also marks our commitment to the retail finance community, which is so important, and the programme will inspire future progress and innovation as we supercharge retail, and start the next phase of the digital finance transformation journey.

I wish you all a fruitful and inspired Excellence in Retail Financial Services Convention 2022, and with this, I would now like to pass the time over to our head of research, Mobasher, who will be chairing the session on "Agile data and responsible AI, developing analytics and personalising services".

Mobasher Zein Kazmi (MZK: Wonderful! Thank you, Boon Ping. Good afternoon attendees, and welcome to our session on "Agile data and responsible AI". I'll be your host for the next 45 minutes or so. Joining us are two distinguished senior executives from leading financial institutions (FIs) in the Philippines and Hong Kong.

They'll be sharing with us their perspectives on how data and analytics and AI is shaping the ongoing digital transformation of the banking industry. Looking at how FIs are utilising AI and data across a range of verticals and functions from improved fraud detection and credit scoring to hyper-personalised product sets.

We'll be essentially looking at using data with partners and an open ecosystem, examining, the accelerating use of AI in financial services, with technologies such as 5G, understanding the significance of data and AI in preventing and detecting fraud, and also looking at the advancement of conversational AI and wrapping that up in the integration of third-party data that delivers personalised insights and customer engagement.

I'd like to introduce our guests. As Boon Ping mentioned earlier, we have with us David Hardoon, who's the chief data and AI officer at the Union Bank of the Philippines. Joining us with him will be Dick Ho, who's the deputy general manager, customer management at the Bank of China Hong Kong (BOCHK). I'd like to thank both of them for joining us today and I'm looking forward to a very exciting interactive session. As we want to keep this as engaging as possible a note for the audience, again to please use either the Zoom or Facebook chat function to drop in your comments and questions that you may have for this subject matter experts.

As we are quite aware, the financial services industry continues to cater to a very highly digitised consumer and they have to leverage technology solutions that are designed specifically to assist them. Whether it's through AI or ML, this is proving to be increasingly necessary. Given that we're in this digital age of instant access, banks are investing a lot in the transformation of their internal processes and business models to improve the way they're operating and the way they're able to meet the growing expectations of their very digitally savvy customers. Automating those processes, digitising data  is the core to transforming the way that business is now being done. But, what are those best practices really, for achieving this?

I'd like to perhaps start off with David, looking at the role of this intelligent automation and this so-called responsible artificial intelligence that operates within an open ecosystem. From your perspective, what role are you seeing data play given the myriad of stakeholders that are involved, that comprise this fast changing financial ecosystem? David, over to you.

David Roi Hardoon (DRH): Well, first and foremost, thank you very much for having me here. It's an absolute pleasure. That's a big question, because you have two components there. One is open banking or open ecosystem, perhaps more accurately, as you position it, and then essentially, the criticality and importance of data.

Now, once you intersect those two, and you have to intersect those two, it's achieving an environment where the degree, to a certain extent, as one would envisage it of openness or facilitation, whether it is the open banking, and it's kind of within the financial sector, or as I personally like to see it, many are now kind of viewing the iteration of it really kind of open data and data portability, is that it's situated on the fundamentals of data. Now, it also means there is a need to start creating a bit rules of engagement and appreciations of boundaries. I'll give an example, previously, as a financial institution, all the data is me. But now, it's essentially saying, "well hold on a second, some of the data that I'm a custodian of, is indeed VAT of the customer". If it's a situation whereby another service provider of this customer requests via consent of the customer to get access to that data, as part of my role as a custodian, I am there to provide it.

It's a shift, it's a change. I don't want them to under underestimate that shift. You  have been, what do you say "a rainbow of emotions across the industry" in responding to that. But, being an optimist, be a data advocate, I believe that the resultant, of this is absolutely transformative. It's transformative because we're starting to see the underlying possibilities that the world of data provides organisations individually, but also in an ecosystem, saying, "well, how do we incorporate? How do we provide for one another? How do we bring our individual capabilities and our strength to go beyond?"

The hub of the providers that we're looking at in the super platforms and super apps which is absolutely fine, but not everyone can have that extent of services. You're seeing this much larger interactivity and collaboration, which as a consumer, whether retail or wholesale, it's fundamentally beneficial. That's an exceedingly important point. Given the region that we're in and allow me to not use the term 'financial inclusion', it's more of 'financial resilience'.

Why do I say financial resilience? It's because at the end of the day, the underlying demographics that may have not been in the formal VAT financial system or may not be fully served  have a form of a financial economy and at end of the day, they work they earn, they save, but to what scale and to what dexterity do they get the resiliency that someone who has access, for example, to a full suite of financial services in lending, and earning, so that's really about it.

Now, once you incorporate this open ecosystem, the openness of data with that agenda of financial resilience, you suddenly start to look at things differently. You suddenly realise that there is an ability to still have financial services, a regulatory environment, all the policy constraints, but the requirements. But then, contextualising it to different cohorts, one is a very traditional sense. For others, you may need to have banking hats because the traditional form of how we do things just isn't relevant.

MZK: Good points. Thank you for that, David, and probably moving on to Dick.

Looking at that financial resilience piece, keeping that in mind, how do you view or at least approach, the integration of data to return or to give you that return in productivity, efficiency and investment from this open ecosystem?

Dick Ho (DH): To me, in too many bodies like ecosystem is about when we partner within the ecosystems have played up to their strength. Together, we should be able to create greater values than living alone.

This is the definition of the ecosystem. We can have a win-loss, kind of situation, but we've got to be with me. The wealth creation to be like, a superb customer experience that could bring new revenue potential. Sometimes it could be the cost-saving, because I couldn't do that as a cost low, as our partners. It could be like, risk mitigation, that kind of thing. I'd like to give you an example that is practically quite well in Hong Kong.

Hong Kong government has an app. The app is called “iAm Smart”. It's pretty smart, actually and the app is basically to serve Hong Kong people so that Hong Kong people can access the app, access to hundreds of government services such as the renewal of a driver’s licence. Access customer authentication so to me, we see this as a golden source of customer authentication. At the same time, the government wants more commercial applications because it's new, we want that to be a super app in Hong Kong.

The marriage is done because we just embed this app into our account opening process. Here's the deal, the government app is commercialised, so they're happy and we are happy too because we can streamline our process by onboarding customers, by removing some control points. That's exactly what David is talking about. About the rest, 'no hold', or that kind of thing. When the ecosystem - to build the data, you can just shipping around then, that needs extra caution. With a government kind of golden source of truth, we can remove most of the control points.

Finally, a customer is benefited from the very seamless remote account opening and then the turnaround time is cut down from 10 minutes to five minutes. It's a win-win for everybody. Here's a classic example, that if we find something that creates value, and the customer is happy, our partner is happy, we need to be happy. That is a thing that we can create value along the ecosystem. Everybody is happy and alive.

Together, I would say, the alliances cannot just give that value at the present time, and in the future, it could be our act as well. This is something about the built of the ecosystem, we need to be smart enough to find good partners, good use cases, and go for it because this is for us to approach the government to have a collaboration, and also a salary or all we think because in their plan, their commercialisation, we're playing commercialisation kind of agenda. Moving forward, this is the thing that we need to work with our partner in the ecosystem.

MZK: Great. Thank you for that Dick. With that said, building that win-win with your different partners, we've seen the emergence of all of these new technologies, particularly this hyper-connected sort of 5G environment. Dick, can you share, some interesting use cases from Bank of China's perspective in leveraging, the existing technology infrastructure that is in place in Hong Kong?

DH: Robotic process automation (RPA) is a big piece because traditional bank like us, use paper form. There's a lot of paper form and  even in one application, the paper form may ship within organisations for a couple of days from department to department. This is the old way of banking. RPA gets rid of the paper and to get customer fulfilled, what their service fulfilled instantly without that kind of like paper thing, that is a huge piece, and is a big cost-saving to us because we can be deployed a lot of our human power to either more better service. Previously, with the paper form, a lot of data entry has been involved. RPA is hugely invested into Bim channel and a lot of paper have been gathered up. I'm happy to say that. Back to 5G, it's about speed.

It's not just an improvement, but it's a whole new level, therefore, a lot of capabilities. To start with, it's about real-time tackling decision engine.

Our mobile banking app is able to understand customer digital footprint and instantly, can blast some messages. But with the 5G bandwidth, I will say, "we can achieve more timely and AI-driven targeting. We are supported by the super data highway, and instantly, basically, we know who are streaming live programme or assessing different application, mobile banking apps, and we can assess their needs and wants from the suite of AI model built. Almost at the same time, we could blast the best conversation to trigger the conversion.

The 5G environment and the AI platforms help us to do micro targeting and instant targeting. To add one more point is about the bandwidth of the 5Gs. Through the new normal, or before the pandemic, people are really self-sufficient. The banking app is the king, it's the way to go. You're seeing some sort of limitation because for some ticket items, they still need people to talk to, experts to talk to. With 5Gs, we can enhance the multimedia capabilities of the mobile platform and literally, our customers can be served either by the robot or by the relationship manager, anytime, anywhere. 5G is over a lot of possibilities. It is combining data, digital and also human-being into one place.

MZK:Thank you for that Dick. David, what opportunities are you seeing in these new technologies, given this hyper-connected 5G environment? What are the implications for this intelligent automation?

The use of AI in data analytics to minimise and mitigate risks with the increased access of digital services

DRH: Before I go into some examples and illustration, it's just to remind everyone, the premise and the objective of let's say, the world of data science and AI, which naturally go habitats, lives on data. Without data, you don't have it. It's about finding patterns, about finding behaviour. Behaviour that can be understood, leveraged on for scenarios of services, products, operational efficiencies and risks. With that in mind, and going back to the point earlier, about working within an ecosystem, and contextualising finance, if I describe it in that kind of manner, you have scenarios whereby, again, in the Philippines, where we've already built solutions using alternative credit scoring, whereby you would have individuals who you would previously say, "oh, please give me your your credit risk rating. "Feel like, I dont have one".

Or "give me your bank statement," a very common request when you applied for loan. Give me your bank statement so, I can see your ins and out. Like, "I dont have a bank account". How do you suddenly break that mold of a traditional account service. I can't provide this product to, "Okay let's think and look about it differently", because the underlying objective is understanding viability. Viability and affordability and as well as risk. It's not about those rules, however, important and established they are, it's about banking at the end of the day. How do we establish affordability, reliability, trustworthiness  and credit worthiness, ultimately, at the end of the day.

By using such an ecosystem data, whether it's data that's now being generated through applications, mobile interaction through other source of media, through partners. You are able to create an underlying assessment and now suddenly being able to offer loan.

This is an example we've deployed through our tech subsidiary, UBX CCAP platform, essentially loans on micro, small and medium enterprises across the board and here's an alternative credit scoring-driven model. So, that's one very evidently critical and for me, very exciting example because it proves the value and improves the viability of it. How as an organisation we can involve, and like I said, contextualise finance? Another example is even breaking barriers within the organisation.

If you think about the pillars, and again, for very good reasons, you'd have retail banking and wholesale banking. But it's about behaviour. Why suddenly, we had this massive shift towards super apps because it's the realisation that customers want more than one thing. How do you now create those interactivity between them. During COVID, when people are literally stuck at home, with a lot of people say, "Well, let me make some income on the side, let me sell stuff." But then, all this time, that's a retail customer. But now, this retail customer suddenly became a small medium enterprise (SME), or micro, small and medium-sized enterprise (MSME).

Previously, from a banking engagement, we kind of sit and go. Well, if you want to have a supply financing loan or loan to help manage inventory, you need to apply to me as a wholesale or MSME customer.  But you're already my customer, you're already my retail customer. By understanding data, by leveraging that is something we can go, "hold on a second, would you be interested in this loan because we're seeing that you're doing a lot of transactions as an online seller." That's exactly how we, as an organisation are using it, exploring it and leveraging on it. It's exactly situated on data that's now coming from this multiplicity of digital channels, and coming from an ecosystem partners.

Financial institutions are not fully relying on AI to interact with customers as human interaction is still required

Now, one last thing, I'd love to say, it's very critical to remember that with this shift with digital and with this shift to not just automation, but digital interaction is it's not just about that. It's the power of using this type of technology, it’s part of insight, and I call this 'augmented intelligence', like I mentioned earlier like the people who want the - I'm one of them by the way, in some things, you want the human, but you want the human to be empowered with more knowledge and understanding for you. It's how do you start combining these things, and that's when we get really, it's not one extreme or the other only humans or only machines. It's that world in between that we should be pursuing.

MZK: Fair enough. Thank you for that, David. It's that world in between. And with that, I'd like Dick to come, I believe you have a presentation just to give us a talk in how your institution is responding to the pandemic in this challenging operating environment. Dick, on that note, perhaps you can share your insights.

DH: Yes, the new normal threat or opportunity? Threat is a given. Pandemic is not something enjoyable, but from a business perspective, we need to look at the bright side, the opportunity. This is quite synchronised with what we have been just talked about like digitalisation, so, we decided  to accelerate the digital transformation because this is something that the customer wants. We focus a lot on our resources to work on a strategy, which is about mobile-first, everything mobile first.

In the past two years, we launched a lot of good stuff, in Hong Kong. This is driving the behaviour change internally and externally with our customers. As a result, we got improved Net Promoter Score (NPS). We are very pleased to know to have that because this is the ultimate kind of customer liking, where our transformation is a moment of truth, whether they like it or not, so, it is an encouraging kind of move.

Young customer acquisition plus 20% is another very good indicator because digital is about younger generation. That young segment, that behaviour, we have a microscope over them because whether they like or things that they dislike, we need to react to that because they define what's good in a digital world.

With the digitisation, we are seeing the mobile transaction has plus 40% year-on-year (YoY) and 84% of our transactions now can grow for online, and for younger segment is about 90%. These sorts of results are about how we embrace the new normal. We think about what is a new normal and it's about the lifestyle. Lifestyle has been changed because people with or without lockdown, people are quite clearly stuck at home. They do, not only banking, shopping, or go crazy online.

My wife is not doing online banking, but online shopping, all the time. I can see it's a good metaphor that the online shopping, the business, they literally has turned your living room, no, not your living room, turned your bathroom, into the fitting room. They just set things to you. You like it, you buy it. You don't like it, shoot them back to them. This is the thing that the lifestyle has been changed a lot.

For banking, yes, we are trying to move our branch. Move our banking into banking services to your home, kind of home banking, how it comes out. We are seeing banking anywhere because previously, when you go to the branch it's about 9AM to 5PM. But now, with the digital app, it's round the clock kind of service. We see the rise of AI. AI has been there for quite some time. But, this is the moment of truth for AI because in the digital world, and exactly what David has been talking about, we need to get, we need to be empowered. People need to do the business. Something, sometimes a robot can do but sometimes, we still need that human touch. But our staff has to be human empowered by AI, that's the rise of AI. It's a very critical element in a new normal. Last but not least, it's a result. Hyper-personalised service, is not a want, it's a must.

This is the thing that people are seeing them as an individual. In the past, we can't quite figure it out. Because, it's like a lot of limitation about the data. That means we have a lot of limitations, about understanding the customer. Now, we have like the explosion about the data science, and also the technology. We have to be able to dissect our segment and almost to go for a seminar, one kind of know concept. This is a way we set the scene, about our new normal.

This four-pillar is a thing that we have. Its our fundamental question, we ask every day. To grab the opportunity today, I'd like to shed some light. How are we going to deliver our digital transformation? First of all, it's about the human-centered design, customer first, for whatever we do, digital or non-digital, customer comes first. Secondly, AI. No need to further explain, this is the key to filter. The third piece is very critical, the nimble banking system. If we didn't play good attention to the banking system, it could be our weakest link and the major hindrance for future success.

Finally, about our digital capability. Again, it's the moment of truth whether to all sorts of thinking development, the innovation, data application and AI. We can do all things right, but if we cannot, bring it forward to our customer with a digital platform, all the efforts have been wasted. This is a support. Four  things that we would like to talk about this, one by one. Human-centered design. I'm not an expert about design thinking but this is a thing that we adopted in our organisation. Design thinking is a sense that we just put customer at the centre. For whatever we do, change, develop, it needs to add value to the customer but doing is not just about thinking.

At the right side, we have a lot, like data support and inside support to make design thinking in practice. For example, we have a consumer panel. We set up consumer panel two years ago, and so we frequently almost weekly, we will ask questions, five, six questions to selected group of customers because, instantly, we want to know their liking. Whenever, we have a new idea or we just launch some things out, we want to get that insights straightaway because design thinking is about a looping, a very automatic looping.

With the inside loop into the loop and then we can have a more lovable products. Net Promoter Score (NPS), again is a very important matrix and that is a common key perfomance indicator (KPI) for many departments in our organisation. Whatever we do, we need the liking from the customer. You can see we have our NPS, we have t-NPS. What is t-NPS? It's about Transactional NPS. When you finish a transaction at the mobile banking app, we instantly asked about your liking. You give some score, your experience with us.

AI models - This is a means to the end, and we invest a lot to do modeling and understanding, the customer's needs. AI, we would spend a lot of time talking about it. But AI is not just a buzzword, not just a strategy. You need to put things into practice. A good data infrastructure is equally important than your data scientists.

The third piece, nimble banking system- branch, mobile banking, chatbot, quite a common phenomenon that this one channel is quite siloed. The data is not connected. We've spent, played significant time to build a super data highway in such a way that the data can chunk, can be connected to the different delivery channel. That is the key to have a better and personalised customer service.

Data capability - To us, it’s our award-winning mobile banking apps. It's about, we want to adopt a banking as a platform. At the right side, you see, every single app would have 100 basic services, it's self-service, but we put five new elements into it. Real-time conversational prompts that means we're connected. We have a digital engine that when they browse into our mobile banking apps, we can have an instant tackling capability.

Second, how to connect with RM as I say, man the service so, there's a button in there when they need to, when they are doing their transaction, and they have a request and they want to get help from the RM, there's a button that will bring them to the RM. Live channel for live streaming. We have live programme every week. We track their footprint that therefore, we can have an instant messaging.

Last but not the least, is about open API infrastructure to connect with other apps. I gave an example about connecting with global source of customer authentication provided by the government. So, this is the architecture. Banking as a platform, we just started it. There's no near-perfection. Combining our effort in AI, this is the way  that we continue to develop our capabilities. I want to end my sharing by this slide. This question is bothering me quite a bit. It's about "what is the next limitation to our good work?"

The business owner and data scientists are different disciplines. They just didn't know they gave some  of those are the levering persons, some of those are the right wing persons. I don't want to go any further, but, if we can have a working model that the business Almanac and data science can work really good together. This is a beautiful thing to go for future. I'm running out of time so I'll just end my sharing, right now.

MKZ: Great. Thank you for that Dick, there's certainly a lot to unpack in the application and use cases for AI and I agree with you. It's the moment of truth, for intelligent automation. David, looking at the potential applications all the digital fraud that has occurred, particularly post or at least during the pandemic, and how institutions and organisations had to respond, whether it's in those data breaches that account takeover.

Generally speaking, looking at how banks need to be mindful of their KYC, anti-money laundering (AML) or counter-terrorism financing, compliance or processes. How are we looking to leverage AI technologies especially when we consider all of the latest in biometrics and digital identification or transaction monitoring? Using AI for instance, in preventing digital fraud, do we have that sort of tight fraud-proof system in place?

What do institutions need to do to keep customers happy? How can they raise that one of the central objectives, and lead to higher retention rates?

DRH: I think especially in the world of financial crimes, it's extremely important to keep things parsimonious.

Because at the end of the day, it's about how you separate between oddities, meaning I transact in a certain manner, and suddenly I sold my house, and you blocked my account. It's a large inconvenience on a very legitimate, irregular, but legitimate transaction, versus a case of a genuine bad actor. It's poking a bit of fun, but obviously, it's not an easy thing, when you're looking at such a scale and volume as an institution. That's why I'm saying it's extremely important to keep it parsimonious. The challenge is they're actually less about the advancement of technology, but it is the willingness, readiness and risk tolerance of organisations and regulators in adopting it.

Going back to what I was mentioning earlier, that the whole essence of this world is about finding behaviour. Coincidentally enough, that's what is necessary when you're dealing with financial crimes and bad actors. It's not going from one extreme to another saying that we're going to displace all our current systems and now just have this omnipresent AI to tell us what's right or wrong. That's going to stay but how do we layer it? How do we add the additional layers of defense in order to support the resiliency of the financial systems? And making sure that, believe it or not, financial experience is a delightful experience?

MZK: Some good insights there, David. In terms of chatbots, we've seen a number of chatbots that various brands and providers are offering. Can you give us some insight in terms of how these AI-powered platforms are really helping build the trust that's needed, especially in their conversational interactions with customers? Where are the gaps that institutions need to look at today?

DRH: First of all, like conversational interaction, you got to be smart and accurate. AI platform can really help the chatbot to be smarter. For example, AI natural language processing (NLP) is a very good investment. In fact, Chinese language, we speak Cantonese, Chinese, or even Mandarin, this is quite a complex language. You can try to learn it but it will take a while to really get a good traction in Chinese language. And so, coping with NLP and other conversational technologies for sentiment analysis and some other AI model, hyper- personalisation becomes possible and pave the way for smarter conversation interaction.

AI platform can also automate the learning loop and accelerate the training process. Chatbots have to be trained to come to life. So basically, we use those technology to train our chatbot. Going forward, more contextual kind of new technology will come in place and we can understand more, even the tone of the customer. We can get not only the basic instructions by the customer. From now on, we can take more complex instruction by the customer as well.

MZK: Thank you for that. Just a final question to you, David, on that note on the same theme, in terms of hyper-personalisation, how far do you think we can go given all of these large pools of data and consolidation and integration that is taking place?

DRH: It is truly limited in our imagination. If we focus on how we make sure that we're enabling people, moments of life.

MZK: Thank you, David and Dick. Just to quickly summarise, here we are really looking at transforming the customer experience. Being able to apply AI and develop deeper insights from data is certainly the way to go and offers a lot of opportunities for institutions in terms of innovation and being able to service their customers more effectively.

I'd like to thank David and Dick for having joined us for this session. We hope the audience has also benefited from their insights and the sharing of their perspectives and experiences. Please do stay with us. We have another exciting session coming up shortly: examining the next phase of real time payments and how that's being powered by blockchain and application programming interface (API). I’ll pass it back to the floor and thank you everybody for joining us.

Emcee: Thank you to all our speakers and moderator. Ladies and gentlemen, to lead us in the exciting session on: the next phase in payments, utilizing blockchain and APIs to revolutionise real time payments. Allow me to introduce Mr. Richard Hartung, international resource director at The Asian Banker.

Richard Hartung (RH): Great. Thank you very much. We do have a fantastic session today. We're looking at the next phase in payments, whether it's blockchain or APIs, a lot is really revolutionising payments.

There are consolidated platforms and there's more happening on digital and mobile. Blockchain is coming in gradually, customer experience is getting better. There are monetisation considerations that people have to look at. We're very fortunate today to have three excellent panelists. We have Chipo Mushwana, executive for emerging innovation at Nedbank. Sam Everington, the CEO of Engine by Starling Bank, and Salim Dhanani, the co-founder of BigPay.

Welcome and thank you for joining us. I'll have a series of questions that I also asked the audience. If you have questions, please put them in the chat and we will try to answer as many as possible. It’s a fascinating session, we can take advantage of the experts who are with us today.

Chipo, let me start with you. If you can provide a short description of your role at your firm and let us know what are some of the most impactful innovations you've seen over the past year.

Chipo Mushwana (CM): Good morning everybody at the side of the world. I'm really excited to be here. Nedbank effectively is one of the biggest big retail banks in South Africa.

Effectively, I am running the emerging innovation and emerging payments business, within retail and business banking. That really involves looking at next generation technology, how we bring that into the business, how we enhance our customer experience, grow market share, and obviously defend our position in the market.

That's effectively what we do. Some of the interesting technologies that we've seen over the last year, things like software point-of-sale (softPOS), from an acquiring perspective, has become key for us. It was first in Africa that we launched from Nedbank perspective, in chat business models through platforms such as WhatsApp as well, that we've seen coming through from a payment perspective and obviously, open finance, embedded finance, which the regulator is quite interested in from a South African perspective as well, including digital ID.

RH: Thank you. Sam, same question. If you can describe what you do. Let us also know what are some of the innovations you're seeing in place.

Innovation and collaboration are the key to transform the digital finance business model

Sam Everington (SE): Good morning over here as well. I'm Sam Everington. I'm the CEO of Engine which is the technology arm of Starling Bank. Starling is one of the UK's leading and only profitable digitally native banks. We've got three million customers including almost half a million SME, which has an 8% market share in the UK for that.

We offer a range of banking products, all delivered and serviced on our own technology platform. We not only run our own bank on our platform, but we power a number of other financial institutions around the world as well. In the moment, everyone is talking payments and what's going to happen with blockchain and things but actually, we're not seeing a huge amount really happening now. Consumers’ expectations are switching to real-time payments, the way frauds are migrating from cards to the alternative payment methods. Fraud on the cards has long been the biggest problems for banks, but actually in the UK, bank-to-bank real-time payments have overtaken cards now for fraud. A lot of the innovation is actually trying to improve the security and prevent fraud on alternative channels.

RH: The bank-to-bank payments have taken up in Asia as well. What are you doing to prevent the fraud on it? What types of fraud are you seeing?

SE: The real challenge in card fraud generally, it's unauthorised, the details are being cloned. Another actor is instructing the payment. Most bank-to-bank security was designed to authenticate users very well. Banks have been good at that for a long time, on their digital channels. It's generally people being tricked into instructing legitimate payments. You correctly authorise the account holder, but they are making a payment they believe they need to make either to the wrong details or because they're being pressured and tricked. And as we call them, authorised to push payment in the UK.

RH: Thank you. Salim same question, give us a little detail on what you're doing and some of the innovations. You're doing some really interesting things with BigPay.

Salim Dhanani (SD): Thank you very much for having me. And good to meet everyone.

BigPay is one of the fastest-growing near banks in Southeast Asia. We launched in 2018, and our problem statement was that there is a large patchwork of population across the whole region that doesn't have access to a full suite of financial services.

If you take that middle class spectrum across the region, that's where we started. We started off in Malaysia with a very simple e-money product, not unlike some of our counterparts or some of our as a comparable businesses that we've seen in the UK. Since then, we've expanded our services to launch remittances, to have credit, insurance and also microinsurance. It's basically unbundled services.

Unlike my two colleagues here that have bank licences, we've launched on unbundled licences across the region, be that in Malaysia or Singapore and soon to come in Thailand, Philippines and Indonesia.

The key principles that we stayed extremely religious to when we're developing products, we talk about innovations as we're constantly trying to make sure that we're lowering costs, because we are operating on unbundled licences, typically speaking. Especially as we went into things like lending, we are using bank intermediaries.

Cloud-enabled platforms facilitate open banking and embedded finance

As we do that, it's more important for us to ensure that we are squeezing out the margin so we can pass that benefit back to our customers and still remain competitive. That's been a big focus of all and especially when we talk about embedded finance and open APIs and blockchain. These are things that we can elaborate on some of the products that we're launching, and some of the innovations and how we see them panning out, especially in Southeast Asia.

RH: One of the things that is important is customer experience. Sam, we'll start with you. What do you see the banks are doing to build the technologies and the payments up to the level of customer experience, and potentially services in multiple fields?

SE: Customer experience engagement is quite interesting in a bank context, because actually some of the happiest customers you have are some of the least engaged. It's not something we want to spend our time dealing with. If the money comes in and the bills paid themselves and notifications tell you what's going on, and you never have to open the app, you can be a very satisfied customer.

RH: Salim, what are you seeing on the customer experience side?

SD: It's hygiene, in many ways. Most customers in financial services just want the best experience in general. They're either trying to buy something or they're trying to have a particular experience in travel somewhere or whatever it may be. It's up to you, whether that means making a payment, or getting a loan, or being able to check out seamlessly as part of one of those things.

Ultimately, that's what the goal is. As we know, financial institutions have a role to be able to provide that along with all the compliance and making sure that we are managing risk and protecting our customers.

RH: Thank you. Chipo, what are you seeing in customer experience?

CM: It's so interesting because as a legacy bank, we've come to the realisation that we have to invest heavily in these digital capabilities that we see all these neobanks are presenting to the customers. There's a strong desire and a need to offer this seamless customer experience, but also ensuring their safety in the ecosystem or in the national payment system. We have the sworn responsibility that we have to perform as a bank. As a result, we're also seeing these new business models that are beginning to evolve and new avenues for growth as well. You've got discussions around data monetisation, etc. About three years ago, we launched a super app into the market. We were the first bank that did that and we've been running a super app since then.

That's one part of the strategy. The other part of the strategy is obviously to partner with other super apps to be able to provide a seamless experience or offer everything that our customers need. But it's no easy task at all. Because we still have legacy systems, we still have systems that don't talk to each other, we still got manual processes in play. There is a balance between running an old organisation and building a new one as well, and trying to maintain the seamless customer experiences and bring together services functions into the single platform so that customers can feel confident in our abilities as a traditional bank.

RH: Let me just build on that with a question about the super app because we've seen that in China, you can run your life off WeChat Pay or whatever else. What is on your super app? What are customers using?

CM: We started off with what we called home services and life services. In the home services, we effectively made artisan services available.  If you're looking for a plumber, you're looking for a painter, you're looking for a builder, stuff that people look for every single day, and they normally have to get referrals. We have that.

Then we also have what we call life experiences. It’s got restaurants, we integrated into Uber, etc. It's a double-sided marketplace where you've got service providers, and then you've got customers coming through as well. We are gradually expanding that into other services based on what we're seeing in the market, and based on what we see customers consuming the most on the super app.

Since we launched in South Africa, what I know is that one of the telcos launched an app as well. The competition is heating up. It's been a learning journey for us, but one that we're extremely pleased about. We've crossed the one million mark active users on our super app as well, which is great for us as a retail bank.

RH: Fantastic. We need you to come over to Singapore. The one with home services sounds fantastic, we don't have it yet. Let me move on.  Salim let me just ask you, we heard about robotic process automation (RPA).

In the previous discussion and some of the things that are being done to bring down costs, what are you seeing to reduce costs, and also to drive up revenue on payments?  And then when you're doing that, how do you balance increasing profitability with also maintaining net promoter score (NPS) so your customers don't go away?

SN: I could just look and put in perspective, we have about 2.9 million users, but 1.2 million are active.  We have about less than 200 people in the business and we operate a full suite of products. We've had automation and making things streamlined and making sure that we use tech as a solution.

We've never really looked at warm bodies as a way to solve a process problem. Therefore, we have less need for process automation, because it's already automated from day one. I do think that many organisations in financial services will confuse RPA with AI and machine learning, and I just want to emphasise that point.

There are two very different things. It is fantastic that organisations are doing it and obviously the hope that automation can be passed on as savings to the retail customer. The more that happens, the more competitive the landscape gets in the end, the better product the user gets.

Institutions that can innovate and ensure that cost can still remain competitive, still give customers a fantastic product at good prices and find other ways to have a good return on equity will have high NPS scores and still remain competitive.

The acceleration of digital transformation has increased digital and regulatory challenges, pushing traditional players to modernise their technology infrastructure

RH: Chipo, you’re a more traditional bank, so probably have a somewhat different perspective on the balance between reducing costs and increasing profitability and the automation side.

CM: Yes, to some extent. One of the first things that we look at is moving away from traditional brick and mortar.

Particularly with the pandemic of the last two years, what we did was reduce our physical footprint, built what we call light bank branches that are mobile, as opposed to the big fixed structures that we have. There's been a lot of focus toward digital channels and ecosystems to reduce all these costs, embedding our products through API. We've got an API marketplace where on one side, we're a landlord, on the other side, we are a tenant. Effectively, we want to play the role of an ecosystem orchestrator and be able to distribute our products, not just through the channels that we own, but channels that our partners own.

From a South African perspective, our economy is not going through the greatest of times at the moment. What we're also seeing is a regulator putting pressure on how we make financial services affordable, accessible. We are forced to think outside the box and we are forced to think about all these new capabilities, and partner with tech companies or fintech businesses to be able to survive. Effectively, this is where we find ourselves from a Nedbank perspective around reducing costs and just making it so much cheaper. We've got this rapid payments program in South Africa on pilot at the moment. It's about financial inclusion, instant person-to person (P2P) payments. This payment stream offers a mutually beneficial solution both to consumers and banks by removing the cost of cash, because one in 10 people in South Africa typically use cash, because our value chain from an acquiring perspective is not as mature.

We've got those issues. It costs the South African economy about $1.8 billion a year to process cash, which is significant. All these things are things that banks not only have to think about, but the regulator is thinking about and putting pressure on us as well.

RH: Thank you. Sam, that balance between reducing costs and increasing profitability for payments.

SE: Banks don't really have a choice. Reduced costs interchanges are under pressure everywhere. A lot of the fees banks have historically charged in other markets are under pressure too and as we progress on to the kind of the world of open banking and payment APIs and things, actually that interchange can disappear entirely.

If you switch from a card payment or real time bank-to-bank payment, there's no interchange, but that becomes a payments scheme that can cost the bank to fulfill that payment. But consumers continue to expect them to be free.

Those payments scheme cost vary hugely by market too. Domestic payments scheme rate can range from, like, SWIFT can be 10s of dollars, domestic payments can be US dollar level per payment, down to like a single cent per market payment in some markets, and even non-centralized payment alternatives to cryptocurrencies can have significant transaction costs because of the energy just for the computation.

Banks have no choice, they've got to reduce costs, because their fees and their margins and their interchange revenue are going to come into threat so the only way to maintain the profitability is to sort out the costs of the infrastructure. They're running on them to automate pricing where they can. Most consumers ultimately don't care how they're paying, they're not seeing the fees, they're not seeing the cost of processing these. They just want to secure a seamless, convenient experience. That includes not just the experience of making the payment, but actually what happens when things go wrong, which is being overlooked a lot and certainly markets at the moment is: what does the consumer protection look like?

If you pay with the bank-to-bank transfers in the UK, you don't get anywhere near the same protection you do, paying by direct debit or over the guardrails. If you pay by crypto or blockchain, you get no protection at all. Debit cards have been very good at this. There's a central arbitrator of disputes, everyone's got collateral posted, to ensure the consumers are going to get paid back.

If regulators are going to encourage fees down by switching to cheaper payment processing methods, the industry and the regulators need to work together to put alternative protections in place for consumers too. Because the criminals will switch and if the criminals switch, consumers start losing out, as we see in the UK, there will be significant pressure politically and from regulators to deal with that.

But at the moment, the banks are effectively mandated to reimburse customers for the fraud risk in the UK, but they don't get any revenue from the transactions anymore, which has historically covered the fraud costs on the cartels.

RH: We have a question in the chat, which is, can you tell us about the relationship between customer experience and AI? What are we doing to improve it to prevent fraud to make the customer experience better? I'll just open it up to whoever would like to take the question.

SE: We've had some opinions on this, it's quite unusual. We don't use chatbots or anything to interact with our customers. If you get in touch with our support, it will go straight through to human. Because I've never met anyone who's particularly enjoyed the experience of interacting with a chatbot.

If your digital experience and your digital journeys are good enough, and the machine can predict what you're going to do, you probably shouldn't have just built a first-class digital experience to allow the customer to self-serve anyway.

The AI should be kind of hidden in the background and making your operations teams more efficient.

If you have reasonable idea why customers are getting in touch, you should put the right screens in front of the agents serving them on the other side so the agents are always interacting with the chat system rather than the end customer, or you're using it to dynamically nudge and notify and drive consumer behaviour. But in a way that doesn't feel like that they're interacting with an AI system that's pretending to be human because they're a long way off being as good as humans. If you've reached the point where you need to talk to humans, you probably should let the customer do that.

RH: Salim?

SD: A lot of financial institutions or fintechs said we want to integrate absolutely everything that the customer could possibly want on any day for the next 10 years.

That's not the right approach per se. Because you first have to pick the best fintechs that will go after a particular segment. And even within that segment, different people have different needs. If you can give the customer better financial life by giving them a product that they actually need or want, and will make your operations better by using AI models, that's really solving the problem. That's really creating a great customer experience for your users.

Regulators are actively investigating potential launch of CBDCs

RH: Fantastic. Good. I'm looking further ahead. Now, one of the things that's being developed in more countries is central bank digital currency, CBDC’s. China, obviously, is probably the lead on this. Everybody who resisted it seems to be jumping in. It's a little while out. But what do you see happening with the central bank digital currencies? Are you beginning to prepare for that? Or think about that? You could throw in crypto currencies, if you want to, or totally ignore crypto, but especially the central bank digital currencies, what are you seeing or preparing for on that if anything? And Chipo, let me start with you, if I may, please.             

CM: Thank you so much. From South African perspective, maybe can we just lead in with the fact that our regulator is actively investigating CBDCs and the launch of CBDC in South Africa at the moment, so there's been positioned papers that have been written and out for comments. We all know that CBDCs present this great opportunity to capture these cash-based payments, which is what we have an issue with from a South African perspective. But I do think that if designed smartly, they can potentially offer more resilience, more safety, greater availability, lower costs, than private forms of digital money. I am in favor of CBDCs based on what they present, and there's clearly a case for it. For CBDCs, the payments industry can't ignore the general crypto revolution, as we might call it, particularly with person-to-person (P2P) or business-to-business (B2B) worldwide. And now we talk cross border, not just P2P, but cross border, B2B as well. All these things have become extremely important. And we need to make them mainstream, from a CBDC perspective. We are watching quite closely at markets that have led from a CDBC perspective, and getting those lessons into our own spaces and industry as banks so that we can launch one from a South African perspective. But the opportunity also lies in the management of these digital currencies, where banks need to remain proactive, right with their offerings to the public, whether it includes acquisition, holding transaction validity, interest, manageability, investment, all those things are things that we really need to think about. And the threat for me really lies in the design itself, and what some of the regulatory measures are going to be are going to be put in place by South Africa in this instance. So yes, that's really my thinking around CBDCs, at the moment.            

All right. Thank you. It is South African one sense. But there's the interoperability and cross border that BIS is working on and others. So, we go beyond it before too long to. Sam, your thoughts on CBDCs?

SE: Every central bank is looking into it. It's a process we're engaging with, there'll be a lot of discussion and talking in proposition papers around this for a while, before we see much operating in market. It's not something we're preparing for really, as an organisation at this point, changing our banking systems and payroll payment gateway is something we're very comfortable with. We're doing it every day. And so ultimately, whatever tech change becomes necessary, we can get that done quickly. We're already running accounts in something like 27 currencies and processing payments all over the world. We're ready for that. At this point, the industry's needs to engage with the regulators work out what it's going to be, what it's going to look like how the interactions and interoperability and the exchange between them is going to work and how do we do so in suitable level forms unless suitably low computational transaction cost.

RH: You're right. There are ways away but you'd be in money for like you said, fantastic. And Salim?

Central banks are enforcing digital payments and introducing digital banking frameworks to shift to a cashless society and achieve financial inclusion

Salim Dhanani (SD): Project Dunbar and BIS is, project is great. But I don't think it's going to happen anytime soon. The reality is that most central banks, yes, they'll say they want it when it's a bull run. They'll say bash crypto when it's a bear run, right? Ultimately, the technology is here to stay for a while, right. And there are some very friendly regulators. And there are some regulators that just do it. Because they need to say that part of some kind of this isn't good PR opportunities. Very few countries have actually enabled it. There are some working projects, but there aren't that many. The reality is that that this fundamentally can change the way again, it's a means to an end, right? It's just changing the way that processes are done. So programmable money is what CBDCs will allow, ultimately, and so where are the real in patient's going to happen around it, what are the secondary kind of developments that we're going to see it's going to be around tax, it's going to be around, overnight, we put markets. It's going to be around how banks share the liquidity around the central bank, for example, the speed at which it's done in efficiency, and what's done is going to change the nature of clearing and like the ability of banks to generate money from debt, like, in theory, like there's going to be intermediaries are going to be removed, right? So, and then there is this whole complexity, I mean, outside of major currency markets which is going to be around exotics. And if you are a central bank, or Ministry of Finance, and in a country, that's running exotics, like you don't want CBDCs, or if you do want CBDCs, they're not going to operate in the way that evangelists in blockchain or crypto, think it's going work. There's going to be a disconnect here. In the end, what do I think is going to happen, I think that you're going see to the likes of USDC and USDT, which are going to be, and UST as well, I will address the elephant in the room. You'll see privately-managed stable coins, which is basically a CBDC, in many ways, right? Some of them, which are algo stable. So algorithmic stable coins, for the uninitiated, that is basically like where, a computer or a chain or an algorithm is deciding on, you know, kind of the ability of what the backing is, sometimes they don't work visa vie, the $80 billion fallout that just happened a few weeks ago. But others like, USDC and USDT, are going to continue staying. The very interesting part that we're going to see, and what big pay is extremely interested in participating in is the private stable coin market, and how can we create efficiencies for our users. And also, bypass, some of the inefficiencies of intermediaries and regional clearing markets by using private CBDCs, as we've seen them grow across the region, but very specifically focusing on the trust-based ones where 100% of liquid assets, highly liquid assets are kept in trusted, credible institutions, such as banks circle closes.

RH: Thank you. I want to ask you a question about API's and the exam. You had mentioned APIs earlier. What are some of the things that you're working on some models you're seeing with API's that are working well? Sort of key success factors and how they're being used to monetise, bring in revenue, in what you're doing with payments.

SE: The models we're seeing working with people with API's commercially and open payment infrastructure, not necessarily particularly innovative. They're largely moving merchant payments to require us for accepting card payments to something lower cost, but effectively paying a payment API provider for processing an interbank payment. Instead, just through the open infrastructure, you get some elements of referral fee models for kind of data exchange over API's and things to give more confidence there. And I guess one of the few things we are seeing some people starting to commercialise and monetise as APIs to access identity, and particularly proving identity. One of the things banks have one of the few trusted custodians of around the world, because their ML and financial crime obligations means they're verified identities for a much greater extent than pretty much any other digital products and service provider. There's a value to being able to prove who someone is online for lots of unregulated sectors through everything from gambling websites, through to retailers and merchants through to more fintech type players. And we're seeing some models now where people are starting to set up kind of standardised API's where you can then effectively log in with your bank and share your proven name and address and date of birth and that kind of information that has a value to someone. That's probably the most innovative bit I'm seeing actually happen in the market today.                 

RH: Thank you. Salim, what are you seeing with the APIs?

SD: PSD to like an AI ISPs and ISPs in Europe was probably the most advanced, it's probably gotten in the public sector, like with regulation. It's going to be as fundamental pillars that are required around it, like data protection, like GDPR, for example that you have in in Europe. I think that you have a patchwork of it. And I'm thinking from a very Southeast Asian perspective, so excuse me when given the new ones here. In Southeast Asia, you have different policies, getting open banking in one market is hard enough, let alone across the region. At least the good thing is interoperability coming on with rails, like, interoperability of payments is a fantastic initiative, whether ASEAN players, and that's really evolving, and that's really creating a lot of innovation. What you'll really see is, that opening up hopefully into open banking, where players can really use, I'd say open APIs to gather data, it's not necessarily a revenue model, I would say not any more around giving people information, that's hygiene, you need to do that. Where it comes in is giving people more personalised products and being able to manage your risk better by having that information and understanding your customer better. That's where the monetisation really comes in. And if customers trust you, they give you that data. And you can make like, for example, credit risk assessments better, you can then monetise with better quality loans or close to the quality risk curve, essentially.                    

RH: Excellent. Thank you.

We do have an API marketplace to about 100 plus API's that we've got in that marketplace. And we are playing this ecosystem orchestrator role where we want to consume APIs from other marketplaces now that have launched. But some key models that we're seeing on our side is the revenue share models for the distribution of our bank products, some particularly personal loans and asset finance. We've seen that taking off quite a bit from our perspective, transaction fees for payments as well as the other model that we're seeing coming through subscription fees for wallets. So those are the top three models that we see coming through from our perspective right now that we think have got some form of scale. But there's a lot of conversation, we have regulation expected to come out at the end of this year. We find ourselves in open finance with our regulated dabbing their feet into data sharing models as well. We are quite we find ourselves between a rock and a hard place. And we sort of seeing these models coming through until the regulator gives us clear guidance on what to do, particularly the data pieces.

RH: Thank you. I know there's a question in the chat. I also have a number of more questions to ask, but we are getting towards the end of time. So, before we close, what I'd like to ask is sort of what's one key takeaway you'd like everyone to leave with today, something you've talked about already, or something else that we haven't touched on that when you're looking at the payments. What's the one key takeaway? So let me start with Chipo. Move to Sam and then Salim round us up.

CM: Financial Services is going through changes and has been probably for the last decade in any case. From my experience, it's a constant and consistent change.  It's not just building for the customer off tomorrow, but building for the customer on a day-to-day and consistently staying on top of that, because financial services are embedded in everything that we do. They are formed structure; nature has changed completely. There's a challenge not just for traditional banks, but everybody that wants to participate in any form of financial services to be able to understand the terms of engagement, or what the new playing field sort of looks like. For me, that's really a key takeaway. Legacy systems, strongholds, extensive approval structures, all these things need to follow for traditional banks, we know that. And unfortunately, it's not something we can do even in 24 months. It's not a three-year project and a very costly one at that. But it takes time. The other thing that we're seeing a lot is that customers trust banks. And that's really important.  If anything goes wrong, if I lose money, today, I'm not going to call the fintech. I'm going to call the bank and say I've lost money. Those are some of the things that we really need to bear in mind and key takeaways that I think about particularly in this journey that is constantly evolving, and that we are part of.            

RH: Fantastic. Thank you. Sam?

SE: Particular margins of revenues for payments are under threat, though, both from the fee income and the interchange, and that the consumer expectations have changed, both in terms of the experience and the contextual awareness of the service. As they're interacting with this belief, everything should be deeply integrated in real time, and most banks still a long way from being able to deliver this. My takeaway is if you want to maintain your margins, you've got to deal with your cost base. And the only way to get the cost base for digital-native players to tackle and modernise your course. The days of applying sticking plasters and deferring investment are really reaching their limits now.           

RH: Great reminder. Thank you very much. Salim.

SD: People think that banks are generally far further behind than they actually are and innovating and people think that fintechs are further ahead than they really are and being able to solve the problems around like, let's say cost of funds and trust and whatnot. There's probably going to be a very interesting opportunity as we go into a quantitative tightening environment where it's going to be a bit harder to monetise some of these fintech plays, especially with downward pressure on payments markets, right where a lot of fintechs have gotten their multipliers, especially like what Sam said, and then downward pressure is globally. It'd be really interesting to see what happens in the fintech market and what fintechs, one, are able to innovate, really innovate, and they get to profitability and survive throughout this period. And the next thing, because there's a lot that probably won't, and there'll be a very interesting bit to see around what the new innovation comes because we are the nexus of a blockchain and outside the fringe of those regulatory environments coming into mainstream. The nexus of these two worlds is going to lead to some very interesting fintech players. And we're looking to see what that looks like. Then coming in the coming two, three years.

RH: This is great. Some real good insights today for how to run businesses better, looking at what's happening in three very, very different regions. Chipo, Sam, Salim, thank you very much for joining us, and Boon Ping, Wilson, over to you.

Emcee: Thank you to all our speakers and moderator. Ladies and gentlemen, please welcome Mr. Wilson Cha, advisor, Excellence in Retail Finance Awards Programme. And Mr. Foo Boon Ping, president and managing editor at The Asian Banker who will be leading the heads of retail finance annual meeting.

BP: What a wonderful discussion. We have two panel discussions earlier with Mobasher and David. They were talking about the use of AI in data analytics and how appropriate the use of AI in Asia as well where we have a diversity of language. And the use of natural language processing is useful in terms of looking at data in different languages, as well as how data is helping to minimise and mitigate for risk, especially in this era when there is increasing access to digital services. And that create, kind of opened up vulnerabilities in system as well as the just concluded section on payments. And again, wonderful insights from Sam, Salim and Chipo and coming from different perspective as well for the new players how the environment has changed from quantitative easing to a tightening environment, the need to monetise their services versus traditional players. They are also innovating and using APIs and creating new revenue models, through distribution, through transaction services, including cultural changes, yes, including cultural change. Wonderful insights from those discussions. And I trust that this will be valuable insights for our colleagues, whoever just joined us, and next we'll start our international HR retail finance dialogue. And I'm pleased to host this session with my esteemed advisory council member and veteran digital and retail banker Wilson Cha. And we're also excited to have leaders in digital retail and consumer finance from across Asia, Middle East and Africa to discuss and debate the future of retail finance, as we look at supercharging retail and starting the next phase of digital finance transformation. As we make the transition to the next phase of digital finance transformation to observation we have been in this challenging years of COVID-19 that have unprecedented impact on health and the economy. And despite early hiccups, most retail banks we have witnessed have actually quite market moving their retail business, including SME lending, as retail consumption and finance, especially to digital and mobile commerce platform continue to be strong and resilient, making up for the drop in corporate and institutional revenue and markets volume.                      

Wilson Chia (WC): In addition, with the low interest rate environment in last two years of 2020 and 2021, of course, 2022 is kind of different because of the high inflation given the tight supply chain as well as the geopolitical situation. Interest margins and MPL have come under a lot of pressure. However, FI country transactions and wealth management activities have more than offset the gaps in bank revenues and profits. And with a shift to digital transactions and processing. We have also seen improvements in operating costs and service delivery. As reflected in our latest bank quality rankings. I'm sure you are seeing these trends in your individual bank, and marketplace. And amid the economy challenges and competitions, traditional incumbents are able to navigate and make critical progressions. In the dialogue to follow, we will explore how the traditional progressive and new players navigate the changing landscape with the appropriate business model and strategies to effectively and efficiently deliver the desired customer experience leveraging on their digital capabilities. Lastly, to recognise and track the increasing array of standalone, virtual or challenger banks, I'm pleased to announce that The Asian Banker has launched the world's first comprehensive assessment of global digital-only banks to rank them based on a balanced scorecard utilising an objective and transparent set of evaluation criteria.            

BP: More details about the Global Top 100 Digital Neobanks ranking will be made available later. Richard who just led us to the panel discussion, we'll be going to a briefing on key findings of excellence, as well as this new research on the global digital bank. And the details can also be found on TABInsights. We have rebranded Asian Banker research, we now call it TABInsights to allow our users an easier access to our risks. Our research resources is a reef repository of research data of digital retail banking, working group that has got case studies, benchmark, and we do a lot of benchmarking and our business revealed for digital retail banks, including the global digital banking services. We'll be sharing some of those insights from those rankings as far as this dialogue. Banks and f5 have also been accelerating their digital transformation, the rise of digital challenges facilitated by regulatory changes issuing of banking, digital banking license, for example, as far as consumer behaviour should have pushed traditional players to respond, not just in modernising your technology, architecture, infrastructure, but then how you do business. We heard earlier from Chipo, for example, NED Bank, how they're creating new revenue models using APIs, especially how you partner and collaborate with each other to digital and cloud enabled platforms to facilitate open banking or embedded finance. A big part of the modernisation is to investment in technologies, such as we heard earlier to artificial intelligence, machine learning, internet of things, blockchain, it is becoming more evident in the industry, that the retail financial services are driving heavier, active digital usage, and more revenues.                        

The adoption of cloud and edge computing to ensure scalability and agility

WC: Given the rising customer, changing customer behaviour and rising expectations, the need for rapid and ongoing innovation impacts every component of banking, from new product development, to new ways to deliver services, to back-office process rethinking that changes the entire banking models, hence the demand on banks and FI today will be for them to focus and prioritise because resources are limited. And the trend towards the faster payments and less cash will continue. As such as new real time payment and open banking platform shift consumer behaviour, and elevate expectations. That inevitable move towards cloud and edge computing has also enabled institutions to have greater agility to innovate, achieve scalability, and deploy secure efficient operations. With open APIs, big data and analytics coupled with the use of machine learning, FIs are leveraging opportunities to collaborate with fintechs and third-party providers to better meet customer needs at lower costs. As well as introduce new products and services, such as embedded finance is which should be the hot topic while delivering seamless customer experience. In essence, when we talk about customer experience, it is all about innovation and partnerships. Incumbents have now started issuing digital tokens and wallets as well. While regulators, as discussed previously, the last two topics, are exploring or implementing central bank digital currencies for short, the CBDCs into the systems, these innovations and development proof that retail finance will play an even bigger role going forward. Amid these trends and developments, we wish to hear from our case of retail, and so digital and consumer finance, about their thoughts on how they addressed their banks, addressing the challenges and opportunities moving forward into the future. What are the important issues for each of the institution and marketplace? How are they, again focusing and prioritising and investing? At the same time, how is their organisation embracing a new operating model with a new culture and apply new technology stack to move forward and compete successfully and when. And with that, we are happy to start with a few comments from Emmanuel Daniel, my good friend, the founder and chairman of The Asian Banker. Emmanuel.                   

Emmanuel Daniel (ED): Good morning, everybody. It's 4:30 in the morning, here in New York. And I'm sufficiently jet lagged so that I'm awake and very happy to join all of us in this year’s Excellent Retail Financial Services Programme. As some of you may be aware, The Asian Banker today is sufficiently mature, so that I can take on an independent personality apart from the company, the organisation. And as Boon Ping has pointed out, we are now part of a global company or rather global configuration called TAB Global, The Asian Banker is one of the brand names and the other brand name is TABInsights, the research division or research arm of what used to be The Asian Banker. And the reason we made this, this transition is to mature the consulting and research aspects of the business. My very good friend Wilson Char and other highly respected, highly experienced, hands-on financial services professionals are now available to us as consultants to work with us on our methodology in helping retail banks and digital banks manage the transition, to guide the transition, and to work out the matrix that you need to put in place and also the direction that you need to take and the challenges that you faced based on the challenges that you face in your respective organisations. I hope that we will have separate conversation with some of you on your digital journey. The value of me sitting away from the organisation and traveling to places like the US, I was in Europe last week and I met with regulators in Luxembourg and people in Germany. What I'm learning is this relationship between innovators, disruptors, and regulators. And by the way, the book that I talked to you all about last year is actually coming out, I'm sorry for the delay, there has been intensive work put in to capture a lot of the innovations taking place, especially in the area of cryptocurrencies, digital and disruptive finance. And I highly commend to you what I've written, because it's so forward looking and it tests some of the assumptions that we make in finance today.              

ED: I take a look at the developments taking place in digital banks, digital-only banks in Hong Kong, in Singapore, and now in Malaysia, and soon in Indonesia and so on, and then the developments in China and India and so on. And also, developments taking place here in the US. Traditional banks like JP Morgan, Wells Fargo have committed hundreds of millions of dollars to digital transformation. So now they are awake, the American giants are awake, they are fighting back, and they're going to be developing innovations that the rest of us will be looking at and I will be meeting the chairmen of at least two banks here. What I want to say is that, the thoughts that I want to leave you with is that any digital initiative that is based on preserving the current ecosystem will fail, is failing. For example, the data that we put together on digital banks, digital-only banks around the world, only five digital-only banks are profitable, all the rest are not profitable, have not been profitable from the first day and your proposition appears to be nothing to do with finance, but based on what is called the platform technology. And in platform technology, the venture capitalist, the investors looking for the same formula that gave rise to the Amazons, the Googles, and the Facebooks of the world, where they onboard millions of customers and then create the income stream later on. The thing about financial services is that that income stream never comes. I can tell you, with all confidence that the digital-only initiatives in Hong Kong right now, none of them are profitable, very clearly, in Singapore, they will not be profitable, and in Malaysia, they will not be profitable. In fact, they will be capital intensive and they’ll be burning capital over a period of time. Regulators even assess them on the ability to withstand or take the blows of capital requirements that will be built on them over time. What needs to happen is that if you are really into digital finance and the impact of the network economy on finance, your idea of products in finance have to change. In other words, you have to eventually be selling something other than mortgages, something other than deposits. I deal with this in my book. We need to start imagining what is the value, I don't like this foreword but value proposition or the value that you give to your customers and relationships that you have. That will be captured in how products are configured going forward. Let me leave you with that thought. I have so much more to share with you. In fact, as soon as the date of my book is announced, I will be putting out videos to explain some of these points and to challenge the assumptions that many of the new players, new platform players coming on stream and getting their license. In fact, the licenses that are being given out by the different regulators may well be a curse, rather than a gift, if they don't know what they're doing. And the second thing I just want to say very quickly, is this, that something I've seen in traveling and meeting different people, is that in every society, the role of the regulator to preserve the integrity of the financial system is very important It's a given, it's something they don't question. But the role of the entrepreneur to challenge the regulator's assumptions, to propose new ideas, to push into areas where permission is not required. And to create new realities is just as important. And that tension between regulation and innovation must always be there. And if you have the tension, you're on the right track. If you don't have the tension, then all you're doing is creating what you already know. Let me not be want to hear from each of you. Let me not hold up the dialogue as it goes on. And I'm very happy that Boon Ping and Wilson are moderating the session. But I'm here. I'm going to listen very carefully, to all of you. Thank you very much. Great, thank you.                     

BP: Thank you, ED, and thank you for the insights and the comments. We're looking for the insight of the book as well. And the reminder that, as the banks, traditional banks are going to the digital transformation, is to create new value, create new innovation, not to preserve the status quo. That is a good topic to start this discussion with, as the banks that you're leading, are going through your digital transformation, as you're facing the challenges, opportunities, these before you, what are you doing to create new value by leveraging technology, new business model, operating model to create new value? New possibilities? Let's start by asking an innovative bank in the region that right now is in the business of starting a digital asset, exchange Kubix. And that is Kasikornbank. They've also worked with a social media platform LINE, and started LINE BK in Thailand. I would like to ask Dr. Pipatpong to give a few comments on your thoughts on innovation as you go through your digital transformation.

Pipatpong Poshyanonda (PP): Thank you. We started off with traditional commercial banks, retail banks and we become digital. We work with partners and those kinds of ecosystems through digital technologies. We have mobile banking, called K PLUS. We are the number one mobile application in Thailand, with over 18 million users. We also partnered with Facebook, LINE and those kinds of other platforms. We want to be what you call digital payment platform going forward. In various customers experience and moment of truth that customer would use on digital payment. Once we open up all the digital lending, we have quite tons of customers coming in and apply digitally every month. We also work with partners like hospitals, universities, many platforms that you can imagine of, including all the tourists. Those are our main strategy moving forward. You can see that the digital bank only may not be the success factor. We believe in what you call strong channel presence and moment of truth that we can capture. And, also that we integrate with other channels besides digital or the human-assisted call centres, branch and others platforms touchpoint, we will go forward on those kinds of experience and try to integrate them. Since we have 18 million users on board, we will use these capabilities that we can edify customers and help artists to onboard their platform as well. So even pay with K PLUS or onboard K PLUS, what we call K ID, you can identify yourself through K PLUS, these are the things that we put all the ticks off to get, and try to work at home and deftly through these digital technologies. I leave it to you first to hear from others, and then we'll wrap it up later. Thank you.

Wilson Chia (CH): Thank you, Dr. Pipatpong. I think you’ve captured some key points, which we certainly agree with you, the new trends. You mentioned things like health and finance, indirectly, based on what you do. At the same time, you have also captured things about, delivering customer experience to innovation and partnership, because these two is very critical in how you deepen the relationship

PP: In with line with Facebook and Facebook Pay, everything, We go forward.

WC: If you want to deliver the kind of customer experience, you just have to innovate and have partnerships. They must go hand in hand. Now we would like to take the opportunity also to ask for the views of Jeffrey Oo of RHB bank in Malaysia, who is the Managing Director of Group Community Banking. Jeffrey, your comments?

Jefferey Oo (JO): Thank you, Wilson. Firstly, greetings from Malaysia. Good evening to everyone here. So we recently have one digital banking licence together with Axiata. We feel that we can definitely leverage and have some synergy amongst us. The digital bank will focus on the underserved segment for a start. So we feel that can be a good leverage, whereby working together with the conventional bank, we can complete the whole supply chain, especially for, SMEs. I just wanted to comment on the fact that RHB, will be investing in digital transformation over the last four to five years. Obviously, we are always looking for new technologies and partners to basically complete our straight through offering, quite obviously, for efficiency, and also lowering the cost to serve, like like most institutions.

What we feel really excited about is basically the development in APIs and ecosystem partnerships. Like what our esteemed and earlier speaker touched on. And we feel that, that truly is going to be the way to go, open banking and the ability to link up with the various parties. Because I think banks today, we actually have to complete the end-to-end solution for a customer rather than just merely focusing on what the institution have the capabilities on at the moment. We must be completing the whole solution for the customer in terms of needs.

WC: I liked your comments on, because when ED earlier mentioned in his remarks about products, I think in today's world, we talk about solutions, and product fulfilled solutions. So solution is the way to approach it. I totally agree with you, especially when you're dealing with SMEs and underserved segments. Today, consumers do not, especially in the business side, do not just extract products because they want you to look at the business health and the journey in the financial management solutions, and leveraging on technology, and API's to support them. So which is a way to go in today's banking. I would ask you a question before we ask for comments from the other participants. What's your use of cloud computing and edge computing? Especially when you’re talking about the transformation journey.

JO: Yeah. So, for us, we are obviously moving towards cloud tech stack like most institutions. You know, I think going forward, cloud computing is obviously going to be really key to ensure that we have actual scalability, and the ability, and the agility as well to actually come up with solutions to meet the various, situations that keep on changing quite dynamically. So, I would think that it is really important for institutions to move towards there, going forward for the future.

BP: Okay. Thank you, Jeffrey, for those comments. And this is an exciting time in, Malaysia as you have new competitors coming in, and incumbents are also responding with your own transformation initiative.

Next, like to get the view of Hatton National Bank in Sri Lanka, Sanjay Wijemanne, and Sanjay, if we can get your comments on dealing with such digital challenges and the situation in Sri Lanka

Sanjay Wijemanne  (SW): So thank you, I think the digital transformation really took place with COVID, with the essential changes that a bank needed to make in terms of supporting all our customers, making sure that business kind of took place during very challenging times. And it shouldn't be, being a leader in merchant acquiring, we have almost 40% market share in the country.  

So we had to look at so many different ways in terms of being able to support the whole payment system in Sri Lanka. So that was one of the first things we did, looking beyond the traditional POS to mobile POS, QR payments, the payment gateway software. So all these sorts of different assets that we sort of enable our customers to really support them through very tough times in terms of being able to run their businesses.

So that was the first thing we did last year. And then, again through mobile banking platform, really enabling retail consumers to freely transact, do their banking, open their accounts, place their investments, and then also make payments. We also enabled the payment platform to allow customers to transfer money to anybody in Sri Lanka.

The person, the third party, simply goes to an ATM, there's a cardless transaction, and then withdraws the money.  Also, during this time, came up with a mobile wallet which enabled the unbanked community to come in to the system, and use any sort of instrument that they already have; being able to then transact and make payments. So this was really the digital transformation that we took during the time of COVID.

And then moved on to support it with chatbot, with the RPA. So, lots of different things happening here, and it's really a very interesting time, because Sri Lanka is this country going through lots of challenges, and some of the digital innovations that we had post COVID. Now, coming into a situation where the country is going through a tough time, has still enabled us to as a banking system, to really support our customers and allow them to carry on their businesses during these days.

So moving on to the second part of the question, I think the country is going through one of the worst periods that we have had, I think it's clearly evident that, we need to go into a well set out development plan with the IMF. We've initiated talks a little late than what we would have liked as a country; but now we are seeing, some sort of positivity coming through the plans that we're talking through the IMF, and we also have some neighboring, and supporting countries coming forward to support us. But as a banking industry, I think we've come a long way with the learning through COVID to now support our customers during these challenging times. So I would think that the banks are ready to face these tough times.

WC: Thank you, we talked about digital transformation. Now, we all know that digital transformation is not just about the use of new technology. One of the biggest transformation barriers could be cultural shift within the organisation. Perhaps it will be silo mentality. To my experience retelling the organisation, one of the biggest challenge about transformation, the digital transformation, or repositioning the bank has always been the cultural shift and siloed mindset. So, how do you address, if you have challenges like this? How would you like to share with us? How have your organisation been addressing these challenges, or at least move across a new culture?

Yeah, certainly. So, I think HNB, being a bank that has been around for 130 years in Sri Lanka, was one of the more traditional banks with a culture that needed a lot of change management. And we think in terms of really supporting the digital transformation. So having sort of 5000 plus community or staff members, this was a challenge, but as we thought through our plans, in terms of innovation, and in terms of changing behavior towards customers, and really aligning them to digital interaction, our first challenge, as you mentioned, was our staff.

So we spent actually a lot of time in upskilling them, upgrading them, taking them through the experience of the various digital assets. So we didn't straightaway go out to the market, but what we did was we spent a lot of time in terms of having small scale innovation labs in all regions. Taking these assets to them, so that they become first hand users, see the experience, and give us very positive comments, negative comments, so that we could also work on it before we went to the market. So we actually have brand ambassadors for all our digital assets, way before we sort of went to the market. So we kind of took a staff first approach, we made sure that staff are really conversant and really ambassadors of these products, and really appreciated the changes in the banking scenario before we entered.

And I think the important thing was, their feedback also allowed us to fine tune some of these products, and that really helped us when we finally went out to the market. So I think it was a challenge, but something that we overcame with proper planning.

BP: We would also like to get some insights from the Middle East and North Africa, from National Bank of Egypt. Mr. Karim Soos. How are you looking at digital transformation and creating new business opportunities over there?

Karim Soos (KS): Good morning, everybody. In Egypt, the central bank is working on the initiatives for financial inclusion and digital banking, along with the government and ministries, because we are very much a cash society. So we work hand in hand with the government through the ministries to enforce the digital payments and add costs for cash payments in its certain ministries. Because at the end of the day, with the with the unparalleled market, also within the merchants and in factories, they are not willing to accept any digital payment, because of the fear of taxes. So we have the infrastructure ready, we have like 100,000, POS machines, QR codes, everything is ready. But still the challenge is, as you said before, is the cultural change, and enforcement of the digital payments. That the COVID period helped us a lot in engaging the banking customers to start using the digital payments, which we grew like 300% on digital payments during the COVID period.

BP: Great, thank you. So financial inclusion is a great driver for digital transformation, and also delivering the last mile service to this under certain segments, and also to do this sustainably, and banks are leveraging technology to do that, but at the same time being able to make a profit out of it, and still not at the expense of this underserved consumer, makes me want to hear from Bank Islam Brunei, Darussalam, BIBD, and we'd like to hear from Mr. Clevy Syabil Ariffin bin Jamil .

Clevy Syabil Ariffin (CSA): Thank you. Yeah, I think a lot of the experiences that we had are similar to a lot of the banks that I've mentioned just now, So one of the areas that I think is quite different than what has been mentioned was an initiative to actually cater customers, to avoid customers flocking to the to the physical branches. We have introduced through collaboration with a third party merchant, where customers can actually book to actually go to our branches. So this sort of avoids people flocking into the branch. We encourage them to book early so that they can actually manage which slot and time of day they can actually visit the branch if they are required to. But in general, we don't encourage, especially during this time of COVID, to encourage people going to the branch, but if they need to, this is the means that we are offering to customers.

And this platform actually is the platform that is currently being used by the government ministry. So it's actually quite well known. And it's easy for customers to adapt and use it. So that's one area. Another area that we sort of tried to cater is towards the ease and convenience of the customers to onboard merchants within their own platform. So during this COVID for instance, restriction for dining-in was made quite difficult. So a lot of customers in restaurants, for instance, are required to actually take away when it comes to food.

So we onboarded several merchants who actually has got a lot of businesses within their platform, so that it would be easier and it gives more options for customers to actually get their orders quite easily. And this is beneficial for us, because during this time of COVID, it's quite difficult to approach individual businesses. So by doing so it's more quicker and faster, and the convenience of this as well, because as you know, we encourage the method of payment to be digital. Also we have our proprietary QR code payment system, so that's also encouraging customers to go digital. So in these two areas, I think it has been quite successful, especially during this COVID period.

WC: Okay, the next topic which is probably an important topic that affects all of us whether big or small, and because of new technology, and that the world is going through a volatile time. So it has been said that financial health is the future of banking. Right. So how can we, bankers help to improve the financial wealth or financial health of our customers? So with that, I'm going to turn to Victor Lee from HSBC Taiwan on how digitisation had been leveraged upon to deliver these financial health on real time basis, to our customers to make the right decisions and be guided with the right advice, leveraging on machine learning or AI and Robo advisory to support their journey in their financial management throughout their various life stage. So I'd like to commence with Victor.

Victor Lee (VL): Yeah, I come from a wealth management background. So I have to say that this digital transformation is not just nice to have, it's a necessity, especially during this COVID period.

So I can't even imagine that in this COVID situation, like two years earlier or five years earlier, that we will see a huge disruption in terms of how we service our customer.

So I think that's number one. Number two is that with wealth management, I don't think we are yet at a pure digital level across state. So in Taiwan, there are three digital banks. And I must say that the scale of the service provided to customers is not yet up to the standard.

I think, for customers, especially at high net worth, and ultra high net worth level, they still need this warmth from the relationship manager, however it needs to be partnered with a very strong digital capacity at this stage, so that they have a lot of things that can be achieved with this double support to our customer service, that's very important. And it also helped out to pick the alert on the customer's portfolio, and get the opportunity to reach the customer firsthand before any other bank, to update the situation, to update certain product performance in the customer's portfolio, to update an opportunity so customers can capture within his risk appetite. And also this delivery is now digital. So in the past two, three years with COVID, meetings has gone online. And the customers, after the customer get these trading idea from the RN, the customer just go digitally to trade it. And thirdly is that I think even with this high net worth segment, they are starting to pass down the wealth to the younger generation,

And the younger generation, they are all, digital savvy, everybody is using the digital device to interact with the bank. And so that's also a very important way that we needed to be ready for. And lastly, is that the challenge in digital is ever changing. So after we launched our equity trading capacity in our mobile app that is new to the platform, the number of customers new to the platform increased by 50%. The overall trading volume flow into mobile-run internet banking is around 50%. So that just tells us that how addictive we all are. Nobody goes home and... I never use my laptop, however I do use my mobile. So I think that's the way forward. And what's next? We're not sure. Would there be something to replace mobile in the coming three, five years? We're not sure. So I think there's a constant challenge to us all that we need to be very agile, to continue to catch up with the new technology. So I think that even with organisations as big as HSBC, where we not only look into our in-house IT solutions, but rather, we're also looking for third party vendors, so that we can keep up to date with the market.

WC: Thank you. Thank you, Victor. So with that, I'm going to ask comments from Girish From ICICI. On the website as well.

Girish Sengal (GS): Good to see you all. So, on the wealth management side, I think on the digital terrain, a few things which we have done and which we believe are very, very important, the first and foremost is how comprehensive or how robust the entire platform is, in terms of providing the wealth management services.

So it's not just profiling a customer. It's not just advising on the model portfolio, telling him which asset classes the person should get into in terms of what percentage into equity, into debt, into alternative assets. Also, I think the quality of reports, the quality of Robo advisory, the quality of detailing that we can do in terms of creating an end-to-end solution for the customer is very, very important. That's the first thing.

The second thing I think, is the nudges and the hyper personalised offers, which you can give to the customer bases, AI and ML models, in terms of how and where the person should get into and what kind of plans or investments which the person should get in to, So I think that is very, very important.

It has to be focused to one, it can't be a machine gun approach, it has to be a very, very sharp laser approach for every customer, because every customer is very different.

I think the third most critical thing is the overall experience of the customer when he has invested with the platform. How is the UI? How's the UX? Is it clutter free, are the reports very clear, there should not be any issues and errors. So I think some of the stuff is very, very important and over a period of time, I think what we have seen is a lot of people coming on the platform and asking for a detailed end to end journey or retirement planning, end to end journey on creating a will. I think these are some of the emerging trends which we are seeing people wanting to collate all their investments in one place. So we have created something called the iLocker where you can pull all your investments with any other bank or any other broker into one place, and you can see what's the kind of asset and look, how do you want to plan your journey ahead. And of course, coupled with the knowledge part, where on the platform, what is the kind of information in the material you are giving to the customers so that they can read and evolve.

So something that we have come up with something called an Orange book, which deals with financial planning and simple things on finance. So that they can read, evolve, and enlighten themselves on what's happening in the market and how they should go about. So these are some of some of the stuff that we are trying to do at ICICI.

BP: True to what was said earlier, the end-to-end distribution or provision of a solution for wealth management, and also to be able to help customers look at their entire holdings of things, not just the banks, but all their financial relationship. The ability to aggregate data is very important, and customers are demanding that task, and with regulation there is also an open finance, allowing banks to be able to share data. So on and so forth.

WC: To put it simply based on the comments from our last two participants, Victor, I think you said hyper personalisation is required in wealth management. That hyper personalisation, which is on segment one, to me is equal to machine learning paths, or in a future metaverse plus data plus INSIGHT Plus action, which is prescriptive, as well as predictive. We would like to ask Dick Ho of the Bank of China to perhaps share with us the developments in in Hong Kong.

Dick Ho (DH): Yes, I think in Hong Kong as like Emmanuel has mentioned we have a lot of virtual banks. Right now, they are not profitable, but they do bring in very new excitement not only to the customer, but also to market players like us.

Actually the apps are pretty good. As a traditional bank, we were more functional, we didn't have the agility that they have. So I put in my entrepreneurship, and also the agility to build on their strengths; however, in terms of competing with them, I think we, as a traditional bank, and also a major bank in Hong Kong, we still have a lot of things. What are our strengths as a major bank? We have a very good foundation about corporate banking, which means I got a lot of open banking ecosystem partners. And we did, we did have some partners from the property developer that we have very good collaboration with digitally. This is another key strength of Bank of China.

So I think the Greater Bay Area definitely is really a goldmine that every bank target for income, basically we are the strongest network by far. We are trying to leverage by saying that some customers can go virtual, but still, they need to keep an account with us because we can give them something extra. However, this only half of the game because I think digitalisation and the impact of virtual is really real, because the customer experience is good. So what we have to do is react to that. In 2019, we organised ourselves. We created two departments, which is composed of around 50 people, just looking at customer experience alone. And also an agile project management.

And these people are our change agents, and we have a very collective agenda, which is how we can transform ourselves, because we have 15,000 people. Cultural change is very difficult, particularly in a big company like us. So we start from these 50 people to really have a collective agenda for one to two years. Some of the thing that I shared earlier in another panel is we have a mobile first strategy. Our number one imperative, and investment goes into AI, and we will build on our digital platform. And also, we transform ourselves from a very functional digital app into a bank. As a platform kind of thing, we have open API capabilities. We could have, multimedia capabilities, we can host live programmes, with the customer twice a week, and also we connect with our customers using the chat function. Also we're trying to put everything into our mobile apps. We see virtual is very good competition, we embraced that competition, but we cannot just focus on ourselves, we need to open up. And I think, in the past few years, I think the transformation has given us some traction, and I think that change agent right now is becoming a streamlined organisation towards a better future. I think this is my final comment on that.

BP: We thank all our heads are retail and digital and well for your insight. And there are so many different initiatives and different priorities that you're working on. And I think one of the common themes that we are hearing is open collaboration, the use of API's, you know, that there is the bank's role in providing total solutions, and the bank doesn't have to do everything, you know, they are partners out there that you can partner with, and how you can create from that innovative solutions. Now, we also want to hear from our research team. Today, we're happy that our advisor Richard Hartung, is going to do the briefing for us the key findings from the excellence program for us, as well as the findings from the global digital new bank ranking, so very happy to have just completed that, that research. So I'm looking forward to hearing, Richard bring us some insight from this. Richard.

Richard Hartung (RH): Thank you very much. So we're going to look at the transition post pandemic that was referred to in some of the discussions just now and in Sri Lanka and other countries. And look at what's happening with innovation and performance. And look at some of what what has come in from some of the research on the rewards program as well.

So if we look at what happened with the the submissions for awards, it gives us an insight into what are some of the key areas that people are looking at. So if we look at 2015 Compared to 2018, compared to Only 22 Several things stand out. One is that obviously digital mobile is a key part of what everyone is looking at. SME has moved way up in the rankings it was in there before. But it's now the top area that people are focusing on for the awards. And there's a lot of innovation happening in this space. Credit cards, surprisingly, are making a comeback and then becoming more important as well. But it's also credit cards in a different format. Some of the key trends are the disintermediation in all fields of retail banking, as more fintechs come in, the economics are changing. We heard about that in the payment session earlier. And people are looking at monetization of those digital solutions, whereas it was just providing a digital solution in the past. Now it is how do we turn that into money, and interest, I'll provide some examples of ICCI with a personalization turning that into monetization.

The top 10 retail banks in the region and we'll be going on to awards fairly soon are listed here. What I think is important about this, along with recognizing the really good initiatives at the various banks is if you're not in the top 10, how do you use this, it's nice to look at rankings. Well, if you're looking at who does really well on digital journey and digitization. I see ICICI bank was number one, if you're looking at who does really well on sales CTBC in Taiwan, and eastern bank in Taiwan do well. You know, risk is something this year we're especially looking at. And CTBC does this well on that also. So you can use this post to look at who did well, but also who can you learn from by looking at the top players next place, and then leveraging their success, their insights by looking at them more deeply. Some of the things that we've seen in this year's program all for us, the second generation digital only banks have consolidated their position. So going from just a basic bank to you know, for example, in China, we've got a bank, we bank, my bank, there's not your bank yet, but fairly soon, and integrates with WeChat pay or other solutions in there to offer broader, broader solutions. And then moving on next, we're looking forward. Not in this years yet. But looking into Metaverse of AI AR VR. The pandemic has moved digital along much faster than we might have expected. If we were looking at this in 2019. The NPL is moving along more slowly, I thought, wow, this is going to be a big game changer moving in much more slowly than we might have expected. There are some technologies that are coming in. Blockchain is fairly prevalent in the China market, not so much in the others yet, there is cryptography coming in. And so there's a new new solutions being developed faster, cheaper, using things like like blockchain, a wealth management we've heard from Taiwan and India as well as others know about the shift towards digital wealth especially for the next generation that is coming in and more important than the past, we're still needs to be managing risk, especially fraud risk, but other risks as well. And financial education and areas India, for example, has a joint venture with ADB focusing on women and overcoming the unbanked gap and enabling more people to do more with their personal finances.

Boon Ping earlier mentioned the bank quality consumer survey earlier, we looked at that to see which are the most recommended bank and retail banks in the Asia Pacific region. And we've selected one from most countries in the region here from Korea with Kakaobank, Indonesia, with BCA and others around the region. Some themes that came out of that is the hyper personalization that we heard about from several other banks. So it really is making the hyper personalized recommendations for each individual cloud infrastructure gives banks an opportunity to be more agile in what they're doing. Integrating lifestyle services we heard about that for example, the super out from South Africa earlier, others coming in and that's in some of the other markets as well on the Singapore with with DBS, and some others, and then additional products that are coming in as well that have led to these higher scores.

When we look at the digital only banks been paying has mentioned the 100 We'll start with Asia Pacific and look at the top 10 within the region. So a number of them are coming out of China we bank my banks meaning bank, doing really really well as digital only banks. On the left hand side, you'll notice that these top 10 are profitable from the calculations that we've been able to do. So there are a lot of others that we've heard are not profitable, but some of the ones that have been around longer. And I contend bank has been around for quite a while Kakaobank has taken massive market share in Korea over the past five years. So there has been growth within that. And then if you're looking to do something on digital banking, now, who are the successful ones? Well, if you're looking at balance sheet that we bank on, and also on the financials, if you're looking at successful funding, Kakaobank has done some really good things around that. So we can use this to look at what are the success factors, but also in particular areas that we want to focus on next place. If we look at globally, we bank is number one globally, and they've done a lot of integration with WeChat pay, for example, and integration with some other services. Ally Bank in the US is is number two globally. And they're focusing on Gen Z, and also the millennials as they bring in new services. ING. In both Germany and Netherlands, they also do relatively well, in Australia, for example, then they're not in the top 10 has been digital for quite a while. And they are profitable in both of those markets. So another good example of what some of the banks are doing, but this look at the global side. And again, we can use that to look at who takes care of the customer best, who does better on the financials, who does better on the balance sheet, if we want to run a better bank, ourselves, and some excellent examples for any of the new digital banks within the region to gain some insights from the leaders next place.

So if we look at some of the findings from those top 100, on the aggregated assets, so the top 100 are over $2 trillion. So they're not just the point 1% Or something like that they're turning into big financial institutions, as we heard earlier, most of them are not profitable. Yeah, 29, that's, that's a reasonable number, that means 71 are not profitable. So it takes a while to turn that around. If they're going to do it. They I have been able to raise capital, even over the past couple of years, which have been quite challenging. What we've seen in terms of the transition the financial institutions go through is it shifts from a highly commoditized business where you're just doing payments, or you're just doing deposits or something like that, and then gradually shifting along. And that initial success that some banks look at is really a tenuous victory, because they need to move it to the next level. And the financial institutions that are digital have had real challenges moving into more than one market. Indonesia is one of the hottest Digital Banking Markets. You've got, you know, financial institutions with Gojek ground and see, for example, that are changing the market. You've got OVO in there, doing some things around Wealth Management at a very, very micro scale. And then Line bank, collaborating with Kasikornbank, as we heard earlier, is the leading digital only bank in Southeast Asia next place.

SME is at the top of our list this year, that was something people are focusing on. And we saw several trends within that. The financial institutions are looking more at the sustainability of SMEs. So how can they help them succeed? in difficult times, it's looking about lending opportunities or managing cash better offering new services. There's digitization of workflow processes behind the scenes to make the processing faster and better. For the SMEs. marketplaces are progressing well. ICICI in India launched a new marketplace for SMEs this year, for example, some of the banks in Southeast Asia now RHB, for example, or you will be about marketplaces for a while. And then the onboarding processes become easier and faster. So it's no longer the two to three days, it's matter now measured in hours or minutes. Again, if we're looking at this, it's nice to see who's number one through 10. What we're also looking at is who's put the best models together. So if we're looking at risks, we're looking at potential esign. If we're looking at process and automation, it may be OCBC bank in Singapore, and each of us can learn from that for our SME business next place. Some of the financial institutions that we like both on the SME side and the retail sign ping on bank has streamlined its application process. For SMEs in particular leverage Big Data and AI and the digital active ratio is the highest among its peers on the retail side, your ICIC bank, mobile pay links multiple accounts together. And that hyper personalized experience that we heard about earlier as well enables customers to get what they actually need, and learn what they actually need to enhance their financial life.

Then finally, some of the challenges that we look at challenges as well as opportunity, there is sustained growth of alternative lenders. So if we go to Indonesia, for example, some of the fastest growth is within the fintechs that are lending. Now. BNPL has come up with some some new models in Australia, in Southeast Asia and other markets. So there is new competition. But there's also opportunity when banks were either able to do partnerships, and we've heard about a partnership, for example, Kasikorn in line today, and some different things that financial institutions can do. But there is greater competition than before. The maturing of artificial intelligence and blockchain is enabling more personalised, efficient services, digital currencies, we talked about in the payments section with CBDCs. And between the digital banks that are all bringing in deposits, that take away some of the cheaper deposits that the FIS have, and some of the changes that will come with CBDC is it's something we need to be aware of and prepare for. And finally, ESG considerations should be caught are coming in this week, for example, Citibank in the US launched green products for its consumers, and they can invest in, of course, city managed bonds that are providing financing. Others have done similar sorts of things. So it's relatively new, but consumers are pressing for a green solutions, eco friendly ESG solutions, regulators are putting on the pressure as well. And there are opportunities for leaders to take advantage of ESG or for the laggards to fall behind because of it. So tremendous opportunities looking at digitisation, mobile personalisation and some of the key trends going forward. Thank you very much.

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