Tell us a little bit about yourself, and how you got into the banking industry.
During my school days, I was a student of commerce & finance stream, while studying for ICWAI course. I heard about computers in the early 90s and felt this is something that might redefine how business & life will be conducted in the future. So I joined a computer programming course, and that’s how my journey in the IT sector started. Next year, I will be completing 25 years in this sector.
During my early career, I learnt many 3GL languages and many other software applications. I also even learnt how to build personal computers. Later, I worked as ERP consultant with a Japanese company and implemented that ERP system in many business units around India.
During later years of my career, I served many large corporations such as Xerox, Honda, GE Capital, Orix Finance, National Housing Bank, Axis Capital & Deutsche Bank. Currently, I am working at DBS Bank, Singapore.
Can you tell us a little more about your job at DBS?
I essentially manage Bank’s technology product implementation programs across Asia region while collaborating with many business, operation & technology units in addition to technology companies and other partners. Currently, I am part of a core banking systems transformation program for a regional DBS entity.
What are some of the interesting and exciting trends in the banking space? And why do those trends excite you the most?
Over the last five years, a lot of digital companies have democratized information. Companies like Facebook have shown that information, transactions and data can be scaled at a global level at a very low cost while still being profitable. They have been collating and collecting data across different countries and creating many data products around aggregate datasets.
Money is in its purest form is also just a data point and therefore it is now being moved from paper form to mobile money and digital money form. Money enables commerce/ financial transactions across business & individuals just like text/picture/audio/ videos enables communication using various channels. Companies like Amazon, Facebook, and PayPal have shown how to build successful business models using digital infrastructure around information. Banking industry is an attractive place for these tech companies to extend their business reach next.
PayPal built payment service that removed friction from online commerce globally. Now it has 180+ million user base with multi-billion dollars annual revenues. PayPal motivated other players to enter the financial services industry & target many other areas of financial services such as banking, wealth mgmt., and lending, insurance, trading & capital markets. These players are quite innovative in their solutions & business models and they are growing at a good pace.
You talked about digital payment trends. Other than that what are the traditional banking practices you would like to see evolve?
Under the Banking umbrella, there are many diverse services like deposits mgmt., lending, wealth management, corporate banking, global transaction services, credit cards, merchant banking, trading & investment banking. Recently many new players have emerged who have built services that act as a substitute or an alternative to a regular service offered by banks.
If you take lending, there are lending services offered by other companies using crowdfunding & P2P business models. They are only going to grow further as more people become aware of available options & get used to their superior service experience. Robo Advisor companies’ solution are enabling financial advisors to serve more customers and also to grow business with existing customers. KYC, Credit Scoring, Cyber Security are few other areas where innovative new solutions are being developed using Bio-metric authentication, Mobile, Artificial Intelligence Big Data & Social Analytics, Cloud services and Machine learning technologies.
How are Fintech changing the banking industry?
For the last three years, I have been focusing a lot on Fintech space. These startup companies are building solutions for a business/ consumer problem using new innovative approach & agile methods improvising solutions by each iteration. Some Fintech firms are building products and services in partnership with banks & insurance companies (B2B) while many firms are directly into the consumer market (B2C). Some Fintech firms building white label solutions to remove friction in government services delivery to the citizens.
Lots of angel investors, private equity and venture capital firms are funding these startups companies at different business stages. Due to Fintech firms specific target market focused solutions & ability to iterate solutions fast, these companies are getting a lot of investments. Last year APAC region Fintech firms attracted $4 billion plus in investments and this continue to be a growing trend in 2016 as well.
Banking leaders are definitely keeping an eye on what is happening in the Fintech industry. Few banks are also working closely with Fintech firms. Every bank will have its own way on how they engage with Fintech firms.
DBS Bank has signed cross-referral agreements with two homegrown peer-to-peer (P2P) lending platforms, Funding Societies and MoolahSense. Bank also noted that historically, small businesses without audited accounts and personal income statements tend to be underserved as they find it difficult to credit-assess them, preferring instead to lend to companies that can provide collateral and have an established track record and at least two years of audited accounts. Bank has collaborated with Hong Kong-based Fintech firm AMP Credit Technologies earlier this year on a new way of making credit assessments for small business loans. This is one example of how banks are partnering with Fintech firms.
Banks are partnering with Fintech firms in specific customer segments where they see opportunity to grow business together or build a competence for future innovative solutions.
When we say Fintech, I am not just talking about startups. Because for example, even companies like Apple Pay are considered as Fintech. Do banks see them as threats or as partners?
Banks see them as partners because they are not offering banking services directly to consumers.
Apply Pay, Samsung Pay, Google Android Pay, PayPal, Masterpass, Visa checkout all these widely used solutions are great digital channels which need to be leveraged for distributing financial services to consumers globally. Some firms such as Amazon are building credit solutions for their merchants/ customers which is a competing financial service to what banks offers to same customer base.
If you look at the past 20 years, banks have not been very active in the consumer payments business. Banks should definitely partner with these companies because through these channels they can, not only deliver “fund transfer” services, but also deliver other banking services. They can engage with their customers more effectively.
For example, we have a mobile app for DBS. A person who uses this mobile app can integrate it with his/her Apple Watch. Even using our mobile wallet, PayLah, you can transfer money to your friends. Mobile wallet app is integrated with few e-commerce sites for making payments. You can buy things from the e-commerce store and pay via PayLah App.
A bank collects lots and lots of data from consumers. How can you derive insights about each and every consumer, and deliver an ultra-personalized experience to them?
I think with mobile apps it is very easy. Even before mobiles… let’s say somebody uses DBS debit card in a mall. The moment that person uses our Bank’s card in a POS/ATM machine, instantly we can send him the best offer in the mall available on his card. In this way, we help our partner merchants to grow their business and also deliver relevant offers to our customers.
With the mobile apps or based on card usage, we can figure out whether the customer is travelling overseas, and inform him about all the precautions he needs to take including relevant travel insurance policies. It is easier to figure out the needs of a customer based on context.
After analysing his historical data, we know what sort of offers will be relevant to him in this context. All the merchants who are using bank payment services will benefit through bank loyalty programs.
I recently spoke to Ron Shevlin and even he said that if banks want to deliver a personal experience, then they should develop and deploy mobile apps.
It is not just about the mobile app. It is about understanding customer’s lives closely. Before that you should know who the customer is, and what he does. You should have that insight. Customizing Mobile Apps look & functions based on customer preferences or most used functions is just one of the feature to improve customer experience. Access to Mobile device sensors & apps data can reveal a lot about customer daily lives to identify opportunities for show up relevant financial services. Scenario based fully integrated banking is possible thru mobile apps & other digital channels.
What exactly is “Blockchain” and where is it implemented?
There is a lot of hype about block chain. Satoshi, inventor of the bitcoin protocol, had the vision to build a currency that is not dependent on the government or any central bank/ organisation.
Currency is nothing but a legal tender. The currency is controlled by the government of a country. But, when the government is in trouble, the value of the currency drastically comes down. Satoshi vision was to create a system where people can actually lock in trust and remove any possibility of double spend. Bitcoin was introduced as a vehicle carrying transaction value across Bitcoin P2P network. As more and more people join in, the value of the cryptocurrency value should get stabilized.
Bitcoin has already crossed a billion-dollar market now, probably one of the top five payment channels. However, it is not controlled by any government. There are other implications like money laundering problems, anonymity (you don’t know who is making the payment). Bitcoin network provides pseudonymity however transactions are completely traceable to the addresses.
The only thing you need is to know the person’s linkage to the address which he/she is using. Each person is given a digital address using which you can trace the person’s activity. The technology on which the bitcoin is built is mathematically/ cryptographically secure. The system behind the bitcoin is called block chain technology.
Actually, it is a distributed decentralized technology. The prime use of this technology is to transfer value. The digital value can represent any currency form, gold form or document titles … it can be in any form. Currently, bitcoin is the biggest Blockchain network. Ethereum another Blockchain network offering smart contract implementation platform is also growing fast.
There are a lot of variations available in block chain right now. The systems that banks are currently using to transfer money is highly complicated and cost intensive. It is also very difficult to maintain these systems and scalability is limited. Now, banks are building prototypes using Blockchain and experimenting with different versions of Blockchains like private Blockchain, public Blockchain and permission based Blockchain solutions.
Tell us about an interesting project you are working on right now.
One area that is close to my heart is financial inclusion. Recently, I was speaking in a financial inclusion summit in a cards & payments conference. I often spent time with Fintech startup firms who are building digital financial products which will enable consumers to access more products and financial services through their mobile, be it savings products, insurance, or B2B services for merchants using new business models such as P2P, Shared economy etc. . This is a very interesting area that I am focusing on right now.
How can banks use Internet of Things (IOT) to improve customer experience and market share?
Probably it is too early to assess impact on the banking industry. But there is a lot of work happening in this space. There are a lot of IOT startups in Hong Kong. IOT is all about devices talking to each other. I believe Blockchain will be a big enabler here. For instance, when two devices are talking to each other, how would you know that nobody is hacking into those things?
You can even sell your car through block chain. If your car’s IOT control device has been encrypted to an address in block chain, essentially your car key, which is digital, you can sell the ownership of that key. You don’t need a physical key to sell your car, as this is a digital key. Once you sell your car on block chain, another guy with access to the digital key can access the car.
This is a simple example of IOT which can be used financing new deal. But, the role of IOT in banking is still in a very nascent stage.