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Tripliii attended NextBank Asia, a 2-day event in Singapore focused on innovation and building the bank of the future. Pitched to challenge the status quo, the event had the additional spark of hosting Innotribe Asia (more on this in next post), showcasing how the FinTech market is hotting up and not just in Silicon Valley.
The banker’s dilemma
By the time we reached the mid-morning break, the organisers delivering on their promise to offer the best event-coffee possible (Jimmy Monkey Café, ‘cause Singapore likes its coffee), J.P. Nichols’ presentation was leading some of the attendees to discuss a Christensen moment for the industry. Most by now will know of the Innovator’s Dilemma and the concept of disruptive innovation. So let’s put some of his questions to the test:
J.P. Nichols’ presentation also described that an organization is either focused on customer engagement, product innovation or infrastructure management. I am not sure he went as far as suggesting this but I would certainly agree that banks today are infrastructure managers. The industry has built complex systems to process large volumes of transactions, where running the bank (keeping the lights switched on in the creaking legacy infrastructure and dealing with compliance) absorbs 85% of its resources. Products have evolved and become more complex but essentially are the same principle since the first concept of interest and Letters of Credit were issued, whilst a multi-channel environment has fragmented the view of the customer and stifled engagement.
If we go back to the principles laid out by Christensen, then the only solution for the industry is to launch a liferaft. A business rarely dies overnight, so to survive disruption banks need to set up small spin-off companies that can function as start-ups, away from head-office influence. Low! Could this explain the rush to open incubators for FinTech start-ups? I think perhaps the Innovator’s Dilemma was on Mr Francisco González bedside table at University? If indeed I do not agree that the Amazons, Googles, Ebays and Apples of this world want to become a bank (they may have bank licenses, but who would want to be regulated like a bank?) I do agree that the financial services ecosystem is changing dramatically as a consequence of a consequence of the Internet.
The brilliant but unassuming Professor Jonathan Briggs (Hyper Island) stated we are at the beginning of the beginning of the Internet. Indeed. If only we could have discussed this point further…Certainly for me the consequences of the Internet are only now starting to appear, with much of the iceberg still to rise out of the water. The deep consequence of the Internet is not the way it rewires our brain but how it creates a new society based on sharing or collaboration. It is a forum for open innovation, uncontrolled and unbridled. That is why crowdfunding, crowdlending are not fads but the first business elaboration of a collaborative culture.
Beautiful Basics
So if our industry is currently about infrastructure management, how, other than rushing for lifejackets and rafts, can we move towards better customer engagement? If the danger is death by overdesign, then perhaps we need to simplify banking? Beautiful Basics was discussed by both Pf Jonathan Briggs and Edrick Ho (Head of Delivery Channels and Platforms, Asia Pacific) from ANZ during a panel discussion. This to me is reassuring, as I get increasingly nervous about the impact of the plethora of mobile applications on customer engagement and in particular core systems. Before we rush towards more complexity lets first do the basics well.
The theme Beautiful Basics continued in a number of bank case studies and other presentations:
For me this extends to the multi-channel network. Not everybody needs to offer all channels to all, as few banks can possibly deliver an omni-channel strategy well.
The case for innovation in Asia
Innovation needs to focus on those “liferafts” and especially in Asia Pacific were the total number of mobiles users reaches over 2.5bn, the case for mobile first strategies is strong. This goes beyond the trend for mobile money users, who account for 59.2 million in the East Asia & Pacific and South Asia regions. The key areas for growth, as well as ensuring financial inclusion, are:
We are seeing real disruption in the provision of payments services as the networks open up on the edges, but the trend towards a collective economy (internet based or not) is also disrupting the provision of financial services at large.
In the short term, banks need to focus on harnessing their big data (focusing on contextual analysis) as suggested by Neil Cross of DBS and Duena Blomstrom of Meniga (who suggests finally to move to PFM driven marketing although I would recommend to get the basics right first).
Longer term, banks need to explore the collective economy to find new ways of engaging and serving customers. In particular, I believe that new models in the SME lending sector will be a main focus for competition from banks and non-banks. The Asia Pacific region has to date few players (Crowdonomics is more Kickstarter than FundingCircle) but it presents a real opportunity. Perhaps then banks will be less infrastructure managers and more product innovators.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Hassan Zebdeh Financial Crime Advisor at Eastnets
08 October
Jelle Van Schaick Head of Marketing at Intergiro
07 October
Kuldeep Shrimali Consulting Partner at Tata Consultancy Services
Nikunj Gundaniya Product manager at Digipay.guru
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