We still have many interesting topics from Singapore Fintech Festival 2018. Techsauce is only Thai media that has a chance to discuss the trend of fintech in 2019 with some of the world-class speakers.
This time we got the opportunity from Mr. Pierre A. Legrand, Digital Services Leader & Chief Technologist, South East Asia Consulting. Pierre discussed shared with us his expertise in technology and financial services.
Mr.Legrand: There are a number of trends that PwC is looking at very closely and monitoring, not just the ones that are happening “now” within the first year or 2 years, but we tend to look at the ones that are maybe about 3 to 4 years away. There are a few things that we are looking at specifically in the financial services area. The first thing we are looking at is what we call hyper-personalisation.
Typically, fintech and financial services organisations tend to group customers into personas, so they tend to say there is a segment of individuals that operates in a very specific way or engage in customer journeys that drive the fintech response, which is the technology that gets responded to. But, what we are observing is individuals don’t get grouped or don’t want to be grouped into personas. In fact, the more financial services can deliver a highly personalised experience, the more financial services organisations are going to capture the hearts and minds of customers.
So if I’m out, and you know that I’m walking down a street or area within Bangkok, and you also know that I’m looking for a home, my spending capacity, my savings, and what type of mortgage I can get, then I should be able to receive a messages to me to say, “Pierre, you are in this neighbourhood, there are 5 houses that are available that you can get a mortgage for. You should go have a look while you are in the area.”
Next, if I am at a department store, in electronics, there are messages that gets sent to me that says, “Pierre, your credit limit may be low, but we know that you are in a store. We can provide you with an increase credit limit or a new card.” Then the new card could potentially be a card that understands my spending pattern. And in theory I could almost construct your own card. So we see a future where products and services are dynamically created around the individual's usage of banking services, their positioning, location, likes, dislikes and what they do. That is hyper-personalisation.
The next trend that is going to be there is not just for the customer, but for the internal employee working for the financial services. We call this trend the bionic workforce. What does this mean? We feel that there is a mixture between human and machine, that is going to allow humans the ability in financial services to do work even faster. There is a lot of automation happening today by software and machines that do parts of people’s jobs for them infinitely faster.
Today, there are people that do reconciliation, settlements, and manual confirmations, where software and robots are doing this now. But what happens when those activities can be done by automation, but also the next level of activities, from the handling of data, processing of spreadsheets and presentations, preparing investment strategies, moving up the ladder in terms of what you can automate.
You can automate my thinking, that allows me to develop skills that focus on this type of delivery of hyper-personalisation, because when I start focusing on how to create dynamic products and go to customers, as supposed to work on parts of my job that are highly administrative. The next generation of workforce is going to be machine enhanced. I will have my AI and software that I take with me to every job, and each job is going to automate certain activities.
An example can be provided for this interview - imagine if you could automatically transcribe everything that I say into a fully edited document, ready for someone to review. You don’t even have to send it, it actually knows it’s done, it knows your preferences, and it automatically sends it for editing. The same thing is happening in the fintech space. A lot of the internal activities are being automated, as a result, there is a new operating model that is being put in place that these companies are focusing on, creating more data scientists, analytics, and becoming data-driven. That is the future when you have a workforce that is machine-enhanced.
It is now moving towards the guardrails of products, the product will get created dynamically. It is the constructs of the products and where the product stops, so if it is deposited, what are the limits of the interest that you can offer. There is work to be done there, but machines will determine what I get, versus what you get, based on your personalised preferences. Imagine a future where you create your own bank, maybe one account from Bank A, a card from Bank B, maybe you get a mortgage from Bank C. But all these are constructed without you making one phone call, it is all done for you, this is hyper-personalisation. It is the construction of banking products and assets in a way that is delivered for your personal preferences.
So if you think about the operating model in the back, it is now focused very much on relationships, so we have to move people from doing common tasks in the back office, to very much focused on relationships, understanding of customer assessment of data. This is where the future is going, but to do that, you need to be ultra fast because the customer thinks quickly, so you need to have tools and technology that allow you to be faster, better and stronger. That is the bionic workforce.
Data visualization is another big emerging trend. To process all of this data and make insightful decisions, the data needs to be presented in a way that is easy to make a decision. If you have a lot of data and you have to take weeks to make a decision, you can’t provide customers with a hyper personalised service. So how do you make decisions quickly? How do you visualise? So we think there is going to be a need for what we call advance visualisation technology, that can display very complex data very quickly.
One of the things that we are working on is augmented reality, to be able to be at any location at any time, to provide advanced visual representation of data in simple ways that you can understand so you don’t have to be in the office to access this data, you can be at home, on the road or whereever We are also working with technologies such as augmented reality and virtual reality that can create virtual meaning places, so that you can understand and get quick access to information.
Mr.Legrand: The trends are going to be about enhancing computing power, and a lot of companies are looking to the cloud to achieve this. As the quantity of data is now so large, to be able to process it efficiently, a lot of companies will be focusing on innovating artificial intelligence and machine learning and what decisions need to be made from there.
From our perspective, the trend that we see is that to deliver hyper-personalisation, we have to combine different data sources, some will be internal bank data, but some of them will be external bank information, like Google, which captures location information. So the ability to combine location plus financial advice is very important. That’s a big trend. From Linkedin, from Google, from your location, from your smartphone. To combine all of these data points.
Augmented reality will have a very huge positioning as well, and visualisation. When companies talk about AI, there is the back and front of AI. Artificial intelligence at the computational level is what most companies are doing today. But we do know that your phone has AI, so that is a front end to AI. What we are currently working on is creating digital human interfaces, so you can assign an actual physical look to the AI so that you can engage with the AI. So imagine going to a bank and speaking to a teller that looks like a human but is actually artificial intelligence, so we actually have this working here in Singapore at the PwC experience.
We have an Experience Centre, where we actually have that working, a digital human. So really this is about visualisation of AI and potentially changing the way we bank. We may go banking into this branch, and we see a digital human. Or we go to take money out from the ATM without pressing a button, so you speak to a digital human, and you don’t touch anything, it facially recognises you. This will change how customers interact with the bank.
We have to remember that banking is about great customer experiences. So every time I think about technology, I think about how are we going to make the customer feel happy, how are we going to increase the financial value of the customer, make them wealthier, And how do we use technology to do that? We want them to bank and do more financial service transactions. To do that, they need to be engaged. We need to engage with customers in a hyper-personalised way that makes sense. That may make sense to me but it may not make sense to someone over 65 years old, he needs to come to the branch, but that’s hyper-personalised because it works for him.
We spoke to someone who has an account with an online-only bank in Australia, and we asked her, “Do you love your bank?” She said she loved her bank, so we asked her when was the last time she spoke to someone from that bank, and she said 5 years ago. So everyone has a different personal way of dealing with their money. The new generation is coming, and they have a very socially engaged way of communicating - snapchat, instagram, ipads. This next generation is going to do banking in a radically different way than we did. I already bank radically different from my father. When my father goes to the bank, he would speak to the branch manager. I don’t even know who my branch manager is. This is the way technology is going, the bank of the future is not a bank, the bank of the future is an experience.
The bank of the future is not a bank, the bank of the future is an experience.
KYC (Know Your Customer) is very important, so as you know in Thailand there is the national identification system, the NDID, so that is going to come into full effect in this November. So that is going to be an important factor for KYC, but also biometrics, facial recognition, other identification verification means will be very pervasive in the market.
The customer will want an interaction, if you cannot find a way to convert certain customers quickly, open an account, get a credit card, you are not delivering an experience that they want. With today’s modern technology, someone should be able to get a credit card instantly, provisioned to their phone.. Why can’t a credit card be automatically delivered to the phone with minimum credit or some low risk credit until a physical card, if any, arrives? You sign the application and ask for $50,000. They say we are going to deliver you a virtual card and put $5000 right now. Low risk because it knows me. Hyper-personalisation says “Pierre I know how much you have in your deposit account, I know your spending patterns because all your transactions come through. We are comfortable with the $5000. It’s an amount we can give you without any underwriting or verification.”
If customers do want this, Fintech will make the experiences really. People will want to be able to create their own servicing experience, Right now I have an online store that I kind of like, that has some of the clothes that I like, so now I have an app for clothes shopping which has all my cool sneakers, but they don’t have all of them all the time. Another other shopping apps as well. I would actually just want one store, Pierre Store, without the need for all the extra clothes that the app presents, because some of those other customers like I don’t like. Same with banking. I have a specific way I want to bank, so I think that’s where fintech is going, trying to leverage big data to provide hyper-personalisation.
I think these types of services can work very well in Thailand, that market is very mature, very smartphone oriented, there is a lot of people on social apps, and now everyone uses Line. And front payment, you see that is disrupting with LinePay. QR codes are very pervasive in the country. I think Thailand is a very digitally oriented, and the rest of the Asian market is moving that way.
Mr.Legrand: There may be a key reason why companies are doing that; because they have figured out that delivering personal service, hyper-personalised services - are more important than delivering products. The reason why they may be coming into this space is because they have a customer, and they know something about the customer, they want to deliver a full end-to-end service, because what they argue is that their customers are demanding this, they stay on my platform because we understand them. They are saying “If we can continue to understand them and provide them with bank services, then why don’t we extend certain financial services. Maybe services that don’t need to be regulated, like handling payments is an example. The customer wants to be able to communicate with their bank, or with certain financial transactions without leaving their social platform”.
So banks may need to decide – are they a bank which provides financial services products, or is the bank a technology services company?
But the original business model was: You were engaging with customers, and you are providing services, but what if a bank doesn’t do that in the next 5 years? What if the bank says “we’re just putting products, and anyone can just come to get the products, via technology channels or API’s. One option is to become a product factory. Or they decide that they are a technology company that wants to deliver very specialised services to customers, and products are less important than experience. So those are the questions the industry may be asking very soon.
Mr.Legrand: Systems that harvest the bank account will always exist. Or some type of deposit or lending mechanism. What’s changing radically is who’s interfacing between the customer and the account. In the past, it was 100% bank driven, now maybe a lot of transactions are happening via wallets so this is a huge difference.
Mr.Legrand: I think there are two things, smartphone penetration and payment infrastructure. Thailand has a high degree of smartphone penetration - there is already good knowledge skills and experience of using virtual payment technology such as Line Pay.
Most of the places I visit in Thailand now are cashless, it’s already in the infrastructure. New places that are coming are now taking cashless payment, where you want to get to is that the average street vendors take cashless payment. We are talking about payments that are small micropayments, cashless. If you are truly cashless, that’s where you will get to, but that takes a while.
Mr.Legrand: I don’t share specific information, but I know that I’m working with a number of banks across our region at the moment that are treating these topics as a priority. The leadership are exploring how to deliver a more personalized experience to their customers. Many are also prioritising data and analytics, creating centers of excellence, where there are dedicated teams in the businesses that are focused on the data and how to use it to make services more personal.