1) What are the current key challenges that businesses, especially Financial Institutions, are facing?
“How do we quickly, and aggressively, reinvent our business model?” This is the question all businesses, not just financial institutions, are facing. Sachin observes that this problem is being studied under two main lenses: First, a rapid upgrading of digital services due to the pandemic. Second, the mobility and abundance of data.
For the first point, one must bear in mind that the COVID-19 pandemic has placed a chokehold on the aspects of organisations comprising in-person services. These organisations are thus racing to migrate their services online, while preserving the quality of personal touch. Sachin shares more details under the second interview question
Second, data has evolved to become more mobile, because the majority of the workforce is working-from-home (WFH). While data security has always been an issue on the radar, it is increasingly in focus today. Home and public networks are very vulnerable to cyber security attacks, and could easily be compromised — Cyber attackers could easily capitalise on these gaps in security to retrieve confidential information. Organisations are thus pressured to provide the same level of trust to customers using new processes and the latest technologies.
Data, however, proves to be the proverbial double-edged sword, and there are opportunities presented there, which will be shared under the third interview question
2) How are you achieving “contactless” and “social distancing” into your (banking) business models?
sA key example that Sachin sees as symptomatic of the race between organisations to maintain their competitive edge is the rapid development of Artificial Intelligence (AI) technology. AI technology, capable of replicating realistic conversations in the form of Chatbots and Videobots, is proving increasingly able to complement the role of, for example, Relationship Managers (RMs) in financial institutions. Wherever any conversation is required, institutions are now aiming to seamlessly integrate those interactions with AI chat machines.
The simple task of understanding language is a feat of human intelligence. We take for granted tasks such as detecting emotion in language, while it is near impossible for machines to naturally do so. As such, organisations are training AI to compensate using incredibly high speeds of processing. For example, the phrase “Thank You” could be understood in two ways: positively, signalling gratitude; or negatively, signalling formality and perhaps even sarcasm. To decide between the two, the AI chat bot must take into account factors like how fast the customer types when replying a chat bot (a faster speed of typing signals agitation or annoyance.)
To take the element of personal touch one step further, some organisations have already begun rolling out video bots. By representing the organisations brand ambassador as a digital avatar on screen, the video bot could almost “interact” with the customer. Ask the digital avatar questions like “what is the interest rate for my home loan?” and you might just have your favourite movie star answering your burning questions. Sachin believes that in the coming weeks and months, there will be more of such advancements to introduce emotional interaction into automated online engagements.
3) Since both working professionals and students are spending more time “at home”, online communication is increasing rapidly, and I think the “data” is inevitably increasing as a result. For businesses all around the globe, what business opportunities do you think these changes can translate into?
You might have heard the phrase “data is the new oil”. Because of increased rates of WFH, online communications have drastically increased. While this has created an opportunity, we must be mindful that it also creates a challenge that cannot be overlooked: how do we best capture and interpret data?
To truly understand the gravity of our situation, take a good look at this statistic:
More than 90% of data has been created in the last 2 years.
This statistic has been true for 30 years. Take a moment to wrap your head around that. The pace at which data is being created is phenomenally exponential, and innovators are clamouring to manage these overflowing amounts of data. In the market today, there are many algorithms and models which help organisations to manage data and generate insights from it. Current technologies are better able to push historical data in order to predict trends from correlated data. This is crucial in helping organisations interpret data more efficiently.
In crisis, thus, comes a large market opportunity. The more data we acquire, the more we can form meaningful insights by engaging the right sets of tools and techniques. The clearest example is this: Many people are WFH. Organisations have analysed and listened to the data to find out how their employees are feeling at home, and to question whether they need any type of support. Based on this insight, many businesses have provided financial support to employees, enabling them to set up work stations. People who are emotionally stressed from WFH are also better supported through adjustments in company policy. Clearly, data has the potential to inform policy decisions and makes businesses better.
The situation now is this: COVID-19 has forced businesses to rapidly reinvent, or lose their competitive edge quickly. Reinvention cannot be made without an active digital transformation, and the need to reinvent has only gotten more pressing.
To that end, Fintech start-ups’ malleable and agile “plug-n-play” skillset is attracting even more attention after the onset of the pandemic. Businesses are increasingly interested in co-existing and co-creating products that provide that decisive edge over their competitors technologically.
It is interesting to note, however, that innovation has always been on the radar for these businesses. Banks have always been cognisant of the need to adapt to the changing global climate. The advent of Virtual Banking in Hong Kong and Singapore is a clear example that demonstrates innovation even before COVID-19. Multiple companies ranging from Ridesharing companies “Grab” and Telco “Singtel” to Chinese Firm “ByteDance” are vying for the virtual bank license.
After COVID-19, however, Sachin observes a much greater impetus towards digital innovation. Companies are hungry for technology that will enable them to do business without compromising social distancing, while maintaining, if not enhancing, the quality of their services. He notes that this is evidently embodied in a study showing that the coronavirus has driven a massive 72% rise in the use of fintech apps in Europe.
It is clear that established institutions see the need to co-create with quick-footed Fintech Start-ups to rapidly innovate, and that Fintech is in a very good position to excel in the near future.
After the interview with Sachin, it seems that one thing is clear: the race to stay ahead is very much shaped by how we use technology and data. Companies – Big banks and small start-ups alike – have always been looking to leverage on the advantages that technology provides. However, their sense of urgency has increased tremendously due to the pandemic and the changes it necessitates, and if you snooze on this race, you will lose it.
Contributor: Sachin Tonk
Director Data & Privacy Operations,
Standard Chartered Bank
Author: Rio Tang
Innovation Analyst, ExpertConnect Asia