Banks should stop applying 'digital lipstick'
Most of the world’s big banks are dinosaurs and more intent on applying "digital lipstick" with internet and mobile offerings than making the shift to become fully digital.
Yet, in order to grow in the evolving digital world, banks have to achieve that status or risk being left out in the cold with an ever-diminishing number of non-digital customers, Olivier Crespin, the head of digital at Singapore-based DBS Bank said at the RFi Group's Digital Banking Conference in Melbourne yesterday.
"I would say a few banks are fully digital - about ten per cent of the world’s lenders," he said, listing Spain’s BBVA and First Capital in the US as fully-fledged members of that particular club.
To be fair, Crespin acknowledged that most other banks - including DBS are wearing some "digital lipstick" as they seek to get back-end processes sorted.
However, he argued there are still some dinosaurs who begrudge being forced to change. This hardcore group is challenged by increasingly, digitally-savvy customers who want their banks to evolve quickly.
In Crespin’s view, they have the wrong mindset. "There is a lack of urgency to tackle change at a time when their customers would rather make a trip to the dentist than go anywhere near a bank.”
"Management has to move really fast. Disruption will come very very fast - in fact within the next few years."
"I hear some people, including in Australia, still talking about cannibalisation. But operating in a digital world is not about the business they have; it's about the additional business they can achieve."
That means embracing digital thinking, enabling scalability, enhancing customer analytics and delivering services directly to customers at a time and place that suits them. If banks want to go fully digital, they need to design these strategies from the start.
"So digitally-ready banking solutions have to be designed from the ground up, they have to be deployed on cloud-like secure infrastructure and they have to harness evolving technology such as artificial intelligence to engage with thousands of customers simultaneously."
For him, being fully digital means refusing to offer any product that doesn't fit.
"We just don’t offer non-digital products. Sometimes that is difficult but we are quite strict about that principle."
Crespin should know all about it. DBS’ launch of India’s first mobile-only bank provided a test case for a branchless model that has also replaced humans with digital butlers like Apple’s Siri. Customers can just "tell" her what to do with their money, track expenses and make payments.
During his address, the DBS executive hit back at claims that banks can’t be disrupters.
Once again referencing the Indian business, the digital banking head told the conference that it is easier to conduct digital experiments in a country where the bank hadn't built up a large presence before incorporating them into the organisation
"With India leading the world in the digital identification of its citizens, the need for customers to go to banks is rapidly decreasing. Moreover, with more 200 million smartphones in the Indian market alone, demand for digital services can grow rapidly."
He spoke about Aadhaar - India's attempt to get India’s entire population into a national biometric identification scheme.
According to Crespin, the Aadhaar number and its associated biometric authentication capabilities are ushering in a whole new wave of possibilities.
"Customers’ financial transactions can also now be authorised digitally, which unleashes the possibility to perform financial transactions outside of traditional banking applications such as mobile and internet banking."
Crespin finished his address by pointing out that going fully digital is playing in a different league in that it demands massive internal change. "You’re constantly pushing boundaries, everything has to go fast and you really have to manage that."