The Digital Wave in Financial Institutions: Key Takeaways

AIBP Insights is a series of discussions held online which brings together a focus group of ASEAN stakeholders to discuss topics related to enterprise technology adoption in the region.

In recent years, blockchain, low/no code applications and cognitive technologies such as machine learning (ML), robotic process automation (RPA), and intelligent automation (IA), are increasingly being adopted by many regional financial institutions. In addition to automating processes, financial institutions are also looking to embrace these tools to accelerate innovation and fuel their digital transformation efforts.?

In the opening discussion for our 2022 AIBP Insights series, our panelists from Standard Chartered Bank, Kasikorn Banking-Technology Group, Roojai, Oracle, and Hitachi Asia, came together to discuss and share their perspectives on the applications of low/no code, building an ecosystem, and data monetisation, in the ASEAN financial institutions landscape.

YY Fong, Vice President, Industry Platform, kicked off the discussion by giving an overview of the changing banking and finance landscape and the growing significance of the digital surge in the industry. In AIBP’s annual enterprise innovation survey, leveraging business process automation (45.5%), experimenting with RPA, AI, ML and other cognitive technologies (43.2%), and unlocking enterprise data analytics (43.2%) are key priorities for ASEAN financial institutions in the next 2-4 years. (Find out more in AIBP’s 2021/22 ASEAN Enterprise Innovation Market Overview here ).

Low/No Code: The Benefits & Revisiting the Buy-Build Dilemma

In an earlier article we explored how low/no code can reshape and transform ASEAN business innovation : Low-code and no-code applications have exploded in popularity in recent years, owing to their ability to enable businesses - even those with minimal software development resources - to precisely construct the applications they require rather than relying on off-the-shelf software. Tetsuya Nakamura, Head of JP1, Digital Solution Platform, ICT Solution Business, Hitachi Asia, shared that low/no code applications can provide value to financial institutions as the application can allow them to be more effective, efficient and productive.

Low-Code has evolved from an "interesting" technology to a "must-have" technology for financial institutions seeking to improve their competitiveness. According to Dr. Monchai Lertsutthiwong, Principal Research Engineer, KLabs, Kasikorn Business-Technology Group, financial institutions must devise strategies to quickly adapt to new markets and technological realities. With low-code development, they can evolve quickly, stay relevant, and stay ahead of the competition. Barry Cheung, Senior Director, OCI Solutions, Modernise Apps, JAPAC, Oracle, agreed with Dr. Monchai, and added that while many financial institutions prioritise building their business differentiation, evaluating their speed-to-market can be critical, and low/no code platforms can help to accelerate this.

Vikram Gupta, Executive Director, Technology - Automation, Data Analytics & AI/ML, Standard Chartered Bank, stated that having the right structure is critical in addressing resistance among business end-users on technology adoption. Low/no code platforms necessitate strong team collaboration, particularly with Centres of Excellence or Business Champion units, which differs from traditional processes in which the technology team builds it and the business users consume it. Barry agreed with Vikram and added that because low/no code platforms can create prototypes in minutes, it is possible to gain end user acceptance in a more iterative manner.

Leveraging digital transformation to nail customer acquisition and retention

During the pandemic, digital technology adoptions have accelerated, and Roojai (an online motor insurance provider based in Thailand)’s Chief Marketing Officer, Federico Brandi, provided an example with their video claim processes. When there is a claim for a car accident, people usually have to wait for a surveyor to arrive at the scene. It can be a frustrating process because you have to explain where you are and wait for the person to arrive. As a result, for simpler cases, they employ a video claim inspection. Customers can use their app, and their agents can carry out the necessary processes via video - it only takes 10 minutes. Customer satisfaction is extremely high, with a net promoter score of 72 on claims last month (which is 9.2-9.3 out of 10). Customers are extremely pleased with their service, which reflects in their high customer retention.

From a technological standpoint, Vikram sees it as how they can deliver an ecosystem that can carry different capabilities in a safe and secure manner, which means providing solutions that are well integrated with data platforms so that their user journeys are data driven, where predictive capabilities and servicing capabilities (e.g. chatbots) can be implemented. As they grow and with the rapidly advancing technology landscape, they are looking to provide a holistic ecosystem with various capabilities that customers want.

Unlocking Data Value & Data Monetisation

In a competitive market, data provides a significant opportunity to improve customer experience and drive value. Large amounts of data are available to financial institutions. When used correctly, this data can provide powerful opportunities to generate new revenue streams, deepen relationships, and improve efficiencies. Federico went on to say that, with the recent surge in personal health data, it's critical to protect customers' privacy and protect themselves from various attacks. Some of the elements they have in place include security awareness and training for employees, as well as infrastructure improvements and tools. As Federico puts it, it's like insurance: when you need it, it's too late - preparation is essential.

Barry explained that with machine learning, patterns can be extracted and we can translate these data into highly accurate models that can be used to personalise a loan offer, recommend investment products, and so on. Having said that, Barry added that a sufficient amount of data and a solid team of experienced data scientists are factors that contribute to successful machine learning, and this is where individuals like Dr. Monchai's role at Kasikorn Labs comes into play, as they monitor the model and assess whether it is producing the desired business outcomes.

The Future Outlook: How much will innovative technologies, augmented and virtual realities, and central bank digital currencies shape the future of financial institutions?

Financial institutions must constantly develop engaging and modern channels through which to provide their services in order to stay ahead of the competition.

In the near future, with Roojai introducing several innovative technology services as it continues to pioneer online motor insurance in Thailand, they will be looking to concurrently improve their applications of AI and ML, whereas Dr. Monchai is most excited about providing new experiences for customers in the AR/VR space, a similar concept to that of retail stores.

Concluding the discussion, both Barry and Vikram stated that central bank digital currencies (CBDCs) are very exciting to them. Rather than being a zero-sum game, the presence of CBDCs will increase the overall economic footprint of digital currencies.

With that, we look forward to continuing our discussion on Transitioning to a New World of Work in Financial Institutions tomorrow (2nd March), and The Shift Towards Phygital in Financial Institutions on Thursday (3 March). Do reach out if you wish to join us, or if there are topics in digitalisation you would like to hear more of!