Andrew Parker, a digital banking specialist who currently works for Fiserv, a worldwide provider of financial services and technology, talks to me about disruption and the unbanked, and he is joined by Fiserv colleagues Marc Mathenz (MD Asia-Pacific) and Travers Clarke-Walker (CMO) (a separate interview).
What do you think of all the changes you’re seeing in the industry, because it’s been all about fintech and disruption this year at Sibos. Also, can we have banking for the unbanked by using technology?
Andrew: In my perspective, in general, and in banking, I think fintech is going to have a huge impact and we are already seeing it across the board. In fact, the unbanked segment really was probably the first sort of customer base that was massively impacted in terms of an industry. Telcos was a whole industry that focused on that customer segment and came up with innovative propositions to target those customers. There is definitely an opportunity beyond what we are currently seeing in the markets today for banks to look at new technologies, particularly around blockchain.
The key enabler, which is Fiserv’s main interest, is the mobile phone. I think it’s the way to unlock that access. Traditionally speaking about financial inclusion – of access to finance – it’s really been a pyramid in many markets. A very small amount of people have access to formal banking systems. Not very far from Singapore is Indonesia, where a very large percentage of the population lives on less than a dollar a day, and remain unbanked. If you put that all together from an entire population perspective, it becomes incredibly interesting if you can use economies of scale and access to target those services.
From Fiserv’s perspective, we’ve done projects across six countries, with two organizations using the mobile phone as being the key access point to deliver financial services to those populations.
Marc: One way to look at it is as mature economies vs developing economies and the different drivers. If we look at the McKinsey study that was done recently, they say that about 30% of the revenue line of an established bank could be at risk through disintermediation of banks. Similarly, they say there’s an opportunity of costs saved somewhere between 20-25%, so there’s a huge swing on the top line as well as on the cost side, both pro and con, and that’s why banks need to go digital in the mature markets. There, it’s not so much about the unbanked rather the under-banked. Having said that, even in established economies, it’s sometimes surprising how many unbanked, under-banked there actually are.
Have you seen any difference in the way digitalization is occurring in different parts of Asia?
Andrew: Absolutely! I would say that the access mode that accesses the digital services goes through changes from market to market in customer segments. At the end of the day, we think about the broad constructs of digital and what it means to banking; it’s the ability of the customers to be able to authenticate them and move money around, and whether it happens on the latest smartphone or through a USB connection, it doesn’t matter. It just matters where the customer is on their life journey.
What technologies do you see evolving to handle this dynamic of the unbanked?
Marc: You can’t displace cash overnight in many of the markets in the way customers use it today. You need to figure out how you can digitally transmit money from one point to another, but maybe collect cash out of the other end. So, having great distribution around, ATM networks or interfacing into ATM to use your mobile phone to authenticate yourself, to take cash out of ATM are all part of having cash; the ecosystem of cash and digital working together. That’s really important.
What’s happening with Fiserv recently? Have you any wins that you want to talk about, or any new projects in general?
Andrew: There is a huge deployment that has gone live in the digital space this year. We recently restructured an entire retail business banking and corporate banking online platform. It’s been a huge project for Fiserv over a couple of years, and that’s now live. We’ve got customers in Indonesia, Cambodia, and Thailand, and all are using our digital banking services that branch on business banking and retail.
The largest bank in Cambodia recognized that 90% of the population really weren’t able to bank with them because they weren’t able to reach the threshold of what was deemed to be appropriate to be having a bank account. The bank was able to reach down to the bottom of that pyramid and provide a platform that enabled customers to have life-changing services. With these services, you can save money, you can save time, and you can provision those services with much easier access to the communities than what we’ve ever been able to do before.
ANZ is strategically ready to take those customers on a journey because, at the moment, those customers may not be hugely profitable if you look at the fact that they may be earning $2 a day, but if you have millions of people with local organizations, who use those services, it can actually create quite a profitable business.
What mobile banking opportunities do you see in the UK?
Travers Clarke-Walker: Mobile banking applications can provide excellent services, and we can be a bridge to that innovation. Fiserv has already done these kinds of things around the world. We’ve done some of those things independently in isolation, so the analytics are pretty interesting, and we’ve also done Geolocational tagging.
In all of those, we’ve experienced how to operate with a smaller third-party organization using our enterprise mobile banking layer, and deploying those things seamlessly to the bank in such a way that the customer’s getting a much enriched service, and that’s how banks will want to function.
I’m trying to understand how your products will actually be the same, because all the regions and all the features that are required in Asia … are they the same for the UK banks as well?
Travers Clarke-Walker: We’ve got three different products. The feature bits can be added or removed virtually at will. We can customize according to what the market requires against the same base product, such as mobile banking and platforms. It’s not a battle to be there to actively encourage people to be adding a whole lot of other services too. It’s effectively a simplified deployment to mobile banking.
I wanted to ask you about one of your themes here at Sibos, which is about wearable technology. Again, this is something big in the UK. There are a lot of banks trying out new types of devices, so to speak, that you can wear. What are you announcing here at Sibos, and what are your thoughts?
Travers Clarke-Walker: Wearables, I think, are an important part of payments and they’re an important part of our daily communication. Customers use mobile banking regularly because of the propensity of the device; the device is accessible to them. There is a limit to the features or functions that you will be able to apply into wearables, but it does increase proximity of service. If customers get reassurance by looking into their wallets regularly to see their cash balance, then the wearable device can create the same type of reassurance. It includes transactions in real-time. The best part is that wearables are easy for our technology to fit in. Most wearables are being designed in such a way that they eventually fit back to the next device further down the line, so I think we’ll increase our product features along with the wearable features.
What do you think are the biggest trends in fintech?
Travers Clarke-Walker: I think the enrichment that’s coming to mobile banking is pretty exciting. Biometrics, enriched transactions and analytical data are going to make mobile banking services richer than they are today. I think behavioral analytics will add an interesting aspect to identifying banking and other transactions, customer behavior, and then linking that back to appropriate services. This will really make the customer’s life more interesting. I think wealth management, wealth advisory tools and services around those is another major area perfect for disruption.
Main image: Dariusz Sankowski, StockSnap