Even before COVID-19, the banking industry was already seeing disruptions from the rise of fintech and the shift towards digital banking. People Matters asked Victor Lee, the CEO of CIMB Singapore, how the last few months have accelerated these trends and how CIMB is transforming its business to keep up. Here are the highlights of the conversation.
What kind of impact has COVID-19 made on digitization trends within the banking industry?
In the world of the digital era, banks cannot afford to slow down. We have the resources and the capabilities, and we must use what we have to stay relevant.
But that's not to say that we rush into it. We manage a lot of products, and not all of these can be digitized at the same time. We and our partners have to come together first, and we must work with the regulator, because we are holding the public's money. The good thing about Singapore is that we have a very strong regulator that understands the complexities—they have even taken cues from the UK and Hong Kong in improving the requirements for digital banks to come into the market.
Also, brick-and-mortar branches still have relevance, because of cash. Can cash be 100 percent eliminated? Maybe, but not in the next three years. Secondly, a branch is still necessary because some customers would feel more comfortable having a face to face conversation rather than a virtual discussion or talking to a robot all day long.
Even in a totally digitized situation, we still must cater to those who prefer to have some human presence.
What are some of the major initiatives you've rolled out to advance CIMB's digital agenda?
I think one of the good outcomes of COVID is that a lot of people who were not comfortable with digital in the past have now become far more comfortable with digital. Here in Singapore, we have only two branches, but we have over 250 branches in Malaysia and over 600 branches in Indonesia. The volume of over-the-counter transaction at the branches has fallen by quite a substantial percentage, but you can't just take branches out overnight. There is a process where you need to educate your customers about digital, teach them about mobile and Internet banking, encourage them to use the website instead of coming to the physical branch. We have actually seen the volume of online transactions step up quite tremendously over these COVID months.
The other area where we have seen exponential growth is in stockbroking accounts. Many young people in particular are opening brokerage accounts—some firms are looking at 600, 700 new accounts every fortnight. I'm actually quite pleased with our response to this. When there's a need and you're able to respond by delivering fast, efficient and accurate service, the pickup can be tremendous.
We also worked with startups to develop new digital initiatives, and one thing we came up with in just two weeks was a COVID chatbot. You can ask anything around financing and the programs that we have, and the chatbot can answer 90-95 percent of your queries. In that respect, I think we have been quite progressive.
How did you decide which of your suite of products and services to digitize first?
We look at what gives us the biggest bang for our buck. That means the things that have the largest volumes. We should not be digitizing services that have maybe five transactions a day: we should first digitize those services that have several hundred thousand transactions per day.
Most of the banks will also look at that, so we need to turn to the customer experience to differentiate ourselves. How we execute and deliver our services today is more important than ever.
How are you addressing the question of talent?
We have to transform our business. One way of doing this is to separate out the high value operations from the lower value ones, and pivot the higher value ones towards the most needed areas such as digital banking, analytics, engineering, coding.
I have encouraged as many of our staff as possible to pick up relevant skills. The three most needed are design, data, and digital.
Almost 40 percent of our staff, from every age group, have taken up online courses. And of course the government is giving a lot of subsidies, which is a big incentive.
We also work very closely with the universities, which have a lot of programs where the government is encouraging companies to intern them so that they can get experience working on projects and be prepared as graduates for the future. So we train them, and we also get some good work out of them. And of course some of the technology and techniques that they have learned from school can be transferred to us as well.
What aspect of the digital infrastructure do you see as the most critical for investing in?
Cybersecurity is the first priority. Banks handle a lot of customer data, and protecting that data is very important for us. It's absolutely critical—our core banking system needs to be hardened, needs to be absolutely secure, 100 percent foolproof so that our customers' data will never, ever, be lost. Because of that, we will not work with partners that are not enterprise grade.
Many people think that banks' worldview is what you might call colonial, but they're not realizing that in our pursuit to protect our customers, we cannot simply allow fintechs to come in unless they have improved their security to a level that we're comfortable with. We are the custodians of customers' data, and the way we cooperate with fintechs is influenced by that.
Another thing is that big data and data analytics are going to be very important because we need to know our customers better. When you have the insights from data, then you are better able to meet your customers needs, you're better able to know what is the next best product that your customers will be thinking about or will likely want to buy. It is a whole science around the way we do things.
And of course there is design. Right now, we are hiring programmers, coders, and designers.
Why designers? Because they are the people who map out customer journeys. In the future, it's all about the customers—putting yourself in the place of the customer to anticipate what the customer wants.
I don't think that banks today have the best UI/UX, but we can adapt. An example is Grab. They have a very good app that is improved almost every week, sometimes with releases that you can't see but that are rewiring the app to make the customer journey better. We need to be willing to give the customers what they want, versus what we want.