Secret Sauce for the Banking Industry

According to Singapore’s largest bank DBS, the volume of cash deposits and withdrawals fell by an unprecedented 11% in the first 3 months of 2020, a 6% fall from where the figure had been since 2017. Coupled with extraordinary growth in the adoption of e-payments, it’s safe to say that COVID-19 has altered consumer behaviour—and fast. 

In the same way, the pandemic had forced banks to migrate operations and ways of working online at breakneck speed, whilst having to overcome constraints of legacy technology. This means that businesses that once mapped digital strategy in one- to three-year phases must now scale their initiatives in a matter of days or weeks.

After living and working through a global pandemic for over a year, many businesses have come to accept that digital transformation is imperative to success. In fact, 72% of business leaders surveyed have seen their digital business models accelerate in the past year. As Singapore continues to wrestle with the persistent effects of the pandemic, it’s time to sit back and take stock: what lessons have banks learned so far and how can these be applied in their strategic planning moving forward?

Three key learnings stand out. First, it’s digital-first and data is king. Second, the need for speed has, quite honestly, sped up. And third, in a kind of paradox, the budgets organisations have to deliver on points one and two above will be under increasing pressure. Looking at these key areas in more detail:
 
#1: Digital-first and data is king

Being digital-first, and specifically using data to automate and offer the best real-time online customer experiences, is vital. Businesses that were already set up to work online have had a massive advantage—in a gruelling environment where many industries have slowed down their hiring dramatically, the tech sector has gone against the grain to hire daringly in order to leverage the pandemic’s digital boom. With Southeast Asia (SEA) home to 310 million digital consumers—and growing, Singapore has seen bolstered investment from global tech titans hoping to get a slice of the SEA pie. Arguably, the threat from Big Tech has come to a step closer. Whilst I believe the gap between digital leaders and laggards is widening, this also presents a good opportunity for businesses, especially those in financial services, to leverage the vast amount of data now available to meet the more diverse needs of consumers. For example, everyday customer experiences are being re-imagined, and gone are the days when we stood in a long line for the bank. This is not just about front end customer interaction, it’s also the back end logistics, manufacturing processes, and all the other intricate steps of creating and distributing goods and services that are increasingly being managed by software, too. Companies are not just using more software, in many cases, they are becoming software. 

#2: The need for speed has accelerated 

Many of the changes we’re seeing during the pandemic are changes that were mostly already underway; consumers and businesses’ banking habits were shifting online, bank branches were closing, and the use of cash was declining. This happened as early as 2019, with Singapore’s Monetary Authority of Singapore (MAS) announcing the digital bank framework for non-bank players to enter the arena. The global pandemic has simply accelerated the timeframes; just a year later, MAS offered four digital-first banks the license required to operate in Singapore, putting pressure on their legacy competitors to compete harder for their share of the market. Similarly, digital banks would have to stay agile, nimble, and remain quick to adapt to secure their place amongst the giants. This is certainly true in the start-up world—and now firmly applies across the board. 

#3: The drive for cost-efficiency

Naturally, as budgets tighten up, the pressure on quick-win ROIs and driving cost efficiency is increasing. We find that a renewed tech focus has emerged, not just in Singapore but across the Asia Pacific, with tech in pole position in this new normal. In fact, public cloud services spending has grown by over 38% to $36.4 billion in 2020 across the Asia Pacific region. With the cloud’s ability to scale computing costs as needed, this would then allow banks to translate operational metrics as benefits to the bottom line.

The question remains: How should financial institutions accelerate their digital and data infrastructure investments so they can deliver online customer experiences and backend operational efficiency in a super agile, fast yet cost-effective way? 

An answer to that, as the success of many tech companies—both big tech and the smaller tech start-ups—have attested to, is setting their data in motion. 

The ability to combine and analyse data from every part of a business in real-time is a major benefit of data in motion, resulting in these platforms becoming a foundational part of the modern software stack. Many tech start-ups are architected around data-in-motion platforms and we’re seeing increasing adoption within financial services. As banks position themselves to build more sophisticated digital experiences that strengthen customer loyalty and increase operational efficiency, the strategic significance of real-time data will increase. This is necessary at a time where traditional banks find their incumbent advantages eroded by new digital players and changing consumer demands—research has shown that 71% of Singaporean customers have at least one pain point with their bank today and those with more than three pain points are more likely to turn to digital banks.

That said, the process of connecting to data sources across multiple business units and a variety of systems can be time-consuming and difficult. The initial build, updates, and maintenance of a platform can take months or even years. These aren’t the core challenges most banks are aiming to solve and not where they want their best people-focused.  So, in order to realise the speed, adaptability and flexibility requirements, all whilst remaining cost-effective, a cloud-based data-in-motion platform should be considered to simply connect all data sources together. This can dramatically reduce the data infrastructure build and integration efforts. 

Looking back at the past 15 months, it’s not been all doom and gloom, and there have been some silver linings. Crises can compel organisations to rethink how they work, and this can often become the source of lasting change and growth. Escalating the strategic significance of your data can help drive a digital-first business in a cost-effective way—a data-in-motion platform can truly become the central nervous system and the most strategic data platform across the enterprise, and financial service is one industry that stands to greatly benefit from this approach to data management. If hyper-personalisation is the holy grail to winning the hearts and minds of new banking customers, then data in motion is the secret sauce needed to achieve that.