Taiwan’s CTBC Bank picked up three awards at the fourth annual CEPI Summit. A bank strong on technology, what is its take on the Asian market and the rapidly unfolding payments landscape in Asia? Senior VP Amy Lin gives Anna Milne a candid and insightful outlook from within
The payments landscape in Asia-Pacific present and future: What are the main drivers for change? How much does consumer behaviour drive change or does technology advancement change consumer behaviour and expectations? Amy Lin: Except for China – a country mainly dominated by Alipay and Wechat Pay – Asia-Pacific countries have all experienced the impact of innovation and technology. The change in payment behaviour is driven by tech, customer generation, and regulation.
Technological innovation will create heightened expectation from both customers and retail merchants. Not only mobile in payment solutions but in other value-added services such as location-based services, e-vouchers and in-app purchases. These are all being developed through mobile technology.
In the future, we expect that more smart applications will affect customers’ shopping behaviour. The IoT, AI and usage of Big Data will have a huge influence on membership management, mobile marketing and even seamless payment implementations such as Amazon Go.
Generation and regulation are the other two critical factors driving trends in payments. The younger generation, born in a digital age, has a higher interest in and adoption of digital services. We have acquired many younger customers through digital services.
Furthermore, their feedback and participation provide valuable insight into the improvement of our products and services. Taking P2P payment as example, customers want to use their instant messaging tool or social media to complete the money flow. This is a case of integration between customer behaviour and new technology.
As regards regulation, the government’s attitude will not only accelerate the development of new initiatives, but also contribute to cost efficiency. However, the regulator also faces huge differences in changes within business models, and continuous communication between the government and the various players is therefore crucial.
What are the main challenges for increasing payments margins and how do you bring in revenue when payments margins are more and more squeezed? Banks can earn invisible revenue from online transactions. Data, traffic and sheer consumer numbers are the three key opportunities for monetisation.
Payment is the easiest tool by which to attain customers and, by default, their data. Based on these data and traffic, banks can gain a deeper understanding of customers’ needs, location, preferences, online/offline behaviours, etcetera. As a result, customers can receive real-time information that is customised to fit their preferences.
These new applications may provide an opportunity to earn income from cardholders or other partners. In the future, the revenue sources will become diversified and quite different than the traditional banking revenue model.
How do you make sure you are targeting the right customer and fully engaging your existing ones to keep them on board? Providing comprehensive products and services is always our mission and product strategy. That is why CTBC is one of the issuing banks which co-operates with all NFC solution providers and all code-based solutions.
First of all, we have renewed the structure by integrating all retail bank businesses. As a result, we can integrate all internal resources. Secondly, we have introduced new processes in developing products and services. Finally, we leverage our partners’ know-how. CTBC believes that co-operation will build sustainable success in the future.
Take LINE Pay card as an example: CTBC collaborated with LINE Pay to issue the co-branded card at the end of 2016. We had issued more than 700,000 cards within eight months. The key success factors were a strong product feature, mobile-based process, and integration with social media.
With this product, customers can apply for a LINE Pay card through their LINE account, register the card to the LINE Pay mobile payment solution, and keep on top of points accrual and all previous transactions through LINE.
Is cultural change required within traditional organisations to stay relevant, product and service-wise? How do you bring about cultural change within such a longstanding hierarchical financial institution? As the previous answer mentioned, CTBC reorganised the structure to maintain and enhance competitive advantages.
First of all, customers may have different product holdings and relationships with banks. Integrating all retail businesses helps to effectively allocate resource and therefore a better service offering.
Secondly, we integrated all back-office resources. Since speed is becoming a critical issue in the future of payments, CTBC integrated all IT, operations and customer service units. All these modifications contribute to a strong support system for all business units.
Thirdly, we learn from others. In the mobile world our competitors and partners are becoming more diversified. CTBC tries to learn from these non-financial institutions. They have strong advantages on UI/UX, speed of IT development, and innovation. As a result, CTBC consults many external opinions and leverages partners’ strengths in developing and delivering our services.
Finally, we embrace the cultural differences. CTBC encourages young talent to join on new product development. For example, the digital payment product team is younger than any other team. The project manager of the LINE Pay project has only two years of experience in CTBC. Since CTBC believes that the younger generation is more familiar with new products, we trust their native talents in the digital world will inject a new-found energy into our digital transformation.
Is the regulator a friend or foe when it comes to fintech? Of course we hope the regulator can play the role of an accelerator rather than a hindrance. CTBC believes in communication and has many experiences communicating with the government. From our perspective, the regulator can definitely be a powerful friend.
Since certain fintech models may be against the current rules, the government’s attitude becomes a key factor.
There are many cases around the world showing that the government can accelerate fintech development. The UK’s sandbox scheme and Singapore’s full support of innovation both create excellent environments for existing players and startups. Under the government’s support, enterprises can be helped in three ways: attracting good talent, reducing compliance cost, and accelerating new models.
Which demographic are you watching? Covering all customer segments is part of our strategy. Furthermore, customer-oriented service is the core of CTBC. As a result, CTBC provides comprehensive products for different segments. However, in the digital world, the younger generation is definitely our primary target.
Working with our customers will be a critical process in the future. This segment is more active in spending, pursuing a better life, and accumulating wealth by investing. Providing suitable products for this segment is critical in the payments business. They may not need some traditional product features but want to manage their account more online, prefer personalised products, and chatbot services.
According to our data, customers have strong loyalty to the bank that provided their first financial product or credit card. Early investment in the younger generation will create sustainable relationships, which in turn generate huge data and create more cross-selling opportunities throughout their life.
How do you measure consumer satisfaction? CTBC evaluates performances in many ways such as market surveys, focus groups, and external data from agencies or consulting firms. CTBC also relies on real behaviours.
Take mobile payment adoption as example: CTBC has a scheme in monitoring how many customers adopt the solution and their demographic, number, value and location of daily transactions, and the trends and differences among varied tools, etcetera. This rich data helps modify the product, improve the marketing plan, and also the allocation of company resource.
How do you see the future of the card payments industry, in light of Faster Payments and the ever-increasing proliferation of payment methods? The future of payments is currently not conclusive. Whether or not payments development will be dominated by some key players or become more fragmented cannot be determined right now.
Currently, NFC and code-based solutions are the two main applications in mobile payments. However, in-app purchases and smart payment solutions – for example Amazon Go – also have their own advantages.
Leveraging the trends of the IoT, Smart Cities, and the Internet of Vehicle, how to connect all scenarios and devices seamlessly and efficiently will become critical points in the future.
Making the payment seamless and low cost will be the irreversible trend. As a result, CTBC will focus not only on current business but also on many attractive initiatives. The world changes rapidly. The only never-changing problem is how to create ‘value’ to the public and make their lives better.