Timetric hosted the first-ever Cards and Electronic Payments International Asia Trailblazers Summit and Awards 2014 at the Grand Copthorne Hotel in Singapore. The Summit allowed industry executives to discuss the core strategies for banks to remain competitive amidst the wave of innovation and fresh competition coming from non-bank rivals. Sruti Rao reports
As payment innovations sweeping the industry globally, Asia has played its part in building the payment ecosystem.
Just as ApplePay hits the ground running in the US, technology giants such as China’s Alibaba bring payment services to market that are taking the industry by storm. It is evident that Asia is a hot-bed for trailblazing payment propositions, and the region’s banks are still trying to figure out how to remain relevant.
The region nonetheless hosts a plethora of markets with diverse characteristics. In this context, lead analyst of Cards and Payments Intelligence Centre, Vladimir Vukicevic candidly highlights in his opening address, that despite the noteworthy developments in payment technology, consumers still prefer cash.
Vukicevic comments: "On a daily basis, we receive news about innovation, about start-ups, and everything seems to be more mobile. Well, this is far from reality. According to the data we’ve gathered 85% of the global payment transactions are cash transactions.""Singapore haa progressed significantly in migrating customers towards cashless payments, with 61% of non-cash transactions in 2013, compared to emerging markets such as China and India, which have only seen 10% and 2% of cashless transactions respectively."
Panel 1: Disruptive Digital Trends
Faraaz Ali, Regional Head, Credit Cards and Unsecured Lending, Asia Pacific, ANZNeal Cross, Chief Innovation Officer, DBS Jarkko Sevanto, Head of Mobile Solutions, Asia Pacific, VISA Worldwide
Disruption: Cause and consequenceWith this context in place, Neal Cross, the Summit’s first keynote address, gives quite a radical view of the transformative forces in play that banks need to focus upon.
"We’ve seen disruption happening all across the banking industry. Disruption is good for us, because it’s disrupting our competitors as well. So if we disrupt, then we can be ahead of our competitors."
Non-bank entrants hold a competitive advantage, according to Cross, with their formidable access to data that gives them an inherent understanding of customer preferences and enables them to optimise the on-boarding process.;
Cross: "Customers must start demanding more tailored offerings. ‘Stop treating me like I’m anonymous’".
Cross highlights a pertinent example that whereas a bank will ask a customer for the same information repetitively, players such as Apple, Facebook and Amazon will only request the information once.
Offering a seamless journey across channels is a persistent topic of discussion from the executives on the panel. Faraaz Ali, Regional Head, Credit Cards and Unsecured Lending, Asia Pacific of ANZ bank, highlights that having one cohesive view of the client, from his/her various modes of interaction with the bank is what will take the relationship to the next level.
Ali: "If I’m comfortable walking into a branch just because I’m walking by a neighbourhood that there is a branch in, I’ve walked in, and that’s extension of what I’ve done online. If I need to apply for a credit card, instead of asking me to fill up a form again, the bank should be ready to have a conversation about what card I want, rather than ‘who are you and what are you doing?’."
Banks need to build an able governance process within the bank to manage the regulatory requirements and still administer policies to offer a smooth user experience, before looking at the final layer of technology, adds Ali.
Looking at the initiatives by non-traditional payment companies is something that banks are still getting their heads around. The recently announced Apple Pay launch was commented on by the panel, with discussions around whether it can be classified as a competitor or a collaborator.
Ali comments: "I think the technology has existed for the last 12 years. So really it becomes a user experience game, and Apple is known for its user experience. I think ANZ and a lot of other banks are quite closely watching the space and I think we will be looking at what we can do."
Leveraging the unique features of upcoming mobile initiatives is another factor for successful customer interaction says Jarkko Sevanto, Head of Mobile Solutions, Asia Pacific, VISA Worldwide:
"I think about making sure that the application provides relevant services for the consumer and solves problems that consumers are facing. It’s really not just about making the payment, but all those other services that can be built around the mobile device; utilising its unique abilities like user interface, to build what you cannot build on a plastic card. If the banks get that right, I think the customers will be happy to use it."
Panel 2: Evolving Payments Landscape: B2B and Retail
Navinder Duggal, Managing Director, Global Transaction Services – Cash & Trade, Head of Cash Product Management, DBSMarc Mathenz, Senior Vice President and Managing Director APAC, First DataTrevor Haeger, Global Head, Product Engineering, Channels & Services, Standard Chartered Bank
Moving into mobile paymentsThe second session looks into mobile payments and its potential across the retail and commercial space. Marc Mathenz, senior vice president and managing director APAC, First Data opens the discussion with a keynote address that hones in on the potential and adoption of the mobile phone as a payment device.
Mathenz highlights: "From a retail standpoint, the mobile phone creates a natural marketing tool, and it actually can differentiate the customer experience and drive sales for the retailer. For consumers, it leads to a richer shopping experience, with features like mobile coupons and real time in-store personalised offers."
Nonetheless, despite high mobile penetration across Asian markets, there is still some way to go before the payment method becomes mainstream. Mathenz highlights that according to a survey conducted by FirstData "in Singapore, 31% of the global middle-class here were not interested in using mobile phones and mobile phone wallets for payments, and the main two concerns were security and data privacy."
Though the NFC technology has been available for more than a decade, banks have had varying degrees of adoption of mobile payments and mobile wallets. Standard Chartered’s Global Head, Product Engineering, Channels & Services, Trevor Haegar explains that the bank took a wait-and-see approach to the adoption of mobile technology.
Haegar: "We have not been an early adopter (to NFC technology) at Standard Chartered, and we’ve got no regrets. Certainly, we’ve got to start putting it onto all our cards, but when it first came out, up there with NFC capability, it was too clunky and too difficult. So I think staying on the edge and watching has been the wise choice. Going forward, once it’s built into the mobile phones, and you can start using it directly, it makes sense.
Navinder Duggal, Managing Director, Global Transaction Services – Cash & Trade, Head of Cash Product Management, DBS Bank explains the bank’s approach to mobile payments with its recently launched mobile app PayLah!.
Duggal comments: "PayLah! was primarily directed at peer-to-peer transfers, maybe more the younger mobile generation. So we really need to look at who is the end user, how it going to work for him or her, and the customers’ familiarity with that whole mechanism.
"While in its early stage right now, we’ve built it more for Singapore, for domestic payments, but there’s no reason why we should not be able to extend it into cross-border payments, also into consumer business payments. That’s the direction we would like to go, but first we need to build up the ecosystem in terms of wallets, users, and awareness and then extend it into the region."Mobile and P2P payments were clearly seen as ways of the future, as mobile payment acceptance and its peripheral ecosystem slowly gains traction in Asia.
Panel 3: Personalisation, and the Role of Analytics and technology to enhance customer experience
Andrew Tinney, Partner, Head of Management Consulting (ASEAN) and Head of Financial Services Advisory (Singapore), KPMGVladimir Vukicevic, Head Content, Cards & Payments, CPIC, Timetric
Using analytics effectively The increasing advantage of data in enhancing the personal customer experience is discussed at various points through the conference, however the last session really focsued on the elements that banks need to embrace to carve out an efficient analytics strategy.
Andrew Tinney, Partner, Head of Management Consulting (ASEAN) and Head of Financial Services Advisory (Singapore), KPMG mentions that having a single view of the client data is critical for the data to actually be used effectively.
"Data centralisation is critical. Now, obviously, whether its physical centralisation or virtual centralisation is less important, but the reality for most banks is, they do not have a single view of their customer across all channels, so actually being able to sew together the database and the underlying data in a consistent way is needed."
Vladimir Vukicevic agrees that analytics can play a significant role in customer retention and personalisation strategies. Vukicevic: "Data is very important and it will become even more important, simply because the cost of acquiring new customers is much higher than the cost of retention of current customers. So retaining an old customer through personalisation of service and products is important and data analytics plays a significant role in this."
The industry’s use of analytics through proximity marketing was raised as a potential source of client stickiness, however Tinney stresses that the focus on analytics should be in enhancing the client experience. Tinney adds: "I think that product-pushing is the wrong answer. So if I was a financial institution, I would be less concerned about things like – ‘Here, you’re in this store, buy this handbag’, and actually much more interested in ‘what the client journeys are and fulfil their needs, rather than to provide them with a product."
Set sail towards a seamless and personalised customer experienceOne of the key takeaways from the executives present at the CEPI Asia Trailblazers Summit was that the core incentive behind the massive innovation taking place in the cards and payments arena is primarily to enhance the customer experience. Leveraging existing customer data and rising smartphone adoption in Asia are factors that banks have recognised but have yet to strategise optimally. A review of the mobile outlook in payments, the potential of the unique propositions of non-banks and the banks’ progress in bringing a unique payment experience will be discussed in the next Trailblazer Summit in 2015.