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Top asian Banks charting their digital transformation journey with open source
Kaustubh Patwardhan, Director I Southeast Asia and Hong Kong, Ashnik
Seated in a majestic meeting room situated on the 60th floor of one of the iconic buildings in downtown Singapore, I was revelling in the magnificent skyline view of the city while pondering upon its incredible transformation journey – from a small fishing sea side village (Temasek) to its current form (Singapura), the lion city. As I sat there enamoured by the spectacular glory of the city, the CIO of a top tier regional bank entered the room with a big smile. His enthusiasm and zeal struck me instantaneously and I immediately moved on from realizing and appreciating one remarkable transformative journey to another. What transpired in the next hour or so was an enriching discussion around how this Asian bank is re-imagining and envisaging its digital transformation through strategic use of open source technologies.
The CIO pointed out that the primary business challenge for foreign banks competing in retail banking with local banks across large countries like India, China or Indonesia was clearly its lack of physical (brick-and-mortar) infrastructure and distribution network. Many banks perceived this challenge as the biggest entry barrier and accordingly withdrew their plans. However, some Asian banks, including the one the CIO represents are more determined to break the shackles of traditional banking while being constrained by regulatory framework – that includes limitations in terms of number of physical branches in these massive countries. Digital distribution is key and possibly the only way to increase the footprint in these countries. Furthermore, in Asia, the so-called platform companies are moving rapidly into the financial-services territory. This is quite worrisome for incumbents, because these aren’t just technology companies with a technology culture and edge, but they also seemed to have acquired a large customer base in a short span of time. Their cost of customer acquisition is low and they can pretty much do everything a bank can – raise money, lend money, move money around, of course with the support of the regulators. This serves as a double whammy – where at one end traditional banking is constrained by regulations and on the other, there’s a serious threat of platform players displacing the traditional banking incumbents by use of technology and regulatory support.
Challenges abound, this CIO and the bank executives were very determined to address these impediments using a three pronged approach. Firstly, the bank needs to move swiftly to digitise completely and look into non-traditional mobile-only banking solutions which is branchless and paperless. The pervasive use of smartphones in such countries facilitates taking the bank to the customer’s pockets, quite literally. This requires re-thinking the technology architecture – which calls for a complete revamp of the rigid legacy applications to extensible API based applications that can be seamlessly and effortlessly integrated with other applications. Open source systems known for its rich features and continuous innovation can be effectively leveraged and will certainly play a pivotal role in this exercise.
Secondly, the bank needs to deeply embed itself into the customer’s purchasing and experience journey. This calls for re-imagining ways in which bank can play an active role in the customer’s home, car and appliances buying and decision making process instead of looking at mortgage and car loan businesses separately. Thirdly, collaborating with other partners in the distribution ecosystem like café chains and mobile retailers will allow scaling operations rapidly. In a way, in this shared economy – producers becoming consumers, consumers becoming producers – provided an excellent opportunity.
The CIO did acknowledge that this transformation required a massive change in the organisational culture, relentless energy and a very strong resolve. He mentioned “When we initially started out along this path, we compared ourselves with the emerging fin-techs and the start-up world and concluded that we really had to digitise completely in letter and spirit and just go in for a cosmetic digital makeover. We made killing paper and redundant processes a big mantra in the organisation and were determined to go beyond just stitching a bunch of digital apps at the front end – that’s the easy bit. We want to go all the way through to middleware and the back end – truly leveraging the power of open source and cloud computing.”
As we wrapped up the meeting, a different transformation story was unfolding in front of me. A local Singapore bank constrained by regulatory barriers and lack of distribution channels outside Singapore, was preparing itself to become a leading bank across Asia charting its digital transformation journey by leveraging open source – not just for its cost effectiveness, but rather for the agility, extensibility and innovation it provides to serve the purpose.
– Kaustubh Patwardhan, Director I Southeast Asia and Hong Kong, Ashnik
Kaustubh (KP) is the Head of Business Development and Strategy at Ashnik. His role comprises of heading Strategic Partnerships, Channels Management and Business Development for ASEAN. With his expansive experience in IT, he plays a pivotal role in strategic initiatives undertaken by Ashnik. Apart from his usual responsibilities at Ashnik, he is passionate about photography, cricket and other sports. He is also an enthusiastic participant in poetic circles and plays.