AB+F AND NUCLEUS SOFTWARE ROUNDTABLE

“The front-end is becoming much more richer now as there is a lot of focus on the customer experience. But the entire processing cycle is ADAPTING TO THE still not digitised, it’s not that well integrated.”

Vishnu Dusad, managing director & CEO, PACE OF CHANGE Nucleus Software

Nucleus Software and AB+F brought together key participants in the banking sector to discuss how to harness the latest technologies and compete against the disruptors as new innovations continue to impact financial services.Christine St Anne reported on the day.

BACK ROW: Tarun Sharma, Daragh O’Byrne, Jon Sutton, Scott Morgan, Nathan Campbell, Harshit Jain, Rajiv Kumar FRONT ROW: Avnish Datt, Bernadette Norrie, Kim Alexander, Melanie Evans, Janelle McGuinness, Felicia Trewin, Vishnu Dusad, Glen Kotopoulos Jon Sutton Bernadette Norrie and Avnish Datt

he role and impact of new custom- the cord,” O’Byrne said. “What they are doing is “Whether you’re spending 65 per cent or 80 “I think partnerships are really important. ANZ’s Alexander also noted that digital strategy. We’ve all got brand strategies PARTICIPANTS INCLUDED: er-centric business models and keeping the basic cable but dropping the premium per cent to run the bank, you have to be very Some of the main issues I have taken away from partnerships will be important for the bank. “In and we sort of know what we need to do for our technology are now the big issues service. Instead, they are getting this service from clear about where your priorities lie. It could be my visits with some of the fintech hubs around the terms of technology, we recognise that we can’t customers, the execution is going to be the huge Moderator: for financial services going for- another company, one that can provide a better, about maintenance, continuous improvement or world is that there are a lot of companies out there do everything internally, nor should we because differentiator now,” Trewin said. ward. However, technology inno- faster and often a cheaper offering.” Banks should transformation and the reality is that it’s going to that are solving huge friction problems within there are people who do it so much better,” she Virgin Money general manager, digital and Andrew Stabback, publisher & managing director, AB+F vation isn’t necessarily accelerating look at how to rebalance their investment spend be a mix of all three at any given point in time,” banks,” Bank of Queensland CEO Jon Sutton said. said. delivery, Janelle McGuinness also concurs that the Tbut we are seeing a rapid diversification. Tech- to innovate for the new world. O’Byrne point- Evans said. He highlighted one company that scrapes customer experience is driving business strategy. nologies now piggyback on existing innovations ed out the now challenging paradigm the banks “In terms of the run versus transformation, Facebook data, does company analysis to assess Shifting the balance of power “You need to be in step with your customer. You Avnish Datt, global head – sales and strategy and corporate from smartphones on top of mobile and internet faced. That is that their businesses could be left we’re very clearly thinking about our whether a business needs to be worried about In the past, it was businesses who were more need to really understand where they’re coming development, Nucleus Software technologies and the internet on top of computer with the basic current and cheque accounts, i.e. transformation agenda as separate to the fraud with a customer or with suspect movement advanced with technology as at that time they had from and how they operate in terms of how they Vishnu Dusad, managing director and CEO, Nucleus Software technology and telephony. the low profit products. “With the fintechs tar- maintenance agenda. We have dedicated teams of money. “It was so interesting that the FBI wants the big budgets. Technology is now affordable live their lives and how does banking fit into that The broadcast sector has also confronted geting your premium customers, why are banks set up purely around transformation where it. With banks now moving to an API system, and customers today have access to a vast range life. You need to understand all the things that Harshit Jain, global product management, Nucleus Software challenges in innovation. Free-to-air and cable spending 65 to 80 per cent of their IT budgets to we aim to build new capabilities and focus the ability to be able to plug in with that kind of of innovative technology. This growing power they do on an everyday basis. Then you can television has not been totally replaced despite simply run their operations,” O’Byrne said. investment,” Evans said. business, solves a humungous friction problem look at how you can provide those services and Daragh O’Byrne, vice president, global head – marketing of consumer technology seems to have shifted streaming over the internet. However, the eco- Suncorp executive manager of digital propo- For ANZ, putting the customer at the centre that all the banks have because AML (anti-money their balance of power. Roundtable participants products,” McGuinness said. alliances, Nucleus Software nomic implications for sector points to a chal- sitions, Bernadette Norrie said businesses needed of its strategy has helped reshape the way the laundering) is just so onerous in this country. discussed how this power shift will change their However, it’s not just about offering mobile Glen Kotopoulos, head of business development, Australia/ lenging future. to take into account the rapid development of bank approaches its innovation. “The customer “There are a lot of different tools out there that investment philosophy. technology, for McGuinness it is also about the New Zealand, Nucleus Software Financial services also confront a shifting technology and its impact on consumer behav- experience is at the heart of everything we do. A takes the friction points out of banking and we are For ANZ head of strategy and business whole experience and ensuring the back end is as landscape. Today 65 per cent of all information iour. Customers are looking for 24/7 connectivity. digital agenda is helping to fulfil that,” ANZ head looking at partnerships to help us achieve that.” optimisation, Felicia Trewin, this power has led good as the front end. “I think when we talk about Jon Sutton, CEO, Bank of Queensland technology (IT) investments in banks are simply “Customers are looking for greater simplicity of technology, corporate and commercial, Kim to changing consumer expectations that will the whole experience it’s not just about putting a to run the bank. At the same time, new entrants to and transparency – we need adopt a more incre- Alexander said. front-end on something it goes all the way to the Melanie Evans, director, sales services & marketing, Westpac force banks to innovate. According to Trewin, the the sector are challenging the way financial servic- mental transformation to our business and invest At the smaller end of the market, institutions “There are a lot of bar has been lifted in respect to what consumer core really. Because you can have a great front- Scott Morgan, CEO, Greater Bank es approach their businesses. In today’s environ- in making it easier for customer to access what like Greater Bank don’t have the “bucket loads of companies out (fintechs) expectations are. Because that’s where you breed end but if it’s not fast, if it’s not secure, if it doesn’t ment, how can banks and financial institutions they need, when they need it,” Norrie said. money to throw” at technology transformation innovation. You don’t breed innovation through do what it needs to do, which is all the technology Bernadette Norrie, executive manager of digital propositions, balance the need to innovative with the task of strategy. “We like a lot of other companies are there that are solving complacency,” Trewin said. behind the scenes, it’s not actually going to be a Suncorp keeping the lights on. Nucleus vice president and Unravelling the complexity running internal incubation capabilities and “We feel this impact quite acutely in the great experience,” McGuinness said. Felicia Trewin, head of strategy and business optimisation, global head of marketing and alliances, Daragh According to Nucelus head of business focusing investment around a small AB testing huge friction problems corporate commercial side of the bank. Small This approach also impacts the investment O’Byrne, set the scene by drawing on parallels environment. We weigh the incubated results philosophy of an institution. McGuinness said ANZ development, Glen Kotopoulos, the answer can businesses don’t separate the difference between with television’s cable industry. “When people talk be found by unravelling bank complexity. “A lot up against all the other incremental investment within banks.” the personal consumer and business experience. businesses need to think about how customers Kim Alexander, head of technology and corporate about the transformative effect of technology or of banks have grown up with lots of complexity. that needs to go into the business,” Greater Bank If they can use their apple device to manage want to engage across a few channels and ascertain development, ANZ the disruptive effect of technology they typically If you can unravel this complexity, you can tackle CEO, Scott Morgan said. “Part of doing that is by Jon Sutton, their personal life than that experience should be how they invest in these channels to ensure the talk in extremes – about entire industries being some of the efficiency dividend and invest another looking at what your customers are telling you CEO, Bank of Queensland consistent with the way they do their business. right customer experience. This is not easy to do Janelle McGuinness, general manager, digital and delivery, completely replaced or made obsolete,” O’Byrne portion of your budget into a better experience for and prioritising the investment spend. For us It’s good for us as it drives us to have that sort of given the legacy systems that exist. Virgin Money said. your customers. The question on a core banking that’s critical as we don’t have a lot of money to Westpac’s Evans also acknowledged the mentality with everything we do,” she said. “It’s not just running the bank but it’s how “People tend to focus on the doom and gloom. s p e n d .” benefits of fintech partnerships. “I think there’s a much you’re investing just to catch up versus Nathan Campbell, chief risk officer, IMB transformation is of course a perennial question The consumer power has also driven a new For example, some people say that fintechs are go- for banks,” he said. It was obvious that the theme of fintechs lot to be said about collaboration and the benefits mindset across the bank. “Every person in our how much you’re spending to innovate or do new ing to kill off all the banks. Although the cable tel- Westpac director, sales service and marketing, would emerge as part of the conversation and a fintech can bring to a large organisation. There organisation has to understand technology. things. We should be really thinking about not evision industry has been impacted by new com- Melanie Evans, echoed Norrie’s view on having a how tie-ups can help banks and institutions are clearly benefits that the big banks can actually Whether you have digital in your title or not, just catching up but leap frogging. If we are always petitors, a lot of people are not completely cutting clear goal to ascertain a bank’s investment budget. innovate in a more efficient way. tap into quite quickly,” Evans said. you should understand and articulate the bank’s trying to catch up, we will never quite get there 4 5 AB+F AND NUCLEUS SOFTWARE ROUNDTABLE

Kevin Delmar Nathan Campbell Glen Kotopoulos and Scott Morgan

Avnish Datt Kim Alexander Felicia Trewin Vishnu Dusad, Jon Sutton and Daragh O’Byrne Adam Ryan Adam Ryan

because technology is changing really fast,” of having a conversation to say well that’s us ty of the data. “A lot customer data is sitting in scalable. It’s going to be a massive game chang- securing an alliance Whole Foods and the BOQ’s Sutton also questions the interest er was more interested in where he was getting technologist of the future is not going to be McGuinness said. cutting our own lunch. That’s where the cou- several systems in a bank. But banks also have er, if it happens. And there’s certainly plenty of growing trend by banks to provide alternative rates charged by some of the fintech lenders his next dollar from. “I always put a little bit of around the person who can build the best kit, Westpac also confronts a number of legacy rageous conversations come in,” Trewin said. legacy systems so it is important that the data smart people who seem to be thinking that lenders. In the latter instance, he notes that if particularly in other parts of the world. He cit- caution over the funding models, particularly it’s going to be around the commercial house systems while at the same time aims to leapfrog Suncorp’s Norrie also believes that it comes that is captured is also the right data.” it will quicker than what we may anticipate,” things go wrong, who will the customer blame. ed an example of a “fairly large fintech” doing some of the big lending clubs. Their models that you can bring together and put together innovation. For Evans, it’s about understanding back to the customer experience. The single Westpac’s Evans believes it is essential that Morgan said. “Will they blame the person they got the mon- SME loans globally. The rates charged in ju- don’t work and they have yet to go through two the patchwork. You must think like a business the broader context of what you are trying to do view of customer is very topical. We currently data is updated. “Marrying the old world tra- Nucleus managing director and CEO ey from or will they blame the bank that direct- risdictions in the United Kingdom and Europe or three credit cycles,” Sutton said. person and technologist constantly,” Trewin for the customer and excel at doing that better. have a customer master data project underway. ditional data back in our core legacy systems Vishnu Dusad, spoke about the outlook for ed them to that lender. You need to be careful were in the 26 per cent to 30 per cent ballpark. IMB chief risk officer, Nathan Campbell said. “For large and small organisations, it is about There is real commitment especially under the with our real time data at the front end. It’s ut- these technologies based on the work his soft- about the brand and the reputational risk,” “Sometimes SMEs just want their money and said for IMB it is more about understanding Evans pointed to Westpac’s customers and defining what that problem is then working new CEO that we believe that our customers terly essentially,” Evans said. ware business is doing in markets around the O’Byrne said. are not worried about the rate they pay, but it’s what the ecosystem is and how the various the culture and legacy that comes with those with customers through customer centred have a right to be able to say you must know Robots, artificial intelligence (AI), and world including its work with BOQ. ANZ’s Trewin said it is a delicate balance. unconscionable some of the rates that they are models could complement IMB’s business. relationships. The banks turns 200 next year. design, design thinking or whatever you call that me. We’re a company with 14 brands and cus- predictive analytics are also new innovations. “Australia to me is a very interesting mar- “Research in the UK suggests if you say no to charging,” he said. “There’s a lot we can learn from the way that Westpac was involved in the start-up funding approach in your organisation to deliver that tomers are smart they know that. They want KPMG reported that banks could reduce costs ket in the sense that there are parts of Australia a customer once, they will never come back fintechs and disruptors have their absolute fo- and expansion of some of Australia’s oldest experience,” Evans said. to be able to do things in one place,” she said. by 75 per cent if they deployed robotic pro- that are right up there with some of the most to you. There is some value in helping them cus on the customer experience. Fintechs can businesses such as AGL and Qantas. Over the While there is a drive to using real time cess automation. BOQ’s Sutton sees significant innovative markets. And very curiously there feel that you have given them a yes however “The new technologist of play a role in augmenting our customer value past 200 years, Westpac has funded the cre- The implications of big data information, a balance needs to also be made change for banking by using these technolo- are parts that seem to lag behind,” Dusad said. they got it,” she said. There is also a big debate the future is not going to proposition, while we maintain that genuine ation of a lot of businesses which at the time The industry also talks a lot about data and with not being too intrusive with both your gies. “The front-end is becoming much more richer around the major banks questioning their role interest in our customers’ wellbeing that helps were start-ups, but are now the incumbents there are some innovations happening in this customer’s information and their business. The bank has already spent $18,000 on now as there is a lot of focus on the front-end as a legally sensitive agent and how exposed be around the person who set us apart.” and share similar legacy challenges as the ma- space. A fintech in Germany called Kreditech “Data comes really back to that whole discus- three robots. These robots could reduce customer experience. But the entire processing they are through their lender recommenda- Much has been said about the incumbents jor banks. uses 20,000 data points to make credit de- sion around the context of how it is used. What 45-minutes of work keying in data to six min- cycle is still not digitised, it’s not that well inte- tions. can build the best kit, it’s particularly with their large size and legacy “But these businesses are still around too, cisions. The evolving role of data has meant customers might see as being intrusive is im- utes, using six people with 100 per cent accu- grated. I think there are rules that AI and an- She also noted that it is about delivering going to be around the systems. Despite these challenges, the incum- because they obviously have a well-regarded organisations need rethink their approach to portant. If someone has got my credit card de- racy. “This gave us the ability to deploy those alytics will play in that area also. The challenge on the consumer experience. “A lot of people bents still have significant advantages includ- culture and offer value to customers. The -or using data. ANZ’s Trewin said it goes back to tails and conducting fraud on it, I would want people into more meaningful tasks. We can on operational efficiency and applying AI and went in with the mindset that some of the new commercial house that you ing a large sticky customer base, brand pres- ganisations around this table today also have having that customer mindset and sometimes to know real time that you can stop and change see many examples of where we can use robots robotics continue,” he said. entrants were taking much more of a riskier ence and trust. Going forward, this sector will a culture that has the customers right in the banks will need to have more robust conver- it. Whereas I may not want to know some oth- instead of replumbing the bank,” Sutton said. position and they were taking less-rated cus- can bring together and put use these advantages to tackle the challenges middle of their mindset. We may execute our sations. er level of detail,” McGuinness said. Suncorp’s Norrie is “incredibly impressed” Banking on fintechs tomers. But actually for the most part they together the patchwork.” that come from innovation and rapidly chang- strategies differently but we should feel confi- “You are not going to be able to sell to a BOQ’s Sutton believes data will be used with the organisation’s appetite to test and ex- Discussion also focused on the how banks are taking the same customer set and they’re ing technologies. “Trust is a massive asset in dent that we will continue to create value for business customer by just being a really nice in risk management particularly as ADIs are periment with these innovations. Suncorp is can compete with the burgeoning fintech sec- differentiating of course around the customer our businesses. The fintechs would kill for the customers in this changing landscape,” Evans banker who takes them out for a cup of tea. now forced to be vigilant with their lending looking at how to use Bots (a software appli- tor. As noted earlier, there was a consensus experience. Especially in small business you Felicia Trewin, established trust that exists in our brands,” said. If you are going to use the time of someone requirements as demanded by the regulator. cation that runs automated tasks) to provide among the roundtable participants that fin- are seeing that the big thing that is making a head of strategy and business Greater Bank’s Morgan said. “We need to be who could use that hour to generate revenue “The risk-based approach of saying if it’s a 65 financial advice to their customers. It is also techs can help with their investment technolo- difference is around time to cash,” Trewin said. optimisation, ANZ really careful when in pursuit of all the nice for their business, you better be coming with per cent LVR or less and they’re PAYG so we’ll looking at cloning contact centre agents using gy spend particularly by offering some services Westpac’s Evans believes the issue is an- technology that is offered that we don’t easily something insightful and valuable,” Trewin just let it go through to the keeper - those days AI. However, Norrie emphasises that the test- more efficiently. There are already a number of chored in the consumer space. “We are work- Sutton offered a more salient example give up what we’ve got. Whatever you do don’t said. are gone. If you use data in a meaningful way, ing of these technologies is always done with notable partnerships in this sector including ing with companies and observing them access highlighting the robustness of the funding abuse your trust,” he said. “The data conversations are the ones that it will allow you to better price for risk-adjust- the “customer hat on”. Westpac’s tie up with several fintechs including different funding models that might not be models for some of these fintechs. He has spent However, partnerships will continue in seem to be driving a lot of the quite controver- ed returns across the industry. And given that Greater Bank is already playing with AI, SocietyOne and uno. the traditional business bank loan. There are a lot of time in the Silicon Valley over the last the sector but the approach will be that of vig- sial conversations, “she said. For example, ANZ the industry is currently eating itself to bits or according to Morgan. “If you asked me three However, fintechs are also increasingly mov- now obviously crowd sourcing platforms and three years and has a firm grasp of the range ilance. “The question we need to ask ourselves partnering with an accounting firm can make through the super competitive pricing now, years ago, whether it was something that we ing into the lending space. Nucleus’ O’Byrne new legislation is allowing start-up businesses of funding models. He found that a lot of fin- in terms of competing comes back to being their customers lives better by providing them what you will end up seeing over time using would be looking at, I wouldn’t have thought questions whether it could mean that the banks in particular in Australia to access capital far techs were attempting to disintermediate their brave enough to choose the right partners but with all the information to run their business. data and better data analytics is greater stratifi- it was going to happen. What is going to be are simply “letting the fox into the hen house.” He more freely and more easily. We need to look at customers through a greater customer experi- also being brave enough to acknowledge we That might be because a lot of them do split cation of risk,” Sutton said. interesting is what is going to follow AI and used this analogy citing two examples. US-based the opportunities that present themselves, but ence but the one problem they had was their don’t have to build everything ourselves,” Sun- banking, banking and transaction data from Nucleus global head, sales strategy and what this will mean for delivering real time fintech Square which started in low end market be clear in terms what our core banking busi- funding models. He spoke of a student lender corp’s Norrie said. many different places and their accounting corporate development Avnish Datt, also high- convenience and digital-based interactions for segments that the traditional acquirers didn’t ness is and monitor how the business commu- in the US that provides a fabulous experience. According to ANZ’s Trewin, it will be software data. “Now that puts us in a position lighted the importance of ensuring the integri- customers in a personalised way that is also want to service but now it is trying to move up, nity responds,” Evans said. But the day he visited the business, the treasur- about testing, trying and partnering. “The new 6 7