NAB Digital Next

Digital finance trends improving customer service with Vinoy Kumar from Partners in Performance

In the latest episode of NAB Digital Next, guest host Alysia Abeyratne, NAB’s senior manager in Digital Policy speaks with Vinoy Kumar, senior partner at Partners in Performance, on digital finance trends. Partners in Performance is an international management consultancy, which was recently bought by Accenture.

The podcast dives into: • Improving customer experience in financial services and how data and analytics can help. • Emerging trends of collaboration between FinTechs and financial bodies in Asia. • Support of responsible innovative disruptions by regulators

Listen to the full episode on SoundCloud, Spotify or Apple Podcast.

Duration:: 18m
Broadcast on:: 18 Jul 2024
Audio Format:: mp3

(upbeat music) - Hi, I'm Alicia Averatny, and welcome to Knapp Digital Next. Today, we have the privilege of being joined by Vinoy Kumar, a seasoned digital finance expert with over 35 years experience as a consultant and executive leader in financial services. Vinoy is a partner at Partners in Performance, a fast-growing international management consultancy, which has recently been acquired by Accenture. He was previously global head of digital assets at Standard Chartered Bank in Singapore and also spent a number of years as partner and managing director at the Boston Consulting Group in Australia and New York. As you could imagine, the depth and breadth of the noise career across global markets, including the US, Asia-Pacific and Europe, provides invaluable perspectives and cultural nuance on digital finance trends. Thanks so much for joining us on Knapp Digital Next, Vinoy. - Thank you so much for having me here Alicia, pleasure. Before we dive into our conversation, Vinoy, it would be great if you could share a bit about your career journey into financial services, consulting and innovation. And what initially sparked your interest into this field? - I feel very privileged to sit on these doors. I'm very fortunate. And if I look back, I feel like I've failed in a lot of places, or many places, but learned a lot and worked on some very interesting topics and come across or work with really great people. And that's very important for me. If I look back, again, start my career with GE Appliances and consumer goods, but realize very quickly, there are like financial services. And because financial services are the heart of economies and social development offer complex problems to solve, innovate, they innovate a lot. And the great opportunity is to leave an impact as markets open up and develop. And in that journey, I've been really been fortunate to have covered most of these boxes, so very strong major transformations, so I've run around of institutions, as well as cutting a generation. And you mentioned digital assets, for example. And besides that, even otherwise, I mean, the range of topics in financial services is amazing. One moment, one could be discussing trade supplements and very next moment, one could be discussing ways to address financial inclusion. Very hard to match. - Yeah, absolutely. I think that mix of learning, interesting work and great people is a winning combination. Thank you, Benoit, for sharing that. You've had deep experience across emerging technologies in the financial sector. I guess from your vantage point, what disruptions do you see as having the biggest impact on the future of finance? - It's such a top-provoking question, right? For any practitioner or anyone who's close in financial services, there's so many different ways you can think about it. I believe you have to start with the customer. As everything has to be in the service of the customer. The core needs do not change, by the way, right? But the customers are always pushing for better, simpler, faster and cheaper, at the least. I mean, but that's really what they're asking for. And when you think about disruptions, I believe the two biggest drivers are one, technology and no surprises. And you can put AI data all in there. And the second one, interestingly for me, is the availability of capital with a spectrum of risk reward appetite. And these drive disruptions or innovations in several dimensions. And if you go right from the capital structure bit and you know, I mean, we can cover it and go deeper into this. There is an increasing flow of new sources of capital and funding coming into financial services. You've seen not only VCs, which you expect, but private equity players, family offices and banks, investing in FinTechs and new ventures. Then if you look at business models, think about convergence and disintermediation. No surprises there as well. But I believe that financial services will get closer and closer and part of products and services in other sectors. Ecosystems and customer groups, you know. Expect to see increasing presence of financial services within purchase and experience context to enable customers to decide and transact in the moment. And range of possibilities is huge. It goes from already what we are already seeing in point of sale choices, decision making and financing, right? So you see a range of providers you can see and choose from, comparing and go from their paper use, asset financing to embed in financial transactions in augmented reality. Imagine what the world would be once you go into the suburban cars and the augmented reality. It's going to be completely different experience. If you go from a bank perspective and segments perspective, I expect to see greater integration of activities across segments. And you can already start seeing some of these. Organization of real world assets is a good example. Capital financing needs are getting connected directly via wealth management to broader sources of capital. So you can already see some of the boundaries of getting dismantled. If I got deeper into execution and your customer experience and onboarding, et cetera, identity authentication and security is a part of trust in financial services. Trust is so important. And I mean, that's what keeps financial services going. It is clunky at the moment, right? With inconsistent identity requirements, document and paper-based identities. And the required several clunky validation and authentication checks, we should expect to see a lot of innovation streamlining in identity authentication and security. And these are not easy to do, right? But in-app identity access and seamless validation will be such a different experience and reduce so much of overload. If you look at financial services infrastructure and we should expect to see technology, some new example, distributed ledgers, some existing, taking significant time in cost of financial markets, especially and crosswater payments or poor payments more broadly, I would say. And of course, data and analytics will drive, not surprisingly, significant new opportunities for new products and services and streamline operating models with greater automation, cost and productivity improvements. And you can already see several cases of this. You have noticed my bank uses transaction information, repayment records and other information to map supply chains and make credit decisions. And this are 53 million customers in SMEs, which SMEs in 2023. The 3.1 zero model is so interesting, right? Because it takes less than three minutes to apply on a mobile phone, less than one second to approve and zero human interactions. - Wow, I mean, that's incredible, Vinoy, that's a very comprehensive list. And I think that my bank example is a great one to demonstrate the opportunities to provide better customer experience for both retail and business bank customers. You've done a lot of work in the Asia Pacific region. Are there any unique trends or adoption patterns that you've observed across different countries in the region in relation to digital finance? Where do you see Australia perhaps being behind the eight ball, but on the flip side, where do you see Australia being more advanced or ahead of the curve? - It's an interesting question. And by the way, I mean, if you look at the disruptions we're talking about, quite a few of these can already be seen, but some have not hit scale as yet, right? And it is not that things change overnight. It is an evolution and not a revolution. I mean, I think that's one of the things which you should keep in mind. And therefore, it's not that you kind of a jettison, everything that one is doing today and you, but it's important to keep an eye on things as things evolve, be in the game and keep creating an optionality. And that's why your question regarding Asia back or more broadly is so interesting, I think, right? Because most of the trends we touched upon can be seen across markets in Asia. And not surprisingly, regulators are supportive of responsible innovations/disruptions. MS in Singapore is a fantastic example. They are at the forefront of several industry efforts so related digital assets and tokenization, right? I mean, I think, so that's really interesting. I think digital banks are no longer the disruptions. And fintechs are not the bad word. Those are working relationship between fintechs and financial institution is not a new norm. That's how I think about it. But you do see to that point, fintech perspective or new perspective of proliferation of payments in business models. And payments are easiest and most disruptive. And these also intersect with growth in super apps. So you have seen or heard, grab, go check, Momo, Geo, PayTM, and not to miss the old ones which have been around for a while, Uber and V and LE, right? The online marketplaces, you see a lot of that now, like Shopee, Lazara, Bukalapak in Indonesia. Very interesting examples. They're bringing together online marketplaces with lending and other financial services products. So that's also quite interesting to look at. There are quite a few new models in wealth management advice and investments for emerging affluence, especially where digital models have an advantage of cost and reach. So in institutions, besides the usual automation and data-driven innovations, which have been there around and they continue to be around, right? I'm gonna have forever. You also see increasingly tokenization and tokenization of money, deposits, real-world assets, collectibles, cross-border payments to name a few. This let's hand get very long very quickly. I mean, I think we can keep talking forever. But to get to your point about Australia, it is hard to do a fair comparison between countries and markets because they have different contexts of scale, wealth, competitive dynamics and regulations. However, to be honest, you can say that the quite a few of these which haven't reached a major presence in Australia as yet. And I often think it is a matter of when and in which form and not if, especially because the underpinning of most, if not all of these trends are technology, data and increasingly digital economies. And these are universal trends. - Absolutely. And you've mentioned Book of the Park, Vinoy and Indonesia's first tech unicorn, which I think is a fantastic example of a country advancing through innovation and digital inclusion. For our listeners who might not have heard about Book of the Park, can you tell us a bit more about how this company has been able to serve micro-businesses in Indonesia? - Sure. And like I said, context is always relevant. So Indonesia is a very good example of innovation in SME and under-bank space. There's several of these models you can talk about. It has a population of 275 million or that about, so right, I think we know that. But it has nearly 62 million SMEs, of which nearly 98% are micro-enterprises or what they call war rooms. And development of these SME or micro-segment is, as you can imagine from the numbers, is quite important for the people in the country. And as digital data modern ways of doing businesses develop, there's a real risk of these businesses failing to compete with big businesses. And that is catastrophic in many ways, right? I mean, you can imagine that. As an online marketplace, Book of the Park gives the benefit of choice to and convenience and comparison to the customers. That's, we all understand what happens in online commerce and everything else, right? But it has also made a huge difference to the SMEs and micro-businesses. If you look at, what did they do? By giving the war rooms access to a much bigger customer set, because they are now on the platform, which is digitally enabled. So, flash, the businesses are now digitally enabled. It enables digital payments, and then therefore transaction-based lending and otherwise through the platforms, which encourages financial inclusion. Then interestingly, it also leads to business improvement of these small business of war rooms by digitizing many of the processes, giving them value-added services such as bookkeeping, debt recording, mobility to order stock, and logistics and having delivered, giving access to a broader supply chain. So, there's a huge amount of benefits from a customer perspective, from economy perspective, and from the business perspective. And by the way, it's a context of strobe or Indonesia, as well as small micro-businesses in other countries. They have the same problem. They need help, right? And if you look at closer home, you know, straight out, there are several players with scale SME ecosystems or small businesses, ecosystems, who could credibly offer a similar, and not exactly, but some form of that, and this is kind of rich form, marketplaces or ecosystem experience to their members or suppliers. And the stability of a supply chain is very, very relevant to any institution, et cetera, right? So, this is worth thinking. - It's a great example to highlight, Vinoy. Thank you. I guess building on that theme of marketplaces, how do you see financial services as being increasingly embedded in these platforms? - You just have to look at the numbers and the alignment of interest. I mean, we have spoken about the solution in the past as well, you know? I mean, if you look at 30% plus of retail sales is now online, right? And online commerce is growing closer to double digits. So the numbers are non-trivial, if you look from that point. And it goes to the audio point, we were kind of covering, for financial services, there's an increasing opportunity as well as need to move closer to the point of sale and transaction, right? Because that's where the real need is. That's where the need reaches itself. So what does a financial services and embedding a financial services, it helps the buyers because the affordability and accessibility of the products and experience is closer, is possible. And it also helps the businesses to grow their customers and sales. And this goes to the marketplace point where you would take them making, right? I mean, if you look at the bookalopack one. And super apps as well as online marketplaces are using digital wallets as a point of access, right? And for payments, and that also becomes the conduit for providing the financial services. And if you look at the product range, as what are we really talking about? If you look at financing, it's the most obvious ones. And the micro financing or different types of financing you have to get to scale depends on the size and depends on what the ecosystem is doing, et cetera. Payments and remittances are obvious next one. Insurance and investments come next from there. And if you look at someone like Ali or V and some of the other more established ones, they have gone to a different level. So they have already kind of a setting the north star of what the possibilities are. We talked about my bank a little bit as well. So this is a space we watch. And as we see the disruptions we have been talking about, we should expect to see more and more embedding and moving closer to the ecosystems and the customs and transactions. - And you mentioned digital wallets when I would be remiss of me not to ask this question, but how important do you think they are? We hear a lot about digital wallets. How important do you think they are to the future of digital finance? - It's such an interesting point. I mean, it's like how important is for us to carry a wallet in physical world? Kind of a thing, right? I mean, in some ways, can you do without them? Yeah, sure, but it doesn't make life easier, probably. And we have touched upon growth in e-commerce and marketplaces, payments, innovations, embedded finance. We have talked about identity and tokenization services such as loyalty, you know, we've touched open all of that. For sure, these cannot all exist at standalone interfaces and experience, I mean, for sure, right? It will be a nightmare for businesses and end customers. And in some ways, people have already thought about it. And you know, you see the super apps and you see the online market basis, having a digital wallet to the point of access. I think it's just that as the future of that is getting to get broader and broader from a convergence and from a convenience point of view. And we talk about digital wallets. It doesn't have to be a wallet or it could be an analog. Who knows how it will be? You know, you can talk about biometrics. You can talk about a lot of different ways of enabling that. But what it does do is it makes life a convergence, which you talked about earlier. And it gives you a very different set of analytics and service offerings, example loyalty, customization of products and financing, et cetera. And at the same time, I'm not saying, by the way, I'm not saying, is that, you know, that you setting up the wallet is the answer to everything. Because it is the way, but not there will be lots of wallets and a lot of people will try that, but not all of them will be successful like everything. And key for successful will be the proposition that one has for the wallet and the problems that it solves and how it integrates and what it experiences. And that's another one conversation. But what it does is it brings back to home that, you know, at the end of the day, it's in the service of the customer and solving the problems. - Vinoy, thank you so much for so generously sharing your time and your insights. I feel like we could spend another hour talking through all of these really interesting topics and issues. Just a few themes though, if I were to wrap up that stood out to me, you've mentioned the increasing presence of financial services within experiences to enable customers to not only transact, but also decide in the moment and that use of data and analytics underpinning the ability for banks to serve their customers better and provided that example of my bank. In terms of trends, you've noted what's happening in Asia around fintechs and financial institutions, partnering in this being the new norm and that regulatory support of responsible innovative disruptions. And then you've also talked about the example of Book of the Park, which I think is a great one to draw out the social impact of that platform and the way in which it's sought to empower and support local communities. So thank you Vinoy, it's been a pleasure to chat with you and thanks to all our listeners, stay tuned for more episodes of Knab Digital Next. - Thank you so much Alicia.