WSBI President Heinrich Haasis
24th World Congress of Savings and Retail Banks
25 September 2015
"A vision for a digital agenda – How digitalization can approve access to finance"
Ladies and Gentlemen, good afternoon.
The 24th World Congress is coming to a close. For the past two days, we have looked closely, in deep detail, at how digital technologies are transforming our world of banking. We have have seen the way they have captivated customers and got some regulators in thrall. And we have recognized the scale of the challenge, and of the opportunity, they offer us.
But the question, before we depart, is what should we do as a result?
The last two days have taught us that there is so much "up-side" to the challenges ahead of us.
We have heard repeatedly here in Washington that digitization is changing the way we all approach our account holders, how we approach banking policy, and how we approach our business models.
Let's begin by thinking about the most urgent questions that have emerged from our talks, discussions and panels:
What do our customers expect?
What about data protection?
- Whether its face to face or via an app on an iPhone, they want us to be there like we have been for a long time. But they are no longer willing to wait while we carry out paperwork. They want individual, tailored offers and instant answers.
Today, our customers expect us to know them as well as they are known by the algorithms of Amazon, Google and Facebook. Many want us to be as aware of their capacity to earn and save as they are themselves. And they expect us to be driven by them, and their needs, and not our procedures, habits and business goals.
- They want a human face when they need one. But they also want the apps on their phone. They want to access our services at any time of the day or night, from wherever they happen to be. Banking hours no longer exist. In my homeland, Germany, mobile phone banking has captured the hearts of savers, borrowers, and all who need to manage their money and make transactions. It has been a great success. Online banking on tablets and laptops must deliver too. But alongside that we need to cultivate the human touch that only a brick-and-mortar branch on mainstreet can supply.
- We have a better sense, or "feel", for the human touch than the others in the market. This will remain. Many of us have roots in local collaboration and cooperation between groups of people who came together to address their financial and banking needs. Our owners and our customers are often one and the same. Historically, they have been key to our success, guiding us to provide the services they need. Digital tools offer us the chance to enhance and strengthen that historic relationship. Yet in the hands of rivals - including commercial banks, digital platforms, and sharing-economy start-ups – they also pose a threat. We need to woo historic and new customers electronically, just as others do. Digital technologies seek to replicate our historic customer bonds electronically. They constitute a 21st Century attempt to recreate the kind of community collaboration that brought us into existence. So our response must be to combine our humanity and our respect – and even affection - for our customers and their foibles, with the virtual proximity that digitization makes possible.
- The issues of data security, data protection and systems reliability have become red-hot topics for consumers and for customers. Scarcely a day passes without a new story of crashing websites, theft of financial data and publication of personal details by hackers. The personal data we handle can make fortunes, or ruin lives. Flawless security and data protection has to be a top priority. Any breach can put our very businesses at risk.
- Yet the vast trove of data we inevitably collect about our customers is also a precious resource that can help us better know what our customers need and what could improve our relationship with them. It's a tool to help the "people" pillar of savings and retail banking. But we must use it very, very wisely.
- And that should give us pause for thought. For what we also learned over the last two days is that banks are vigilant and always looking to stay ahead of the game. It's in our DNA. But we need to get the data-delving right.
- Regulation will try to address many of the issues surrounding who gets to look at the data, and whether it is transferable. But we need to be on our guard, in two ways. First, because regulators have already shown a tendancy to be less demanding of new entrants than of traditional banks, thereby giving advantage to start-up challengers. And second, because as we all now know, big online platforms gather data relentlessly, and countless programs already exist that crunch data in new and unexpected ways. So new opportunities – and rivals – are emerging. And not all of these new rivals have the respect for customer confidentiality that has characterized our historic relationship with those who entrust us with their savings, or whose entrepreneurial ideas we help to finance.
- In the European Union, for example, data protection legislation would benefit from a more consumer-centric focus. [Removed reference to ESBG position paper]The golden rule for us is that a balance must be struck between consumer protection and sound banking practices.
Here's another question:
What do we - retail and savings banks, serving our communities and regions, expect from digitization?
- In a nutshell, we expect it to deliver. Deliver for our customers. Deliver for our vision of banking.
- First, digitization boosts back-office efficiency. It enables us to process transactions more efficiently and more quickly. It can save us money, freeing resources so that we can offer more competitive products to our customers, invest more in our people, or strengthen our balance sheets. But to leverage these opportunities, we need to quickly and creatively respond to what technology makes possible and our staff or customers imagine, developing new processes and new ways of doing things.
So how is the digital revolution likely to pan out? What changes will we see?
- It also empowers us tap into big data – a precious resource in a data-driven, highly and increasingly competitive banking world. By looking at what our customers do, collectively and in granular detail, we can look at how to serve them better. We can begin to anticipate their needs and experiment with products they don't yet even recognize they need. We can get ahead of their thinking, and help them by proposing timely solutions to the challenges their lives throw at them, from financing property, healthcare or school fees to developing their businesses in new directions. For our customers in small and medium-seized businesses, we need to be there, alongside them, virtually or physically, not just providing finance, but also sharing the insights our number-crunching brings us. We need to develop new, closer partnerships to help them succeed. Because our success hinges upon their success.
- But there is pressing need to act. And fast. Other players with less baggage and fewer costs, such as PayPal and ApplePay are pushing forward. They want to serve the public too! And they too are trusted, and perceived as being able to deliver!
Lets just remember that digitization is integral to our three core goals as retail and savings bankers:
On the the last point, let us also remember that WSBI-members have commited to contribute to the World Bank's strategic goal of Universal Financial Access by 2020. Based on its current membership, WSBI has endorsed the goal to increase the number of transaction accounts managed by members by 400 million by 2020.
- Serving the real economy
- Riding the digital wave.
- And developing financial inclusion
Back to the digital wave, digitization can breathe new life into savings and retail banking, making our operations still better, whilst reinforcing the local touch.
We have heard plenty of success stories during this two-day meeting. We have heard about breakthrough products that are adapted to and even anticipate our clients' lifestyles and needs. We have been told of SMEs embracing a wave of new digital-based banking services, benefiting especially from the two way flow of information with their local banker.
Today, digitisation has placed us on the cusp of being better. But being better means we have to stay on the front foot, always advancing. The big prizes are still out there, awaiting innovations that our staff are only now beginning to draw on their increasing insights to imagine.
So for our industy, and for me as your president, today marks the end of the beginning. The end of the beginning for my mandate. And the end of the beginning for digitisation. Now we need to go back to work and start to sketch out just how far digitization can take our individual businesses, and how it can help us help our customers succeed in their lives and ambitions. For our success will be founded upon the success of our customers. And it is only by listening to them, and imagining the future with them, that we can ensure they and we thrive. Its a tall order. But we will do it.
I hope you share with me the prospect that the best is yet to come!
ends / all
>> See Heinrich Haasis's Opening Speech (German version)
>> See Heinrich Haasis's Closing Speech (German version)