Speaker Interview- Rod Pool

Q- In relation to your current role, how would you describe an ideal Agile Bank that is ready for the “New Normal”?

IAn ideal Agile Bank is one which is ‘future-ready’ – by putting the client at the centre of everything that they do – and delivering superior client experience through physical, digital, platform and ecosystems. At Standard Bank, we are using MIT’s two-by-two matrix to talk about the process of becoming future-ready, where the vertical axis measures client experience and the horizontal axis measures operational efficiency, and I think this model best describes the state of an agile, future-ready bank.

An Agile Bank would be score well on both client experience and operational efficiency, with the result that they are in the top-right quadrant of the matrix. Companies or banks in the top right quadrant are described as being future ready.

They are both innovative and low cost; provide great customer experience; are modular and agile; engage in dynamic partnering; treat data as a strategic asset; and are ecosystems ready. Strategically – Focused on solving client needs across a broad range of ecosystems (i.e beyond just serving their financial needs), working together with key strategic partners to offer products and services beyond the Bank’s own services - Technically – Modular, API-based technology architecture, in the cloud and data-driven and Organisationally – connected, simple processes, empowered decision making in teams, embracing new skills sets and ways of working and embracing a culture of innovation

Q-What are the vital elements that organisations need to put in place to ensure they are ever ready for an unpredictable world?

It is vital that companies are ambidextrous, focusing simultaneously on improving client experience and operational efficiency, in order to become a future-ready, an ever-ready organisation, able to handle an unpredictable world. Again, to use MIT’s model, they describe four organisational explosions that companies need to adopt in order to become future-ready.

These are:

• Decision rights – getting the right people to lead key decisions
• New ways of working – changing the culture, to be agile, evidence-based and always thinking of the customers’ perspective
• Organisational surgery – removing organisational complexity
• Platform mindset – connecting organisational silos, through the use of data sharing, APIs, and reducing legacy spaghetti infrastructure systems
• Keeping client-centricity at the heart of your organisation and being nimble to react to client need as they change
• Establishing a lean and scalable technology architecture to enable the business
• Creating a culture and employee experience that stimulates innovation and encourages decision-making at all levels of the organization
• Agile teaming structures (multi-disciplinary teams)
• Diversity of employees (i.e skills, background, demographics)

Q- The world as we know has become more technologically advanced, how can Banks’s cushion the effects of cyber threats while leveraging technologies to meet the needs of their customers?

Cybercrime is one of our number one concerns, and we dedicate an enormous amount of resources to combatting cybercrime. We regularly communicate with our clients, keeping them aware of the latest phishing tactics to obtain access to their accounts. Our staff have to complete compliance training to assist them to detect fraudulent communication which may allow criminals to access our systems. The group information and technology committee oversee how the group manages IT and the governance processes that are in place to ensure, among other things, effective cybersecurity and ongoing cyber resilience that together offer better client service and protection of their assets. We continue to mature the cybersecurity model to face the ongoing threat of attack against a digital bank. During the pandemic, we partnered with Microsoft and Pioneering Solutions Studio to deliver a learning programme on a number of basic computer skills, including cybersecurity, reaching 11,600 South Africans with 47% having completed the course by November 2020.Through the Covid-19 pandemic, the board was concerned whether it would be possible to maintain the security of our information systems with such a large proportion of employees working away from the office. The answer was that we could. There were no material cybersecurity incidents in 2020.

Cyber threat risk management include:

• Cyber risk assessment (e.g., security landscape, exposure, gaps etc.) including simulated attacks (e.g. hackathons)
• Create dedicated capacity/ teams that manage and monitor cyber risks
• Implement systems/ processes to limit the risk of attacks (e.g. insurance, cloud vs. on-prem data storage, masking of personal data)
• Employee training/ awareness campaign on cyber threats
• Client needs
• Creating a single client view (leveraging data capabilities)
• Personalization
• Easy access onto the financial services platform
• Lower barriers to access (e.g. online channels/ WhatsApp)
• Better customer service (e.g. lower turnaround times and better transparency around workflows, tailored products)
• Automation (e.g. Straight through processing) and AI/ML for faster and more accurate solutioning (e.g. immediate access to loans)

Q-Within your organisation, can you highlight 3 key steps that have been taken to ensure you remain an Agile Bank?

As mentioned above, we have been following the guidance provided by MIT’s model in terms of explosions – or steps that need to be taken to become future ready. First, we have implemented a framework for decision-making across the organisation, to ensure that decisions are taken by those closest to the client, and it is clear who is accountable for making decisions on what vs how, new customer offers, off-path spending etc.

Second, we have been for some time being working on enabling new ways of working throughout the organisation – from adopting agile methodologies in the way we work, to experimenting with small cross-functional teams etc. This has enabled us to practice a “test and learn” approach to new ideas.

Third, we recently changed our operating structure, moving away from our old monolithic business unit construct to a structure which will be less complex and less siloed and will provide all our clients with a comprehensive range of financial services and solutions in a seamless way, without expecting them to navigate our internal complexities.

We are now primarily organised into three client segments, and each of these is equally supported by our Client Solutions business, by our Engineering infrastructure, and by a specialised Innovation capacity. The Client Solutions business will partner the three client segments and the Group as a whole. It will focus on delivering innovative and cost-effective client solutions which can be scaled across client segments and countries, or sold to third parties.

The Engineering capability will bring together all the infrastructure we use to deliver the Group’s services. Their responsibilities include maintaining our physical infrastructure, running an efficient, stable, robust and secure technology stack, and providing comprehensive data management, analysis and monetisation capacities.

Finally, a new capability known as Innovation to generate future-ready solutions and new business models more quickly and efficiently in the service of our clients. These benefits include: Reorganised around client segments – switching from business line to client segments to ensure we are truly client driven; Developing ecosystems to deliver beyond our traditional services to clients; Establishing a partnership model where we can both bring in services from partners to our clients, as well as channelling SBG products and services through 3rd party platforms.

Q- Delegates are certainly getting ready to attend this conference, would you like to give any advice to them?

• Become digital savvy!
• Understand how digital will impact your company success in the next decade and the organisational change required.
• Develop an enterprise-wide understanding of technology such as digital platforms, AI, big data, IoT, mobile and digital processes that enable new business models, partnering, improved customer experience, more efficient operations and cyber risks.
• Understand when to commit, when to experiment, when to partner, and early indications of both success and challenges with new initiatives operating at enterprise scale.
• Consider technology early in strategy process, focusing on business model then project risk.
• Don’t just focus on competition and innovation in financial services sector– focus on all sectors as industries converging and so is technology across various sectors and industries

Q-.Would you like to share any personalized experiences within your organization that has been improved by use of data and advanced analytics?

We have a few goods examples of this:

• Our BizFlex loan offering to SMEs is one example of this. Leveraging our existing relationship with a business, we can proactively offer them a loan based on how they’ve been interacting with us over the last few months. This loan is made by tying the repayments to their income each month –so if they earn less, their repayments are lowered to ensure they feel comfortable as they continue to run their business i.e. the bank is an understanding partner in their business, and not just another removed party.
• The Early Warning Financial Distress solution in our Wholesale client segment (old CIB Digital) is a model which uses data analytics to examine both internal and external sources of data and determine if a client could potentially go into credit distress over the next 3-6 month period. The team can then proactively partner with the business to help them avoid going into credit distress.
• Trader Direct, which is live in Zambia and Lesotho, provides the merchants, who typically don’t have the ability to go to banks nor good sources of data for lenders to make credit decisions, with point-of-sale devices (in partnership with Nomanini). We are able to gather “health and wealth” data to build profiles on the merchants – health meaning do they open their store at the same time each morning, are they consistently supplied with power etc; and wealth meaning what value flows and volumes do they achieve in their business. These profiles give us the opportunity to offer short-term virtual stock advances to help the trader continue trading without leaving their store to go to the bank for a loan.
• Single client view: enabled advisors to provide more relevant/ value-adding solutions to clients

Q-.Can you highlight some of the negative and positive implications of COVID-19 on the BFSI industry in the Southern Africa region?

Covid-19 has accelerated the shift to digital. For banks and other financial services companies who were slowly shifting towards becoming more digital, it has now become an imperative to move more quickly to change their business model. Those who move quicker will thrive, those who don’t pivot fast enough will be disintermediated and become a service in the back end.
Covid-19 has shown us that it is entirely possible to work more remotely and still effectively deliver to clients. Going forward, this will mean that our people will have more flexibility in the way in which they work, and it provides the opportunity for real estate savings.

Positive:

• Opportunity to deepen client relationships and goodwill (supporting them through hard times)
• Increased digital adoption in the client base(e.g. online banking/transacting)
• Innovation in banking channels and new financial technology (new channels, better digital CX)
• Event-driven business (restructures, M&A activity)
• Increased use of modern tools of BFSI staff resulting in a more efficient workforce
• Easier access to global talent a (potentially) improved employee value proposition (e.g. flexible hours,work from home)
• Potential reduction in fixed cost base (e.g. office space)

Negatives:

• Credit risk/ default risk
• Lower interest rates
• Less disposable money in circulation, low economic activity (e.g. lay-offs, pay cuts etc.)
• Loose monetary policy (inflation implications)
• Cyber security/ risk
• Negative impact to revenues given economic stagnation
• Neutral (debatable)
• WFH considerations (e.g. burn-out, flexible hours)
• Impact on diversity and inclusion (flexible hours and voice-only interactions may have a strong positive influence on women, especially in environments/ teams that have a much larger male component)

Q-.The power of partnerships should never be underestimated, especially in the financial services industry. How can the collaboration within FinTech’s and Traditional Banks be fostered?

Using ourselves as an example, we have invested in or partnered with fintech start-ups over a number of years through a small team whose job it is to look for and make strategic investments and alliances. We realise that we don’t have to build everything ourselves, and that partnerships create shared wins much more cost-effectively and efficiently, ultimately benefiting our clients, who get a solution, our partners, who achieve scale more quickly than would have been achieved otherwise, and ourselves.
This obviously does not form the bulk of our offerings and solutions – yet – but we believe it is an important part of our overall business. Developing partnerships based on each company’s strengths to leverage each other’s client base and expertise.

Some of the ways to collaborate include

• Optimising legal structures to enable equity/ VC type investments
• Simplifying access to business, simplification of procurement processes
• Banking as a Service - Provide support, Access to capital/ SMEs, Access to data, Access to office space, Act as a financial backer/ underwriter
• Formal structures to introduce partners to the business include - innovation awards, academies

Opensource development practices and API-enabled, modular technologies that are attractive for partners to plug into a strong partner value proposition, including well-structured value sharing models. Branding and public messaging on sustainable business practices (E.g. a high BEE rating, low carbon footprint) – especially for large strategic partnerships even before the COVID-19 pandemic, as we have to reach the unbanked people in the rural areas.