#GROWTH Asia Banking Summit: Decoding Digital Banking

The Digital Revolution is disrupting the banking sector like never before. Especially in the case of the Philippines, where the CIMB (a digital-first bank), headed by Mr. Vijay Manoharan as the CEO, has registered phenomenal growth, banking is now at the edge of transformation in this country.

About CIMB

CIMB (Philippines) has acquired over 4 million new customers in a matter of just two years – which is nothing short of greatness. At its core, CIMB has embraced digitalization and made it work in tandem with the fundamental needs of its customers.

Exploring the success story of CIMB to gain more insights into the world of ideal digital banking, Anna Green is in conversation with Vijay Manoharan in this session.

Watch the full video here:

Bridging The Digital Divide

In the Philippines, as Anna points out referring to a 2019 statistic, about 71% of the adults are still “unbanked.” This is a staggering number for a country that is on its way towards development. In the case of CIMB, to have gained a colossal 4 million new customers on their digital banking platform in just 2 years, this statistic is something to talk about. Anna addresses Vijay with a very important question: How is the CIMB looking at these unbanked individuals, and what is it doing to bring them on board?

At this point, it is important to see through the clutter and reach into the fundamentals of the problem. Why are a majority of eligible Filipinos not formally banked yet? Vijay explains that the root of the problem lies in the complications involved with traditional banking. “How do we change the banking system that makes it a whole lot simpler, a whole lot less intimidating?” Vijay says, remembering his own experiences with traditional banking.

The first issue to address was identified as making the onboarding process simpler during the initial steps. While traditional banks required more identification documents to let a person open an account with them, the CIMB app needed just one for the initiation. The account created thereby could be formalized bit by bit over time with more IDs.

Vijay’s second issue was the give-and-get equation of traditional banks, which mostly strategize on their margins rather than returning value to their customers. This is where CIMB cashed in – by incentivizing the people who banked with them. Higher interest rates, zero-fee transactions were just some benefits the customer got.

How are Banks Transforming Into Digital Banks?

Compared with the neo-banks that already have a digital infrastructure in place, traditional banks need a lot of upscaling before being digitalized. CIMB, however, has brought the two together in a harmonious confluence. Vijay explains that this was made possible by bifurcating the entire operation into two fronts: technological and business.

Technologically, the banking app was kept streamlined and integrated – a one-stop place for the customers to access all banking operations through a single interface; a robust architecture well connected between the front-end, the middleware, and the backstage. Business-wise, the model banks on the uniqueness and value it brings to its customers, its entrepreneurial culture, and its ability to build strong partnerships.

How is Digital Banks Dealing With The Privacy vs. Personalization Paradox

Data invariably follow digitalization – and this is where the lines get fuzzy and the area grey. CIMB, however, has a clear set of guiding beacons that has helped it navigate the narrow ridge of personalization and privacy deftly. Vijay emphasizes, “In terms of privacy laws and regulations, the good thing about them is that they are very clear.”

At the core of CIMB, using deep analytics to understand user needs while staying within the guardrails of data privacy and using the collected data intelligently are the mantras to giving the consumers a good final product.

Digital Banking Apps in Competition With The White Label Apps

Any average mobile phone today lives inundated with an assorted collection of applications. It is inevitable for the digital banking applications to become “just another one” of these – to avoid which CIMB has a very simple and logical strategy. “All the areas that a consumer goes to on a day-to-day basis, we want our app to be there,” Vijay clarifies.

It isn’t a competition for a mobile phone’s real estate – it is just reinforcing the purpose of having an application available. To give the customers a simpler way to pay for their movie tickets, or to book a cab or purchase groceries – this is what the app is for. There is no forceful tactic to have anyone install or use the app. In just becoming “a simpler solution” to every financial transaction taking place, the CIMB app leapfrogs over its competition easily.

Digital banking is the new era of banking – it is more holistic, a tool and method of managing your finances – a step further and beyond what traditional banking could ever be or will be.

FAQs

Saurabh eagerly points out a thoroughly interesting question from the audience, asking Anna how traditional banks compete with the new FinTech / DigiBank entrants. The Asian demographic is given to doing everything through their mobile devices, whether banking, retail, booking cabs or other day-in and day-out activities. Because of this, the newer banking entrants are more enthusiastic in providing this demographic the same level of engagement in the banking ecosystem as well – which the traditional banks are finding slow to catch up to.

Speaking of how digital innovation in the non-bank realm challenges the banking ecosystem, Vijay highlights that because of FinTech and money management systems in place that do not require an entity to be a bank, big conglomerates would now want to tap into banking and compete with traditional banks. Saurabh adds to it by pointing out that conventional banking wouldn’t just need to reinvent its infrastructure and its people into becoming digital-friendly.

One question directed towards CIMB Bank specifically asks Vijay what digital offerings the bank is planning apart from those already offered. CIMB Bank believes in delivering true value to its customers, which begins by prioritizing quality over quantity, according to Vijay. Since the digital offerings are concerned, Vijay highlights that CIMB is looking to expand into the SME space.

Summing Up

Traditional banking today is not the whole and sole proprietor of money management in a consumer’s life. Much like ordering food online, FinTech is bringing banking convenience to the table and reimagining its future. Demographic has a big role to play, and starting with Millennials; The populace is welcoming finTech. The future of banking is digital.

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