Redefining the Hong Kong banking scene
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Standard Chartered: Spearheading a cutting-edge virtual bank and a brand-new operating model
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S TA N D A R D C H A R T E R E D
With a ground-breaking virtual bank in the pipeline, Standard Chartered is showing it’s a true digital disruptor
‘
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re you a leader or a laggard? Will you disrupt your sector or will you be disrupted?’ These are just some of the pressing questions
facing businesses across the globe, particularly in the fast-moving fintech sector. On the road ahead, it’s clear that innovation is set to maintain its blistering pace in the banking industry. In fact, Gartner has 04
even warned that digitisation will ‘make most heritage financial firms irrelevant’ by 2030. For many businesses, it’s a matter of pushing yourself to evolve before someone else does – and that’s exactly what’s on the cards for financial titan Standard Chartered. With over a century’s worth of experience in the banking sector, Standard Chartered has a presence in 60 countries as well as more than 86,000 employees to its name. It has deep roots in the burgeoning Asian, African and Middle Eastern markets and as a result, Samir Subberwal, Managing Director & Regional Head of Retail Banking, Greater China & North Asia, contends the firm is poised for vast growth. “Whether it’s in Taiwan or India, China or Hong Kong, we are present in areas where the middle class and wealth are growing,” he enthuses. “We’ve played to our strengths in the
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S TA N D A R D C H A R T E R E D
“ Whether it’s in Taiwan or India, China or Hong Kong, we are present in areas where the middle class and wealth is growing” — Samir Subberwal, Managing Director & Regional Head, Retail Banking, Greater China & North Asia
market and we have aligned ourselves as a bank of choice for the affluent and emerging affluent.” Speaking in the company’s sleek office in Hong Kong – a city hailed as one of the top three financial hubs in the world – Samir points out what the city’s growth has meant for the company since it first arrived 160 years ago. “We are a trusted partner for the people of Hong Kong,” he explains. “We have over 70 branches in Hong Kong and we are one of only three note-issuing banks here.” Not one to
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rest on its laurels, Standard Chartered
CLICK TO WATCH : ‘SAMIR SUBBERWAL, REGIONAL HEAD, RETAIL BANKING, GREATER CHINA AND NORTH ASIA, ON UNIQUE FOOTPRINT AND DIGITAL ASPIRATION’ 07 is acutely aware that, in the banking world, you need to innovate constantly if you want to keep up with the competition. The bank has taken this in its stride and decisively doubled down on its technology capabilities with its ambitious ‘Refresh Strategy’ that brings technological innovation to the fore. “As part of our enhancements, we launched a new chatbot and we’ve launched a new FX
Deniz Güven, CEO of the Virtual Bank by Standard Chartered with Samir Subberwal, Managing Director & Regional Head of Retail Banking, Greater China & North Asia
capability across the region. On top of this, we launched a new mobile funds capability and we’re revamping our mobile banking platform for our customers,” lists Samir. “We also launched QR cash, where w w w. s c. com
“Using truly cloud native technology creates a completely different speed of development, allowing banks to launch and innovate far quicker.� Paul Taylor CEO, Thought Machine
What the Standard Chartered team have been able to do in a few short months is quite unprecedented in banking. They have set out to create one of the first, truly, virtual banks in Hong Kong. Unwilling to wait for potential disruptors to enter the market, they are putting their future into their own hands. Unwilling to play catch up, they are reimagining their entire business model. They are playing to win. And we’re proud they selected Thought Machine as the core banking engine.
Learn more about Thought Machine
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S TA N D A R D C H A R T E R E D
CLICK TO WATCH : ‘DENIZ GÜVEN, CEO, VIRTUAL BANK ON ON WHY STANDARD CHARTERED IS LAUNCHING A VIRTUAL BANK IN HONG KONG’ 10 you can withdraw cash out of an
shouldn’t anxiously wait for new
ATM using a QR code rather than
innovative products and services that
a card, and we rolled out real-time
could eat into their market share.
onboarding for customers in India
Instead, they should create their own
and Singapore last year.”
disruptive offerings – that way, if it
Yet perhaps the crowning jewel in
cannibalises the old proposition they
Standard Chartered’s digital strategy
won’t lose their market share. This is
is its cutting-edge virtual bank. In a
precisely what Standard Chartered
recent blog post, Deniz Güven, CEO
has done, setting out to create one
of the Virtual Bank by Standard
of the first virtual banks in Hong Kong
Chartered, urged businesses: “Canni-
which will act as a separate entity
balise yourself, otherwise, someone else
to Standard Chartered. It’s both a
will! You can delay the deadline but don’t
defensive and offensive move; with
be too late to build a ‘New Operating
a standalone virtual bank, Standard
Model’.” In essence, businesses
Chartered hopes to defend against
E XE CU T I VE PRO FI LE
Samir Subberwal Samir Subberwal is currently Managing Director & Regional Head, Retail Banking, Greater China & North Asia at Standard Chartered Bank. He has worked for the bank for over 20 years. In his role as Managing Director, Samir is responsible for developing business strategies, delivering financial performance, improving business efficiency, driving digital agendas, and enhancing organisational efficiency in the region. He is also responsible for ensuring opportunities to enhance shareholder value are identified through organisational and external growth with the optimal allocation of resources. Prior to his current role, he was the Managing Director & Head, Retail Banking, Hong Kong. Samir was responsible for leading the overall development, implementation and delivery of a distinctive Retail Banking busines strategy and financial plans to ensure the businesses are managed in alignment with Group and regional policies and risk parameters. Samir originally joined the Group as an International Graduate and has since held a variety of increasingly senior roles across five different geographies over the past 20 years. In these markets, he has held roles across sales, business development product management & wealth management.
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Samir was born in Mumbai, India, and gained an MBA in the USA. He is married with two daughters.
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Banks reinvent themselves – GFT crafts the solutions to make this possible
A GFT is enabling Standard Chartered Bank to rapidly prepare for the launch of the Virtual Bank in Hong Kong. In this interview, Christopher Ortiz, Managing Director at GFT, speaks about the key role played by this pioneering technology consultancy. How is GFT participating in the build of the Virtual Bank? GFT has been working alongside Standard Chartered on this project from its inception in 2018. Today, our 25+ strong team dedicated to this project represents around 10% of the total number of people working on the launch of the Virtual Bank. As a digitalisation and transformation software engineering consultancy, GFT primarily drives three areas in this project: DevOps / infrastructure, back-end development and missioncritical data infrastructure. Why was GFT selected for this project? GFT brings to the table a deep understanding of technology (in this case cloud technology), methodology (Agile and DevOps development) and financial services, which is a rare combination. For over 30 years, we have been working with the largest tier 1 retail banks, investment banks and asset management companies to apply technology solutions to help solve their specific business challenges. Our consultants are certified in AWS, GCP and Azure cloud platforms. The teams have ensured the successful launch of various virtual banks and delivered around the world. To find out more about how GFT can help you to transform your business, contact: > florian.becker@gft.com
About GFT A blog.gft.com twitter.com/gft_en linkedin.com/company/gft-group facebook.com/GFTGroup >gft.com
GFT is driving the digital transformation of the world’s leading companies. With strong consulting and implementation skills across all aspects of pioneering technologies, GFT’s clients gain faster access to new IT applications and business models.
CLICK TO WATCH : ‘SAMIR SUBBERWAL, REGIONAL HEAD, RETAIL BANKING, GREATER CHINA AND NORTH ASIA, ON SAMIR ON SUCCEEDING WITH PARTNERS’ 13 potential disruptors and proactively
a bank, apply and get personalised
take on incumbents in the fiercely
financial services on the go, in real time.
competitive banking market.
By pioneering a new financial revolution
Teaming up with travel-focused
and disrupting its very own business,
fintech Ctrip Finance, telecoms
Standard Chartered sees its virtual bank
provider HKT and its parent company
as the ticket to banking success because
PCCW, the bank has forged a new joint
not only does it offer a new proposition
venture. The JV in question, SC Digital
to the market, it’s also championing
Solutions Limited, has been granted a
a brand-new operating model.
licence by the Hong Kong Monetary
Deniz is well-equipped to lead the
Authority (HKMA) to create one of the
ambitious new virtual bank; in a
first virtual banks in the region. Virtual
previous role, working at Turkey’s
banking goes a step further than current
GarantiBank, he helped to spearhead
online banking services, enabling
the first mobile-only bank in the
customers to start a relationship with
country, iGaranti. He’s keen to stress w w w. s c. com
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“ Many people talk virtual banks, neo banks, challenger banks and digital banks, but we like to describe how we’re building a future operating model for Standard Chartered” — Deniz Güven, CEO and Executive Director of Virtual Bank by Standard Chartered
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Read more about our work with Standard Chartered Bank in this issue
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E XE CU T I VE PRO FI LE
Deniz Güven Deniz is an internationally recognised leader in driving digital transformations and bringing new digital banking experiences to audiences globally. As the CEO of the virtual bank by Standard Chartered Bank, Hong Kong, Deniz leads the team in building a smart bank to solve clients’ pain points with real digital services. The new banking model focuses on financial inclusion and fostering dynamic partnerships to create a comprehensive digital ecosystem. Deniz joined Standard Chartered in 2017 as the Global Head, Design and Client Experience, where he oversaw client journey and optimizations, digital wealth, and collaborations with tech firms and start-ups.
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Prior to joining Standard Chartered, Deniz served as the Senior Vice President at BBVA Group’s Garanti Bank in Turkey. During his role at Garanti, Deniz was responsible for end-to-end digital assets, as well as iGaranti the first mobile only bank in Turkey. Deniz played an important role which enabled Garanti to reach 5 million active digital customers and to grow their market share in Turkey. Deniz holds a Bachelor’s Degree in New Media and Communications from Marmara University and an MBA from Istanbul Bilgi University. In addition to being a technology enthusiast, he enjoys yoga, writing and supporting the Besiktas Football Club.
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that while there are many so-called digital banks in the market, Standard Chartered’s virtual bank is radically reimagining the entire business model. “Many people talk virtual banks, neo banks, challenger banks and digital banks, but we like to describe how we’re building a future operating model for Standard Chartered,” explains Deniz. “Some businesses create a mobile platform, push marketing and call it a challenger bank. We, however, want to rebuild and recreate our business model.”
This is no mean feat. After all, Standard Chartered’s Virtual Bank will see it build a new tech stack from scratch, become a real cloud-based bank, redefine the customer onboarding model and much more. Before the bank could begin tackling these massive hurdles, it first had to get its license from the Hong Kong Money Authority. At the start, Deniz’ team consisted of only 10 people who worked around the clock to finalise the banking application. “It was an important milestone for the bank,” he says. Now, with the license granted, the virtual bank is expected to commence early 2020 and will act as a wholly separate entity from Standard Chartered. “It’s a separate bank but our relationship with Standard Chartered is really close,” he notes. Samir echoes this sentiment, adding that while Standard Chartered has “sharpened its focus on the affluent and emerging affluent”, the virtual bank is allowing it to “resonate with younger customers such as millennials”. This is not the only partnership backing up the virtual bank. “As part of the joint venture we have partnered with PCCW and HKT, which, with more w w w. s c. com
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S TAT S
than 4 million customers, is the biggest mobile operator in Hong Kong,” says
• Oldest bank in Hong Kong, operating since 1859
Samir. “We’ve also partnered with Trip.
• One of three (and first) note issuing Banks in Hong Kong
Asia. I don’t believe we can provide all
• Over 6,000 employees in Hong Kong
ships are a key part of our strategy.”
• First batch to receive a virtual bank license in March 2019
com, the biggest online travel agent in the services that customers are looking for on our own, and so partnerJoint venture partners are just the beginning, says Deniz, noting that, when building a new bank from scratch, finding the right vendors is critical. “We selected Thought Machine as our powerful product engine and another important partnership has been with our processor provider Paymentology.
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S TA N D A R D C H A R T E R E D
C O M PA N Y FACT S
• Standard Chartered is listed on the London and Hong Kong Stock Exchanges as well as the Bombay and National Stock Exchanges in India • 86,000 employees • Presence in 60 markets • More than 160 years in business
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• Over 1,000 branches worldwide • Its employees come from 125 countries
Elsewhere, we’re working with Oracle and using their Netsuite programme. We’re also partnering with FICO to help us create our credit engine,” he says. Getting the right talent on board is critical for a digitally-savvy operation and so the bank’s partnerships with Vacuumlabs and GFT have also been fruitful. “They’re providing us with experienced software engineers and developers who are helping us build the bank from the ground up,” adds Deniz. The virtual bank has come a long way since its fledgling years. Its team is now over 100 strong, with 60% local staff and the remaining 40% coming from all over the globe. “We’re trying to get a blend of different people because culture doesn’t come from the top down – it has to grow organically,” Güven says. “We hope to hire around 50 people in the next six or nine months.” As well as getting its license, forging meaningful partnerships and hiring the right talent, Deniz and his team realised they needed to get a real glimpse of the virtual bank’s customers wants and needs. The bank conducted thorough research in the belief that if they could identify real pain points, then they could bring something real to the w w w. s c. com
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THE NEW WORLD OF VIRTUAL BANKS: PROFITABLE GROWTH WILL DEFINE SUCCESS Progressive regulation is creating open and collaborative ecosystems with both banks and customers moving up the technology maturity scale. With customer sentiment ripe for a new way of banking, virtual banks need to grow at scale, leveraging open, cloud-based platforms.
As A Customer Moves Across Lifecycle, The Satisfaction Drops And Digital Engagement Drops Satisfaction Level
While a perfect storm supporting the growth of virtual banks is brewing, success is not guaranteed unless new banks are able to transform into a data-driven, high-performance and profitable organization. Exceeding Your Customer’s Expectations Consistently and Across the Financial Lifecycle Virtual banks globally have done well in the on-boarding process but must prove themselves across the financial lifecycle as they expand into more complex product areas such as SME Banking, Mortgages, and Business Banking. A global survey conducted by Oracle showed that existing customers of traditional incumbent banks are ready for churn not at the beginning of the lifecycle but when more complexity appears in the relationship. This is where the rubber meets the road. Virtual banks need to have a nimble, friction-free approach across processes, and an ability to act on customer data insights to elevate the overall service experience.
Origination
Payments & Transfers
Personal Loans
69%
30%
want their entire financial lifecycle on digital channels.
are open to trying a virtual bank
Home Loans
Investment & Financing
Source: Oracle Report - The New Digital Demand in Retail Banking
3 Critical Aspects of Running a Virtual Bank Using Data as a Core Asset Across the Business Virtual banks can leverage data insights via agile technology stacks to offer the customer unique personalization. To grow market share and reduce churn, it is critical to implement an analytical architecture and automate using artificial intelligence and machine learning. To ensure long-term profitability, data-driven tools should be used to optimize on capital allocation, customer data management and to mitigate risks.
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Enable the Strategic Role of CFOs & Customer-facing Teams CFOs have increased responsibility for providing data-driven business enablement: 40% of banking CFOs say they need to provide proactive analysis of future business scenarios. Also, 66% of global banking executives consider aligning financial performance and risk data very important or critical to success. A common analytics platform helps give a real-time picture of a bank’s business and aligns finance, risk and performance management strategies under the same data-decisioning engine and platform.
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Enable Regulatory & Finance Crime Compliance Anti-Money Laundering (AML) technologies like graph analytics and machine learning, applied to histories of transactional data, can help virtual banks curtail criminal flows of capital that put their customers at risk. With the ever increasingly complex business and regulatory landscape, virtual banks need to make use of Know Your Customer (KYC), risk or compliance data associated with running a new bank to gain business insight.
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Drive Ecosystems Partnerships The ability to tie up options for eCommerce, transport, lifestyle and payment all in one seamless digital banking experience is critical. Oracle is enabling virtual banks to jumpstart such initiatives with more than 1600 ready to deploy Oracle Banking APIs. Virtual banks can scale and react with speed and agility to incorporate new products and processes onto their platform and easily connect with third-party products — offering more choices to the end user.
Venky Srinivasan, Group Vice President, Sales, Asia Pacific and Japan, Oracle Financial Services venky.srinivasan@oracle.com https://www.linkedin.com/in/venkys1/
The new wave of virtual banks will need to journey through different stages of ongoing adaptation in the bid for growth and profitability, greater customer traction and market share. Oracle is assisting banks in redesigning the customer journey right from the API strategy, front-end customer-facing applications to the back-end rails of modern and digital core platforms. The result is better digital services that boost customer value and understanding their needs more deeply across the financial lifecycle.
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table. “Ethnographic research was so important to the project. We reached out to 2,000 customers from different segments and different classes who had different behaviours and passions,” explains Deniz. “This bank is going to be a service-led bank instead of a product-led one. Therefore, we tried really hard to understand our customers’ pain points so that we could differentiate ourselves in the market and help them.”
“ We plan to start by acquiring ‘heart share’ with Hong Kong clients before building up market share. When people start to talk, recommend, share news, and get excited about our services and offering – that will be the biggest prize for us” — Deniz Güven, CEO and Executive Director of Virtual Bank by Standard Chartered
Deniz and his team are maintaining a consistent focus on customer w w w. s c. com
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CLICK TO WATCH : ‘DENIZ GÜVEN, CEO, VIRTUAL BANK, ON ‘FUTURE OPERATING MODEL’’
Samir Subberwal, Deniz Güven, Mary Huen (CEO of Standard Chartered Bank in Hong Kong, Chairman of Virtual Bank by Standard Chartered) Zhe Wang (Head of Overseas Business, Ctrip Finance) Janet Feng (CEO of Ctrip Finance and on the board of the Virtual Bank by Standard Chartered) Monita Leung (Head of Financial Services, HKT) Susanna Hui (Group Managing Director of HKT, and on the board of the Virtual Bank by Standard Chartered)
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centricity as the virtual bank’s launch
impressive scrum boards decorate the
draws closer. “Our aim is to bring the
walls and, overlooking over the city’s
best customer experience and digital
impressive skyline, the firm has
banking services to Hong Kong. We
positioned itself in the heart of Hong
plan to start by acquiring ‘heart share’
Kong’s bustling financial hub. The city’s
with Hong Kong clients before building
banking market is a dynamic and
up market share. When people start to
advanced one and, with online banking
talk, recommend, share news, and get
use only set to rise, the virtual bank
excited about our services and offering
is getting ready to make its mark.
– that will be the biggest prize for us,” he says – and with a palpable sense of drive in the air it seems this is well within grasp. The virtual bank’s office is testament to its high ambitions; w w w. s c. com
32nd Floor 4-4A Des Voeux Road Central Hong Kong T +852 282 033 33 www.sc.com