Digital at The Core

As a logical progression of its strong entrepreneurial heritage, Hong Leong Bank’s digital transformation continues to gather momentum in 2019. Group Managing Director and Chief Executive Officer Domenic Fuda provides an update on the Bank’s digital transformation journey and offers his thoughts to young talent seeking success in a work environment that is rapidly changing.

How much has the finance industry changed since you first started?
Our industry has come a long way since the introduction of internet and mobile banking, with technology being increasingly embedded into processes and offerings – and it will continue to head in this direction in the near future with much greater intensity.

That being said, it will not be at the expense of not maintaining physical access to products and services where customer contact with a branch or relationship manager remains important for complex services such as investments, bancassurance, SME banking and corporate banking, to name a few.

In early 2018, we launched our first digital branch concept at our headquarters in Damansara City, Kuala Lumpur, and more recently, launched another first in Penang. In line with being digital, there are no teller counters for customers to queue up nor are there banking backrooms to clear transactions. Instead, service ambassadors equipped with mobile tablets greet customers, and transactions are completed effortlessly through the tablets. This new approach greatly improves customer experience while visiting our branches.

The finance industry is one that’s been shaken up a lot by technology. What do you think is the biggest change that technology has brought to the industry?
For us, our direction is clear and we are very conscious in moving along our digital transformation journey. Technology, as an enabler, is something that will constantly change – but what does not change is our goal to deliver exceptional customer service and an ever-enhanced level of customer experience. To that end, the biggest change that technology has brought to finance and banking is to enable us to help our customers perform their banking and financial needs – making it simpler, better, intuitive and tailored to their preferences.

What is next in line in terms of digitalization and technology for the industry? What are some trends you see coming?
For starters, the upcoming 5G network will remove some of today’s network constraints and will make it possible for a true Internet of Things (IoT) experience, where machine-to-machine and human-to-machine experiences will be offered – which is inconceivable today.

We will see a refinement of machine learning and more advancement in Artificial Intelligence (AI) which will enable more seamless customer experiences, process automation and use of big data in functions such as compliance, operational and credit risk management.

As an example, rather than informing the customers that they have overspent this week, the conversation will shift towards highlighting how they might be able to get better value for money for certain products or services – this in turn will enable banks with a compelling digital experience to differentiate themselves from the rest and ultimately offer genuine recommendations to better financial wellness. Banking and financial services will see continued experimentation with new technical architectures that are completely digital at the core!

Tell us about digital banks – this seems to be the catchphrase for the industry. What does it involve and how would this change the way we bank?
In its pure form, digital banks started ‘life’ in the digital age – with the advantage and viability to bypass legacy issues that us incumbent banks have to go through to digitize our operations. Digital banks will be open 24/7, bringing unparalleled convenience and connectivity.

Specifically for us, it is about embracing an integrated digital mindset by embedding digital considerations in everything that we do. Broadly speaking, this involves changing the way we work, the way we collaborate internally and with partners, the progressive transformation of our products and services, and how we offer them to customers.

Use of data, for which banks are well-positioned given that we have rich transactional and financial data, will be increasingly augmented by in-depth personal and social data (such as geolocation, social status, likes and dislikes etc) - it will provide insights that will translate into contextual offers that are relevant and valuable to customers - these same insights were unavailable to us just a couple of years ago.

Digital banking will also entail the transformation of our workforce. Employees will need a different mindset as well as different skills than those that were required just a short 10 years ago to remain relevant, let alone competitive.

What about how would it change the way banks hire?
Digitalization is already influencing the way we hire - from the qualities we seek in candidates, the way we reach out to them and how we interact with them during the hiring process,

Last year, we ‘hired’ HALI, our Artificial Intelligence chatbot, as a Virtual Recruitment Assistant for the 2018 Graduan-MASCA (Malaysian Student Council of Australia) Career Fair to offer a better candidate experience, and to efficiently screen or shortlist quality candidates. The results were promising: Using HALI removed traditional bias such as degree qualifications, doubling the candidate pool. Candidates loved the experience of ‘speaking’ to HALI, rating their interactions an average score of 3.5/4. This was supported by a referral rate of 40 per cent, five times higher than the industry traditional average.

Most importantly, we were able to shortlist seven per cent of the candidate pool to pre-determined criteria (versus 1.33 per cent in the case of traditional recruitment), and save over 1,700 hours of work.

How is Hong Leong embracing the digital changes in the industry?
We seek to be digital not for the sake of being digital alone but instead to use technology to continually enhance customer journeys and be entrepreneurial in our approach towards banking and technology. It is this very mindset that has pushed us forward in carving out many firsts in the industry. For example, our Hong Leong Connect App offers a ‘three-word banking’ function which mimics spoken language. With three words, our customers are quickly ported to the right tools, helping them to transfer funds, pay bills, make one-click bulk bill payments, all speedily and hassle-free. This, of course, is in addition to enhancements to security features which include fingerprint and facial recognition user authentication (where supported by the mobile phone).

Our offerings are also predicated on how we go about our day-to-day business. We naturally carry our mobile phones wherever we go and it makes sense to link our banking services through mobile numbers. This led us to introduce our award winning PEx+, which has since been rebranded as Pay Mobile, available on the Connect App, and which allows users to easily transfer money by just keying in the recipient's mobile phone number. We even introduced a ‘Request for Payment’ function which serves yet another customer need, taking the hassle out of having to “remind” friends, colleagues and relatives to pay.

We aim to transform customer experience, by looking at how we can incorporate people's behaviour with intuitive functionality to provide a seamless experience; a new way of doing banking.

Our digitalization journey would not be complete without reimagining the way we work and collaborate with our employees. As we speak, we are working on transforming our processes and platforms to be fully adaptable to digital connectivity. Several digital initiatives have been implemented, aimed at assisting our people in carrying out their responsibilities more efficiently and attuned to how we live our daily lives. More projects are being planned around the same intention.

Amongst these is HALI - the first Al powered chatbot which now actively answers employee queries on Human Resources and Branch Operations policies and procedures. Employees no longer spend time looking up procedures and policies, and we expect this to lead toa 60 per cent improvement in operational efficiency within the first year. In addition, we no longer assign employees to man internal helplines but instead redeploy them to higher value and more engaging work, which in turn encourage career growth and improve overall morale.

Digitalization of our workforce does not end there. To ensure a holistic approach, we took learning and development to a whole new level with the introduction of SmartUp, a bite-sized knowledge sharing facility accessible on computer and on mobile devices providing e-learning facilities right at their fingertips allowing them to update their knowledge, insights and skills at their own pace and in their own time.

"Banking and financial services will see continued experimentation with new technical architectures that are completely digital at the core!"

What are some unique offerings Hong Leong has made to coincide with the trend of digitalization?
I've mentioned a few of those already. Additionally, we have introduced the first-in-Malaysia cognitive computing technology that employs Al powered by IBM Watson. In a nutshell, our customers will have round- the-clock access via online live chat to information related to products and services of their interest while giving us clearer insight to our customers’ preferences so that we can proactively provide solutions. This has rewarded us with a reduction in waiting and service times during the calls as information is now speedily retrieved and conveyed.

Keeping us close to the ground, we set up our very own Customer Experience Lab or CX Lab at our Damansara City Headquarters in Kuala Lumpur. The CX Lab is a dedicated lab to facilitate experiments and prototyping of innovation and technologies using big data and analytics to gain customer insights to provide out-of- the-box digital banking solutions and fine-tuning existing offerings. The lab also serves as a collaborative space for internal cross-functional teams and departments of the Bank and is open to external collaborations to help empower innovation in our community. Powered by design-thinking methodologies, our CX Lab enables fast prototyping and iteration testing prior to launching our innovations to end-users.

Our partnership with Wechat continues to deepen. Since 2oth February, HLB’s existing and new SME customers are able to sign up for a WeChat Official Account (OA), which will further enable them to tap directly into the growing number of users on WeChat in Malaysia.

We have a lot more exciting stuff in the pipeline that we are currently working on which include further security measures around facial recognition, conversational Al, Augmented Reality, robotics, blockchain, and Application Programme Interfaces, just to name a few. Whilst a lot of the initiatives are at the employee and retail banking level, projects are underway in wealth management, SME and commercial banking that will transform how we work and the interactions we have with clients, whether self-initiated or assisted by our customer-facing employees.

How does Hong Leong encourage innovative thinking amongst its staff?
As we want to transform the business, our people too need to transform in order for them to grow - for this, we are preparing them to be fit for the future by helping them acquire new skills and encouraging personal growth.

We are guided by a six-pillar approach to ‘future-enable’ the skills of HLB employees with the right skills and mindset. These cover an essential list of areas including a heightened appreciation of digital means, making use of data in decision making, being human-centred in our design, applying agile principles in business, understanding the importance of communication and having a heathy appreciation of risks and governance. Our structured approach ensures that information is shared quickly and easily amongst our people whereas our CX Labs can be used for collaboration and experimentation on ideas, products, and services, empowering them in their own developmental journeys and above all else prepared to embrace and drive the digital future.

We welcome feedback and ideas, encourage employees to volunteer to be part of a team that is experimenting on a new product or service. We encourage use of RPA (Robotic Process Automation) to automate processes, facilitate change by picking a process or area that they feel passionate about and drive the change that they want to see. Of course, in all of these, there are things that work and others that don't. Experimentation is encouraged as long as employees take ownership, recognise the risk and monitor developments so that mid-course corrections can be done quickly or the project can be abandoned promptly, recognising the learnings without ‘wasting’ any more resources. To see innovation at a different level, we ask our employees to participate in our LaunchPad and #CanYouHackit programs, sponsored by HLB in collaboration with external parties to grow the start-up community. We have first-hand visibility of how start-ups and young entrepreneurs go about changing products and services, innovate, collaborate and generally disrupt incumbents. Hopefully, these activities will ignite the drive to innovate back at the workplace!

Your advice to young talent on how to reinvent themselves for the changing industry?
Work, as we know it, is being reshaped by all the technological advances we have mentioned. However, regardless of these external factors, there are some key qualities that talent should cultivate to find success in any environment. Alongside digital skills, today’s talent will need to harness a decisive mindset; to make things happen and take ownership in a fluid or ambiguous environment and demonstrate creativity, empathy and ethics. They need to nurture strength and agility in learning and a positive life-long growth mindset, and have the courage to challenge the status quo, and finally, to be driven and focused to contribute meaningfully to a successful business. Dare to dream and make it happen!

Your mantra for success, regardless of whatever changes are happening?
Be yourself, be honest and remember, your word is your bond: People will rely on what you say and it’s important that you actually deliver. And the only way to excel is to love the things you do, which will show up in the drive, enthusiasm and energy that you show daily.

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