Getting personal: banks must brace for change

Uguina: innovation will only work when it is supported and integrated at every level

Major global banks need to grasp social networks, cloud computing, user-generated content, personalisation, contextual information and gamification if they are to maintain a competitive edge and stay connected with customers. But they also need to ensure their innovations are transmitted thoroughly to all employees, according to panellists at the BAFT-IFSA conference in London on Monday.

“If you want to make an omelette, you need to break some eggs,” said Luis Uguina, global head of new technologies at Spanish bank Banco Bilbao Vizcaya Argentaria. “You can’t push this from a traditional IT department. It’s hard to convince a company of 110,000 people to change. For every product, you need an innovation person to be there. You need to mix the CIO with specialists in technology. You need to create special teams at every level.”

Uguina’s point was that innovation should never be locked away in an ivory tower, or isolated in an IT department that doesn’t connect and integrate with the daily work of the bulk of staff at a major global bank. It was a theme he shared with fellow panellist, Marcus Treacher, head of e-commerce, global payments and cash management at HSBC.

“You need to connect with clients and embrace change for the whole organisation,” said Treacher. “It is important to have an innovation section in your company, but not a large department of thinkers disconnected from the rest of it. Many of the best ideas for HSBC came from dialogue with clients. With banking, you could be doing something small that has real impact for clients. It is better to reach out to customers, than to get wrapped up in old school big projects.”

Bank executives have been talking about the best way to implement innovation for many years. The topic features heavily at Swift’s annual Sibos conference, where many of the themes are the same each year – big data, the rise of mobile devices, increased computing power, use of cloud platforms and outsourced service agreements. Some elements are relatively new, such as the internet of things. For Treacher, the main significance of these technologies is their capacity to force changes to long-established business models.

“Technologies will be disruptive,” he added. “Innovation will force us to rethink the business models with which we’ve been comfortable for many years. It’s daunting and, for the brave, very exciting.” Treacher added that innovation often takes unexpected directions, and often the best innovations are discovered almost accidentally, such as the ATM.

“On a smartphone, you can combine GPS and banking, facial recognition and buying a coffee,” he said. “It’s no longer predictable. What to focus on? Tablets and iPhones are just the beginning. The future is about collaborative technology. Having private connections to customers is going to become a thing of the past. We will be forced to collaborate and combine, and the internet of things will change the entire bank supply chain.”

Much of the debate revolved around data, and attempts to make sense of what the numbers calculated by major financial institutions actually mean. For example, figures provided by Morgan Stanley suggest that by the end of this year, more than 60% of world computing will be located at cloud facilities. According to Uguina, cloud is creating “new paradigms” like big data that allow new products that were science fiction three years ago.

It’s also long been known that mobile and new internet device usage is increasing faster than internet usage in many developed economies. At the same time, a study by marketing company Cone Communications, Big business in internet and social media found that 85% of corporate customers believe a company should customise its products. These findings led Uguina to a simple conclusion.

“Let’s go and personalise!” he said. “We need everything on mobile to be sure we delivered the best possible user experience. That means you need to change your mind in the way you design products, security and the way you deliver products and services to your customers – and doing it once won’t work. It’s not the same if I’m in London or Madrid or New York. We need to deliver different information depending on the context, every time. We need to move from big data to smart data. Don’t have it static in a database. Use it to provide the right information at the right time with the right products.”