Digital Banking Have You Befuddled? Chris Skinner’s Latest Book Has Practical Plans – Forbes

Chris Skinner, who has written several excellent books about digital banking, has a new volume, Doing Digital: Lessons From Leaders, coming out in February.

His last book, Digital Human, wound up with a 100-plus page in-depth case study of Ant Financial, which is something of a digital deity of fintech. For example, on Singles Day which Alibaba invented a few years ago Alibaba had revenue of $30.8 billion, up 27 % from 2017. The first $1 b settled through Alipay in the first 1 min 25 seconds; Alipay was processing 256,000 transactions per second — Visa averages 2,000 — and Amazon on Black Friday 2018 had revenues of $5 billion.

In his new book, he is offering some hope, and paths, to mere mortals of the financial tech world, but even that company is pretty rarefied. Skinner, who has been writing The Finanser daily blog for more than 10 years and traveling the world learning, consulting and reporting, set out to find the banks which had made, or were well in the process of becoming, true digital banks. He came up with five which agreed to talk to him — BBVA, headquartered in Spain; ING, headquartered in the Netherlands; JPMorgan Chase, U.S.; DBS, headquartered in Singapore; and China Merchants Bank, in China.

For bankers who have little hope of attaining anything remotely resembling Ant Financial’s results, these examples are supposed to offer some practical ideas for how to get to get their entire bank, not just one or two channels, to digital.

“Many bankers think if they have a mobile offering they have done digital. The banking model is built for physical distribution — we’re going to digital distribution.”

Most banks, says Skinner, are still built on an industrial age model based on paper and distribution through branches, supported by a legacy core system of product silos, no comprehensive view of customers, accounts by branch and batch processing. He is dismissive of Apple Pay which just moves a credit card from a physical card alone to a physical and a virtual card on the phone.

Alibaba and Alipay focus on the customer journey; making payments is a by-product of the app. His five banks have tech in their DNA but most banks do not, he says in the book and in his blog, suggesting bank boards ought to have a balance of bankers and technologists. Curiously enough, his featured bank, DBS in Singapore, has a board composed largely of ex-bankers, and its CEO, Piyush Gupta, subject of a long interview, is proud of that. (Skinner doesn’t address this contradiction of a favorite talking point.)

Gupta said the success and scale of Alibaba scared him and the bank set out aggressively to study the Big Tech companies, sending its CIO to Silicon Valley to meet with all the leaders, which he did. DBS leaders decided that if the Big Tech companies with a billion users could move away form mainframes to cloud, a bank could too.

DBS also decided its frame of reference would be Big Tech, not other banks, leading leaders to ask “What would Jeff do?” Referring, of course, to Amazon CEO Jeff Bezos.

It moved 85% of its tech to the cloud in four years, although mostly to a private cloud, leaving some efficiency on the table compared to a public cloud but maintaining full control of its technology and avoiding reliance on an external cloud provider.

Then Gupta took a trip home to Delhi and saw his 83-year old father banking and buying online — his granddaughter and grand niece had shown him how. But in the bank, he realized, nobody lets you learn by doing. In 2016 the bank set a KPI of running 1,000 experiments. (One should note that the board backed this transformation with $200 million for innovation beyond the regular tech budget.) I wrote about DBS and analytics last year and about Gupta’s view of rising Asia presented at Sibos in Singapore.

The bank acted boldly and replaced its legacy core banking systems. It moved from 18 tech stacks in 18 countries to a single core banking app, Finacle, in 15 countries in 17 months.

You should try and change everybody and go for broke, advises Gupta, whose motto called for Making Banking Joyful. The involved tech transformation, customer journey thinking and creating a startup culture in the bank. DBS , trained the whole bank in a five-day customer journey thinking program and created internal innovation hubs where people collaborated with each other and with outside tech providers. You can see videos by going to YouTube and typing in DBS Innovation Hubs.

Skinner’s prescription for change is to decide what to change, then how to change, then change and after that change better.

“For example I talked to a CXO of a bank that was actively engaged in ‘doing digital’, but neither she nor the rest of the banks executive team knew what doing digital actually meant.

“I was a bit surprised at this admission and gave her my spiel about the logic of digital change to which she replied ‘We don’t need to have someone explain that we need to transform to be digital. We know this. The issue is not that we need to change, but we need to know what to change and how to change.”

Skinner follows up with specific suggestions on how to approach change. “Doing Digital: Lessons from Leaders,” is broken into practical chapters drawing on the experiences of the five banks who agreed to talk. The chapters show how Skinner breaks down his approach: The Leadership Challenger, The Technology Challenge, The Customer Challenge, The Employee Challenge and The Partnership Challenge. Finally a concluding chapter asks Is Digitial Transformation Worth It?

No need for a spoiler alert — I’m not sayin’.

(You can follow Chris Skinner’s blog at TheFinanser.com and if you are in London and other major financial centers in Europe check out the FS Club which recently joined forces with Z/Yen. When I was in London I always enjoyed their meetings which had good content and great networking.)