Chief technology officers from Westpac and rival ANZ took to the stage at the FST Media banking conference today to discuss what IT projects make a bank truly “innovative”.
The two thought leaders discussed innovation in the context of an uncertain economy, with the number of patent applications plummeting in tandem with economic growth.
Both offered radically different opinions on what it meant to innovate as a bank.
Westpac CTO Sarv Girn first attempted to define innovation in the context of wider technology industry – comparing the research and development spend of some of the world’s largest companies.
He noted that the world’s biggest spenders on R&D – such as Intel and Microsoft, each invested over US$20 billion a year – but got less return from their R&D spend than Apple, which spent only US$4.5 billion but grew revenues at over 70 percent.
Quoting Steve Jobs, Girn noted that innovation didn’t necessarily translate from the “size of the pot you have to play with” but rather from people and their ideas.
In the financial services sector, Girn believes there are three areas of innovation – in process, product and customer.
The ultimate process innovation, he noted, was the supply chains of Dell or Walmart. In Westpac’s case, Girn pointed to the bank’s “one kitchen, multiple dining rooms” strategy, under which the group’s various banking brands access common processes and technology platforms (credit card platform, HR system etc) behind the scenes.
“When a customer comes in, they are not aware they are dealing with fundamentally the same organisation,” he said.
From a product perspective, Girn holds 3M and Google in high esteem. His favourite Westpac Group product is BT’s ‘Super for Life’, which surfaces superannuation information within internet banking to give customers easy access to their superannuation balance should they wish to add funds to it. The product was developed using service-orientated architecture, such that it could be progressively rolled out to the Westpac retail banking site, across the St George site and now across Bank of Melbourne’s online sites.
Girn said the ultimate in customer innovation was the Apple Store, which was modelled on customer service initiatives at the Four Seasons brand of hotels.
Within the Westpac Group, he felt BT Insurance’s approach to CRM was the best example – being that 90 percent of customer information is available on two screens.
ANZ chief technology officer Dr Patrick Maes, by contrast, told the conference he was “not really convinced” that Australia’s banks are innovating on product at all.
There was a “limited” number of opportunities for banks to design new products, he said, and adding new sales channels (mobile, online etc.) was only innovative if it didn’t product a “sub-optimal customer experience” for users of older channels (such as branch banking).
“The level of automation in an automotive assembly line is far more complex than transactions within banks,” he argued.
Australia has little automation for mortgage processing, he argued, a problem solved in the US and Britain. And too often, he noted, Australian banks choose to keep low level processes internal that could be outsourced for lower cost.
“Most investments [in banking technology] are on sticky tape,” he said. “Our processes are broken because we have too many systems, we have too many systems through poor processes.”
Maes said the real magic was in “business integration”, or what he calls “assembly”.
His view was that true innovation as a customer is in service integration – building services on top of a base loan and deposit platform. That might mean integrating assisted (contact centre) customer channels with non-assisted (online or ATM) channels. It might mean integrating processes between pre-sales and service systems, or having a holistic view of a customer despite data on that customer being “everywhere in the organisation.”
A true example of innovation, he said, would be the way different systems can be integrated together to offer a structured deal to a large client, such as a mining project. Or the use of a single platform to service customers that are domestic, regional or multinational.
What do you think? Do Australia’s banks use technology to ‘innovate’ on product or customer service?