Banking on a connected future

OCBC Group chief executive officer Samuel Tsien is thinking aloud, running through the permutations of the next big thing. Computing has transformed from the desktop computer to laptops and now mobile phones. Will the smartphone be rendered obsolete next?

"Now with Amazon's Alexa, Google Home, and Apple's HomePod, voice-activated devices might one day do all the things you want to do. Even phones might be outdated," Mr Tsien says.

Risks are also on his mind. With the digital revolution, banks around the world are consolidating their physical branches. But what if one day, trust is eroded in the Internet and digital banking?

"They may start lining up in our branches to validate their accounts. From a risk management perspective, we must be prepared should something happen."

Reaching out with tech

Tech's possible failings, however, are dwarfed by its potential. OCBC, the second-largest financial services group by assets in South-east Asia with a substantial presence in Singapore, Malaysia, Indonesia, and Greater China, is reviewing how much artificial intelligence (AI) to adopt in its banking systems, Mr Tsien says.

The bank recently introduced two first-of-its-kind chatbots, he says. One of them, Emma, can respond to mortgage-related questions, a first in Singapore.

Emma can calculate the amount a customer can borrow, and also prompts potential customers to enter their details so they can be contacted by a mortgage specialist. Some S$25-30 million in mortgages have already been secured in just over three months through Emma, he says.

The other chatbot, dubbed Buddy, helps OCBC staff with human resource-related queries. Buddy can be used anytime and anywhere, immediately and accurately answering questions like "How many holidays do I have outstanding?" and "What happened to my expense claim?".

The next step is for machines to score an application, or even identify the potential behaviour of a customer, Mr Tsien says.

Meanwhile, OCBC is experimenting with voice-activated banking. It already allows customers to transfer small amounts of money from one account to another through Apple's Siri.

"If AI can completely verify the authenticity of a person, we can do a lot of things. In the future, if you want to remit money to your relative in Australia, you will be able to talk to an Alexa-like device, which will figure out the corresponding bank account for the transfer," Mr Tsien says.

Banking on tech, outside-in

Another way for a bank to connect to potential customers is what he terms an "outside-in" method.

This refers to finding ways to insert banking products in a seamless manner, through technology, in non-banking services like health care and leisure.

This is done through inserting back-end connections known as application programming interfaces (APIs) to the websites and apps frequented by consumers.

Go to a hospital's website to search for services, and one might also be able to buy medical insurance from OCBC subsidiary Great Eastern by filling in a couple of details on the page.

Search for a destination on a travel agency's website, and one can access an in-built OCBC wealth planning platform to plan for their dream holiday. Hotel deals can be automatically converted into the customer's currency of choice based on latest data sourced from the bank.

The bank has already developed 22 such platforms or APIs, with functions like providing credit card suggestions based on a user's lifestyle, an education calculator to figure out how much one needs to save for children's education, a renovation loan calculator, or maternity insurance policies.

"If you go out and say, do you want to open a bank account, people might say no, I already have one. But if you go out and entice them into an ecosystem, you might be able to bring them in. The bank does not have to be at the centre, people can come to the bank," Mr Tsien says.

Bringing customers from the "outside-in" and reaching out to potential customers through digital means is an especially relevant strategy for countries with far-flung land areas like Indonesia.

There, OCBC has a single-digit market share through Bank OCBC NISP, which already has more than 330 branches.

In Indonesia, a sizeable and growing middle class might require banks to finance their aspirations for various goods and services, including insurance and health. "We are reviewing what we can do there," Mr Tsien says.

Chinese lessons

Mr Tsien's ambitions are not limited to the region. A veteran banker who has spent a significant part of his career in Hong Kong, he formerly headed Bank of America's Asia operations and its successor, China Construction Bank (Asia), before joining OCBC in 2007.

Since becoming the top honcho in OCBC in 2012, Mr Tsien has bet big on Greater China, steering the bank to acquire Hong Kong's Wing Hang Bank for S$6.2 billion in 2014.

Much ink has been spilt on China's slowdown, inefficient state- owned enterprises and the sheer amount of debt accumulated. But commentators often miss the significance of how planned China's economy is, Mr Tsien says.

"Authorities there have the tools, the channels, and the information. These three things are very powerful ways to manage the economy," he says.

"I don't want to sound too optimistic. China faces significant problems like overcapacity and its debt build-up. But they are aware of the problem and as they delay the problem erupting, they have time to absorb the problem."

China will thus not have a hard landing - the economic crash which the West fears. "They won't have a soft landing, which implies they will recover quickly. Rather, they will have a long landing," Mr Tsien says.

A fast-growing segment in China's economy is the Internet space. China is now notable for its tech giants Tencent and Alibaba, where everything from shopping, money transfers, cab rides or wealth management can be done on a single platform.

The country's digital scene developed so fast because the government allowed new ideas and ventures to prosper without clamping down much, he says.

Ultimately, in a digital future, humans may not perform as much labour but common sense, street smarts and an understanding of context cannot be replaced by technology, Mr Tsien says.

"Also, when you do things with us, you implicitly have trust in OCBC, you know you're parking a lot of information with us. So the human element continues to be important. Technology, too, cannot replace trust."