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SMBC: A commitment to technology

Partnerships on facial recognition and blockchain technology are part of Japanese banking giant's digitalisation efforts

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Mr Nishisaki: ‘With society digitalising at a rapid pace, SMBC has to keep up its efforts at providing sophisticated solutions for its retail and corporate customers.

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SMBC's FinTech strategy will be developed in these key areas.

AS TECHNOLOGY relentlessly marches on, Japanese banking giant Sumitomo Mitsui Banking Corporation (SMBC) is committed to staying ahead. Be it in exploring biometric authentication technologies, implementing artificial intelligence (AI) in contact centres, or testing blockchain technology for cross- border trade transactions, SMBC is adopting new technologies and promoting digitalisation across its businesses, says Head of SMBC Asia Pacific Ryuji Nishisaki.

In Japan, a project team to look at FinTech initiatives was set up in 2012, and formalised into the IT Innovation Department in 2015. In Singapore, where the bank has been present since 1963, the Asia Retail Innovation Department was established this year to support SMBC's affiliates and partners in the region, notably in high growth markets like Indonesia.

"Singapore as our regional headquarters today is a display of our confidence in the market's talent pool. In addition, the country's FinTech community is an advanced one, burgeoning with innovation and resources, making it ideal to hub the team here," Mr Nishisaki says.

He says SMBC, which employs more than 1,100 staff in Singapore, views four main opportunity areas for digitalisation - enhancing customer experience, generating new businesses, improving workforce productivity, and upgrading management infrastructure.

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To spearhead the push, the bank has in 2017 appointed a Chief Digital Innovation Officer to implement an IT strategy, he says. The IT Innovation Department also continues to work with numerous partners in the field.

Biometric authentication

Customer identity authentication is a critical process in banking, and recent advances in the field can help the bank to achieve efficiencies.

Biometric authentication in particular promises to make fraudulent impersonation extremely difficult, while providing customer convenience by eliminating the need to carry physical identification cards. To explore the field's potential, SMBC has partnered with NTT Data Corporation and Daon in a joint venture to offer the technology to e-commerce sites, electricity and gas companies, and insurers among others.

The bank also jointly conducted an award-winning project with NEC Corporation in facial recognition. The project involved 1,000 SMBC employees, whose pre-registered facial images were matched against images taken by cameras at dining facilities at SMBC's head office. Payment is automatically deducted from employees' monthly salaries the following month. A security feature is that facial data are stored as numerical values, making it difficult for a third party to identify faces of registered users even if it can obtain the data. This project won a Minister of Economy, Trade and Industry award at CEATEC Japan 2017, Japan's largest IT and electronics trade show.

With smartphone facial authentication technologies in the limelight, the project was also lauded for showing much promise for marketability with its high authentication accuracy enabling hands-free transactions. The project team is currently looking at expanding this to provide secure, cashless and cardless payment services at its branches in the future.

Improving the customer experience

SMBC has also been experimenting with AI technologies like natural language processing, machine learning, and chatbots to improve the customer experience.

SMBC was the first Japanese bank to introduce AI to support its call centre agents in 2014. It uses AmiVoice, a speech recognition solution by Advanced Media Inc that converts voice into text. IBM Watson Explorer, a solution from IBM, can process vast amounts of unstructured data and provide suggested answers to staff based on the text which has been converted from speech.

In South-east Asia, SMBC is collaborating with its Indonesian affiliate PT Bank Tabungan Pensiunan Nasional (BTPN) to reach out to new customer segments.

In 2015, BTPN launched its Wow! mobile banking service offering savings, payment, purchase and money transfer services. The branchless service is provided through BTPN Wow! agents, who are typically grocery stores or small business owners.

The following year, SMBC worked with BTPN to launch Jenius, a smartphone digital banking application targeting middle-class customers and high net worth individuals. The app allows for payments, savings and budget planning.

Blockchain, big data and start-up

SMBC is also involved in several blockchain-related initiatives. In February 2017, SMBC and IBM Japan agreed to initiate a proof-of-concept to assess if a distributed ledger (based on blockchain technology) can be applied to cross-border trade transactions.

If electronic data can be shared speedily and safely between multiple parties like exporters, importers, forwarders, shipping companies and port authorities, operating costs can be considerably reduced.

In the area of big data and analytics, SMBC is partnering SAS Institute Japan to use AI to speed up the detection and reporting of suspicious transactions, to comply with anti-money laundering regulations.

The bank continues to invest in cutting-edge areas. In July, it announced its partnership with US venture capital firm Entrepreneurs Roundtable Accelerator (ERA), with the aim of spurring innovation, particularly in FinTech, to create value-added, marketable financial services it can roll out to its customers. Based in New York, ERA is the city's largest and oldest technology accelerator.

"As we grow organically across Asia, it is critical that we integrate our IT and data management infrastructure and enhance our business intelligence capabilities to create new business frontiers," Mr Nishisaki says. Ultimately, with society digitalising at a rapid pace, SMBC has to keep up its efforts at providing sophisticated solutions for its retail and corporate customers, he says.

"We will continue to transform our business model through digitalisation and inspire our employees to innovate and grow together with our customers."


SMBC's Digital Transformation Journey

2012

  • Set up project team to look into FinTech in depth

2014

  • Became the first Japanese bank to introduce artificial intelligence (AI) to support contact centre agents

2015

  • Officially set up the IT Innovation Department

2016

  • Expanded AI capabilities across all call centre desks

2017

  • Appointed Chief Digital Innovation Officer
  • Won 'Minister of Economy, Trade and Industry Award' at CEATEC Japan 2017 for facial recognition project
  • Initiated a proof-of-concept with IBM Japan on blockchain technology in cross-border trade finance
  • Invested in New York's largest and oldest technology accelerator Entrepreneurs Roundtable Accelerator to spur innovation for new services
  • Established the Asia Retail Innovation Department and SMFG Silicon Valley Digital Innovation Laboratory
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