UOB's $1.5 billion tech spend propagates ASEAN businesses, bank services
By Celine Chen
SINGAPORE, NNA - Global banking group UOB, which has a particularly strong foothold in Singapore, Malaysia, Indonesia, Thailand and China, forked out $1.5 billion (S$2 billion) on information technology from 2014 to 2019 to ensure the quality and robustness of its digital infrastructure and services across the region.
The Singapore bank has built a distinct structure that enables them to digitize customer services at scale and at speed consistently. Customers could get the product or service they need across all channels, whether online or in person, with customized service and solutions driven by AI and data analytics.
Launched in 2015, its mobile banking app UOB Mighty is known for integrating banking, payment and lifestyle services. The app also introduced an AI-driven digital banking service that provides personalized insights based on the customer's banking pattern to help them save and spend more wisely in Singapore and Malaysia.
UOB also created a unique engagement-focused digital bank model for ASEAN’s digital generation who expects intelligent and individualized services on their mobile phone.
The TMRW digital bank, first launched in Thailand in 2019, and subsequently in Indonesia this year, boasts a fully integrated digital service combining biometrics, chat, video, and voice technology.
"We see this model as a flywheel in which customers who are most engaged with UOB will continue to be active users – this in turn enables us to continue to use the data generated through each transaction to personalize further the TMRW experience for these customers and to continue the relationship for the long term," said a spokesman for UOB.
The bank's solutions in its all-encompassing repertoire, from wealth management to a new electronic forex exchange service to be launched are indeed numerous, though not without criticisms even from long-term customers using its private banking and credit card services in a competitive market.
They had demanded more 'outstanding' innovations and services to be more customer-centric, giving examples of how they were better served by some rival companies. They range from disappointing financial advice from staff who did not work long with the bank to inflexibility in processing annual waivers for credit card fee.
On why he stays loyal to its credit card, T.K. Tan, a medical practitioner, said, "I have eight different credit cards. I still use UOB because of air miles. But I hope they can explain clearly their UNI dollar reward system."
Another loyal customer, K.C. Chow, a senior manager, urged the bank to be flexible in keeping promotion benefits longer for those who have made long-term financial commitments.
However, a long-term customer, Soo Yew Weng, a regional vice president for SES Video, only had praises for UOB, for being "proactive and responsive" to customer needs.
He said, "The credit card service is good and efficient. Their online banking has improved tremendously over the years and it's easy and convenient to use. It's the only bank I use."
Digital improvements carried out by UOB have helped businesses in their digital transformation during the pandemic which has devastated most of the economies of Southeast Asia.
This year, the bank launched in Singapore UOB Infinity, a new mobile app that provides business customers with intuitive features such as a customizable desktop, cash management capabilities and trade services.
In terms of assets, UOB is the third largest bank in Southeast Asia, after its Singapore rivals DBS and OCBC,
NNA speaks to Susan Hwee, UOB's Head of Group Technology and Operations, about how its initiatives are helping ASEAN businesses ride out the economic storm of the pandemic. She also gives insights into UOB’s successful digital strategy.
Q: What new digital solutions does UOB offer to business clients?
A: This year, we launched in Singapore UOB Infinity, a new mobile app that provides business customers with intuitive features such as a customisable desktop, cash management capabilities and trade services. Our small-and-medium-sized-enterprise (SME) customers across ASEAN are also tapping the convenience of our digital banking services to help them minimise the disruption to their businesses.
Three in four businesses banking with UOB are using our internet banking service for companies called UOB BIBPlus. SMEs can also use the mobile UOB Business app for their banking needs. For example in Vietnam, SMEs can use the app to submit their application to open a bank account, without the need to visit the branch. Once the application is approved, the SME will be able to start transacting with the account in as fast as one business day.
Q: How else is UOB supporting businesses?
A: UOB’s innovation accelerator, The FinLab, supports financial technology companies, start-ups and SMEs across Malaysia, Singapore and Thailand through their business transformation journeys. In running the innovation accelerator programme over the past five years, we have received interest from start-ups and SMEs across ASEAN to join The FinLab community.
To give more ASEAN business owners and entrepreneurs access to our business transformation programmes and to The FinLab’s community of like-minded SMEs, technology providers, consultants and mentors from UOB and across industries, we launched The FinLab Online in April this year.
Q: Many SMEs still find it daunting to go digital? How does The FinLab help them?
A: With the implementation of COVID-19 restrictions across many countries, more businesses have prioritised and accelerated their digitalization efforts, sometimes out of necessity rather than choice. As these businesses implement digital solutions to solve pain points, they may fall into the trap of easing symptoms rather than taking the opportunity to transform their businesses holistically for the future.
Many SMEs embarking on a business transformation journey find it daunting given their lack of knowledge on where or how to start. This is why at The FinLab, our approach is to guide our start-ups and SMEs through an holistic evaluation of their business’ key challenges and needs. This enables them to have clarity on the root causes of their business challenges and to determine a sustainable digital transformation strategy that can drive their business for the long term. We then match them with the relevant technology solutions.
We have more than 1,500 technology solution providers across the region whose solutions can enable the digital transformation drives of the SMEs in The FinLab community. We also collaborate with institutes of higher learning with expertise in different areas of innovation, as well as with consultants and mentors to share best practices with SMEs.
Q: How does UOB manage to innovate so successfully with digitalization in such a diverse region in ASEAN?
A: At UOB, we are very clear that we must keep building on our competitive edge as a regional bank in ASEAN. To do that, being able to innovate at scale is critical. Our technology energies and resources are focused on our business priorities.
They are three-pronged: to extend our regional connectivity in support of our wholesale banking business; to expand our omni-channel and digital strategy to serve ASEAN’s rising affluent segment; and to enhance our regional infrastructure to optimize synergies and scale.
Our technology strategy centers on three key pillars to enable our business priorities. The first is driving standardization across UOB’s regional network. By standardizing our systems and processes across our network, we are able to ensure a seamless, uniquely UOB customer experience across the region.
Our IT architecture features standardized core systems on which an integration layer is built. This enables us to plug in new technologies as we innovate for our customers and to scale these solutions speedily across the region. At the same time, we are able to limit exposure to our core banking systems, thereby ensuring that we continue to meet our robust risk management frameworks.
The second is our focus on forging partnerships with technology providers to complement our in-house architecture, build and design capabilities.
The last pillar of our technology strategy is to balance innovation with our strong risk culture. As a bank, we are highly regulated and this means we must be mindful of our obligations and how our innovations create a safe, smarter and simpler experience for our customers.
Where there are innovation models and best practices that are already available and which meet our business objectives, our IT architecture is built such that it enables us to be agile to adopt and to adapt new innovations quickly. Because our regional platform is largely standardized, we can then roll out these new innovations at scale across the region.
Q: How does UOB address obstacles posed by the different regulatory requirements in ASEAN countries?
A: It is easier said than done because ASEAN is such a diverse region and each market has its own set of regulatory requirements and business dynamics. It takes perseverance, commitment and a multi-year investment to be able to build to scale.
Imagine for example, the complexity of connecting with more than 20 regional payment rails, each with its own infrastructure and regulatory needs. And this is just one facet of what is required for a bank to build a multi-country standardized banking system.
Many organizations, even multinational corporations, often do not stay the course to establish a standardized IT platform across their key markets for this very reason, preferring to add as they go. This often leads to systems that work in isolation, and in the end, drive poor business outcomes.
But at UOB, we are reaping the benefit of speed of scale and cost efficiencies because of our commitment to stay true to our regional IT strategy.
Q: Can you give a good example of one of your standardized platforms?
A: Our global Customer Relationship Management system sits on a single platform for our Group Wholesale Banking teams to manage end-to-end client relationships across 16 markets. This enables our client relationship managers to have a holistic overview of their clients' businesses across our network and to provide bespoke advisory and banking services for them. Our standardized IT architecture provided the foundation for the centralization of the platform and the implementation across all 16 markets was completed within just 12 months.
Q: That is amazing. What other new platforms have been built?
A: Our modular IT infrastructure was also essential in building TMRW, our full-fledged digital bank, from scratch in just 14 months and then to be able to deploy it across multiple countries in a matter of months. Just a year after we launched in Thailand, Indonesia was next.
While TMRW is the same digital bank in both markets, it does have some differences such as in the onboarding process to address the regulatory, technological and cultural nuances of each market.
Q: Can you elaborate on how the digital bank in each country is tailored differently to serve customers effectively?
A: The way in which customers open a TMRW account in Thailand and Indonesia also shows the benefits of the nimble and agile architecture which we have built. In Thailand, customers can sign up for a TMRW account, then head to any of our conveniently-located TMRW authentication kiosks to complete the onboarding process by simply scanning their fingerprints or facial features. This innovation taps Thailand’s national biometrics database, of which TMRW is the first bank to use.
In Indonesia, banks are required to have a face-to-face meeting with any customer opening a bank account. As a mobile-only digital bank, we designed the onboarding process such that TMRW customers do not have to visit a UOB branch if they did not wish to do so by implementing a video chat feature within the mobile app.
When we tested the service however, we found that the inconsistency in broadband cellular network reception across the country meant that some customers may not have enough bandwidth for a video call. To ensure a consistent onboarding experience through a video chat, we optimized the data stream, so that even in areas where the bandwidth is low, customers can still speak with a TMRW live agent with minimal disruptions.
Leveraging our regional architecture enabled UOB to launch TMRW in 14 months. By building on our modular regional platform, we have the agility to adapt TMRW to meet the different country regulatory requirements without rebuilding the digital bank from scratch.
Q: How has the standardized regional architecture helped to optimize UOB's IT investments?
A: Today, our IT platform is also serving us well as we ramp up on our innovation and transformation drive across the Group. The standardized regional architecture enables us to optimize our IT investments to allocate more than 60 percent of our IT investments into “change-the-bank” initiatives, of which more than 60 percent are for our regional franchises.
Q: How do you strengthen the second pillar of your technology strategy when you complement in-house capabilities with external partnerships?
A: By forging partnerships with technology providers, we can complement our in-house architecture, build and design capabilities. In collaborating with and adopting new technologies, there are several considerations, including an appreciation of the technologies that will become foundational versus those that are technology fads that may not be widely adopted. In this respect, we adopt the fast follower approach to implement technology that can enable our business requirements.
However, what has not changed is that banking is a highly-regulated business and we need to evaluate carefully and stringently the technology available and its longevity once implemented. We also look at the partners in detail because many financial technology firms are still in the early stages of their businesses and we cannot run the risk of the technology failing because the fintech start-up fails.
Q: How has UOB's approach to digitalization enabled the group to stand out and stay ahead of the competition?
A: While technology solutions are rarely unique, the way in which they are built into the technology infrastructure to drive specific outcomes can be unique to an organization. We believe that our omni-channel and digital customer engagement strategies are a case in point as they are enabled by the capabilities we have built and are what differentiates us from our peers.
Take for example the digital engagement engine that we have built for TMRW. We brought together the complementary strengths of our fintech partners Meniga and Personetics as well as our unique cross-functional Engagement Labs (eLabs) to use data analytics to personalize the TMRW experience for each customer. Today, this same digital engine runs through our regional mobile banking app UOB Mighty. Meniga cleans and categorizes large volumes of transaction data which is then fed into Personetics’ AI-driven cognitive analytics solution to identify transaction patterns.
Q: Interesting. Tell us more about your AI prowess.
A: Both TMRW and UOB Mighty’s eLab teams of specialists from a range of various disciplines including data analytics and behavioural and decision sciences use the results generated by Personetics to design digital conversations in the form of ‘insight cards’ within the mobile apps which are personalized, familiar and intuitive to our customers. These ‘insight cards’ are crafted in the customer’s mother tongue and take into account the cultural and linguistic nuances of each ASEAN market.
Q: How do you ensure that your digital banking app serves customers well?
A: When we built UOB Infinity, our digital banking app for business customers, we focused on creating a distinctive and consistent digital experience across all devices, whether through the app or on a web browser. UOB Infinity comes with the same existing controls and workflow that our business customers are familiar with and expect. These include having in place the necessary delegation and authorization levels required for governing financial transactions and the integration to relevant payment rails to support our customers’ business needs.
With the ever-growing range of technology solutions available in the market serving different needs, we work closely with our partners such as those in the areas of enterprise technology, financial technology and regulatory technology. Key for every technology solution that we adopt is that it must suit our business focus and fit our architecture. The agility of our purpose-built IT architecture means that we have the flexibility to plug and play out-of-box solutions, customize solutions to meet our specific needs and co-create new solutions where there are none available in the market.
Q: With UOB's vast achievements in digitalization, what fintech issue does the group still have to grapple with?
A: One hurdle that we often face is finding the right technology solution that enables us to meet our business aspirations and goals. The fintech industry in ASEAN is growing, but it is still in a nascent stage. To meet our business needs, we have had to cast a wider net to invite global fintech companies such as China’s PINTEC and Israel’s Personetics to work with us and to launch their businesses in ASEAN.
Q: In UOB's tech strategy, how is innovation balanced with risk management?
A: As a bank, we are highly regulated and this means we must be mindful of our obligations and how our innovations create a safe, smarter and simpler experience for our customers. For example, UOB has pioneered a digital customer engagement model, first seen through our digital bank TMRW.
We remain committed to enhancing our digital engagement capabilities within the bank and through strategic partnerships with and investments into relevant fintech firms. Because our regional platform is largely standardized, we can then roll out these new innovations at scale across the region.