To be digital-ready for the post-pandemic recovery, financial institutions must build resilience, reimagine and reinvent their strategies and operations. In this interview, Connie Leung, Senior Director, Financial Services Business Lead - Asia at Microsoft , tells us how Microsoft has been adapting to the new normal and helping financial institutions to succeed.
Q: How do you think the global pandemic has affected businesses in the financial services industry? What do you consider as the biggest challenges?
The pandemic has become the biggest risk event worldwide and we see that the current implications are profound with the slowdown of the global economy, zero interest rates, loan losses, and widespread business disruptions within the Financial Services Industry (FSI) and beyond.
We are working with our customers in the industry to support their immediate priorities and needs, which we have realized center around a few key things:
This is crucial for organizations to measure risk exposure and modelling. One of the challenges was quantifying Covid-19's impact while ensuring compliance with regulators on core ratios. With the rise of sophisticated fraud and financial crime during this time to exploit the fear and concern of customers, organizations have also needed to step up on security against cyberattacks and identity scams.
Q: Has Covid-19 become a wake-up call for financial institutions in terms of digital transformation?
I would say that it has very much been a wake-up call for many within the industry, both regulators and banks alike. The pandemic has required organizations to adapt rapidly to change including remote working, introducing new digitally connected services for customers and even new business models.
All this requires speed, agility, and applying adaptive measures, and would be impossible without embarking on digital transformation. Within the industry, some organizations were previously putting off digital transformation or seeing it as a nice-to-have. However, the pandemic has been a needed reminder of the integral role that technology plays today.
For organizations that have already begun their digital journey, and specifically, have adopted cloud services for better flexibility and scalability, their transition to remote work has been relatively seamless. The converse is also true. For those who have yet to adopt cloud technologies, they face significant challenges in ensuring that employees are connected to the company network securely during work from home.
Beyond Work from Home, the recent months have also seen an increased demand from customers for digital services. With the preference for services on the go, and minimized physical interactions for health and safety, FSI players have needed to rethink manual customer service processes and take this fully digital. I think that many of our customers are still weathering through the digital journey.
Q: How is Microsoft helping financial institutions in providing the best digital experiences and the agility to rapidly adapt?
Our mission is to empower individuals and organizations to achieve more. During this time, our commitment remains the same and we are supporting financial institutions in their efforts to respond to the challenges of this pandemic, as well as recover faster and reimagine their businesses for the future.
Together with our partners, we are working with the customers in the industry, so they can leverage the technology, expertise, and also best practices from other organizations. Let me share a couple of examples how we do that.
1. Empowering remote work and servicing
For employees who can work from home, we have been helping our FSI customers enable remote collaboration through Microsoft Teams. This has proven effective in ensuring seamless and productive collaboration, both within and outside of the organization, through secure virtual events and services to high-priority customers and high-risk communities through virtual banking.
Combined with Dynamics and partner solutions, employees can now operate across a full range of services to customers, including know your customer, onboarding, e-selling and e-signature. We work with customers to deploy Dynamics 365 and Power BI to drive greater customer insights and better manage client data.
2. Improving business outcomesDuring this time where physical interactions have been reduced and virtual services have been at the forefront, we help relationship managers obtain meaningful customer insights through our digital feedback loop. Developed to be a single source of truth, this infuses data and AI into every process so that more value-added and personalized conversations can be held with customers based on their preferences and current considerations. In turn, the product development cycle can be enhanced with customer feedback on an ongoing basis.
3. Driving operational agility and efficiencyOrganizations are increasingly automating their processes not only to reduce costs but streamline the processes and improve efficiency. Customers are leveraging Artificial Intelligence (AI) and cognitive services to make the automation process accessible and seamless for organizations.
In the last few months, we have increasingly been helping customers move workloads to the cloud. Financial institutions are turning to cloud services because they realize that it is integral for risk management – computer power will be needed to run risk modelling at the capacity they require at this critical time.
This includes a large bank in Australia, whom we are partnering to architect a multi-cloud ecosystem that will host 1,000 of the banks' applications on Microsoft Azure as the primary cloud. Another partner of ours is a leading international bank that we are co-innovating with through Azure to empower innovations in open banking and real-time payments.
Q: What are Microsoft's 3 most prominent products that are helping financial services organizations meet the demands of today?
We recognize the critical role that technology plays in supporting operations and business continuity. As the industry faces new challenges, we are committed to helping customers stay up and running, and transition toward the eventual rebound and moving to the new normal.
I think every customer is unique. And there is no one-size-fits-all scenario. What I would say though is that the most prominent products and solutions are those that make the biggest impact for our customers, allowing them to adapt and transform. Let me name these, which our customers are betting on for their transformation within the FSI industry today:
1. M365 modern workplace solutions
These have been critical for remote working, collaboration and in enhancing the productivity of employees. At the same time, they meet the regulatory security and compliance requirements for financial industry customers.
2. Teams, Dynamics 365 and Data and AI
This second category has been instrumental in driving the new digital customer experience that organizations within FSI need to develop today. Not only do they empower seamless real-time communications to customers, but this is also supported with rich insight for personalized services that aid in customer retention and success.
3. Microsoft Azure
Cloud is becoming an increasingly important part of the equation to enable the agility and resilience required to keep the industry thriving. Specifically, the modernization of core systems such as payments and core banking, as well as security measures to mitigate the risk of attacks. Azure cloud also provides built-in compliance features to address key requirements, meeting the broadest array of certifications and standards in the industry—more than 90, spanning over 50 regions and countries.
We work with a variety of financial services businesses across Asia who choose Microsoft Cloud. Across our various customers, there is one thing in common: we create technology platforms and solutions to help our customers innovate, grow, and transform.
Q: Covid-19 is changing people's relation to work. We observe an acceleration of remote working trends. How do you see the future of work?
I think that remote working is here to stay, and we will transition to what we call a hybrid workforce. Many of our customers within FSI are already planning the comeback with a remote workforce, as people are witnessing how much can be achieved remotely.
We are unlikely to go back to pre-Covid times where work was synonymous with being in the office. Through this time, we have seen how digital capabilities have given employees the flexibility and agility to work and engage at anytime and anywhere. This has been crucial in improving customer engagements, now that they can have the option of interacting with financial institutions both at physical locations and remotely. This same flexibility and agility will drive tremendous changes in working behavior, a change mindset to drive further business outcomes and growth opportunities for our customers.
The pandemic has also shown us that we do not need to be bound by geographical boundaries, which has opened a huge opportunity for organizations in the future of the workforce as they transition toward recovery.
Q: How do you see the impact COVID-19 has made on customer behavior and how do you think financial services can improve it in the long term?
During this time, we have not only seen a significant cultural change within organizations but also in customers, and what they expect of financial services. I think this has been a good example of how digital transformation is about change and a cultural transformation, rather than one that is solely about a change in technology.
At Microsoft, we believe that for organizations to successfully transform and have a Culture of Innovation, there must be a focus on technology adoption and culture and people's capabilities in order for sustained innovation to take place and digital transformation to be realized in the long run.
As I have mentioned earlier, COVID-19 has made the need for digital transformation within the industry so much more apparent and has changed the way that we offer digital capabilities to customers. They now expect even more seamless and personalized digital services, and this will continue to shape the way that products and services are designed, and the entire customer experience.
For our industry to reach the next level of offering improved personalized services to customers, as more data becomes available, AI-embedded services will become the new norm whether it is for KYC, credit score or special offers. What will make the difference in terms of ensuring the success of FSI organizations will be their willingness to accept change and introduce innovation both in their customer services and internal operations.
In the long term, agility will continue to be of utmost importance, and a quick time to market will help raise the levels of innovation within our industry. It is promising that many organizations within FSI are now taking the steps to go fully digital and leverage cloud technologies to improve their operations while looking to embed data and AI to empower decision making.
Q: From banking perspective, regulations in many countries allow processes such as customer onboarding to be completed fully digitally now. Do you think the pandemic will also have an impact on regulations in other countries?
At Microsoft, we have invested in broad engagements with regulators for the past 8 years, where we have had many 1 on 1 discussions with over 120 regulators, global and held several regional regulator summits. Through these dialogues, we have been able to create a constant feedback loop between regulators and customers and improve our services from a regulatory and risk assurance perspective.
It has been a journey of working with regulators to modernize regulations, which has resulted in us being able to establish our position as a trusted advisor when it comes to modernizing regulations, particularly in cloud computing.
To date, we have seen markets around the world updating regulatory guidance to provide clarity on the use of cloud, and a positive impact of cloud adoption by our customers.
I personally work closely with regulators in Asia and we are seeing regulators driving industry innovations particularly in our financial hubs, Hong Kong, and Singapore.
Overall, regulators are concerned about Covid-19's impacts and have been working actively with financial institutions to support business continuity and pandemic planning. Apart from that, they are showing flexibility to maintain resilience and liquidity, and have even been looking at cross-country collaborations to aid this. For example, the Monetary Authority of Singapore has recently announced enhanced data connectivity in Financial Services with the US Treasury and Australia.
Similarly, Hong Kong Monetary Authority (HKMA) and Insurance Authority of Hong Kong have amended their guidelines to allow the use of technology for non in-person channels to avoid physical interactions and our customers have leveraged this to accelerate the launch of new remote digital selling services.
Q: How do you see the future of branch banking post-Covid-19?
Banking channels are evolving to become a combination of various customer touch points which bank will ultimately need to create a seamless experience around for customers to be served anytime and anywhere of their choice, be it via web, a mobile app, in a branch or via the customer hotline.
Technology plays a key role to enable that journey to ensure a seamless and consistent customer experience, backed up by an intelligent digital process and customer data. There will be scenarios that customers need to be served by branch employees. The key to successful interactions would be ensuring that all customer history through other customer touch points with their respective data and insights are all seamlessly consolidated to empower employees with a 360-degree view of customers to interact and personalize their advice to customers.
Q: How does responding to Covid-19 together with VeriPark help financial institutions steer a course through the uncertainty and shape the path?
VeriPark is one of our valued solution partners that enables financial institutions to deliver customer experiences across digital and assisted channels. We believe that digital customer experience is a key differentiator of our customer offerings. VeriPark's solutions have incorporated a 360-degree view of the customer, empowered with AI tools, to help financial institutions develop personalized customers services and gain market share.
Customer experience is a continuous journey and we will continue to work with our partners to create a digital feedback loop to enhance the customer experience. In turn, serve customers better through intelligent decision making within our sector.
Q: What do you think should be the 3 key priorities for the financial services industry in the post-Covid-19 world?
First and foremost, technology is the foundation for digital transformation.
Data from Microsoft and IDC's latest study, "Culture of Innovation: Foundation for business resilience and economic recovery in Asia Pacific", revealed that 68% of organizations in our region is accelerating the pace of digitalization in response to this crisis. Today, technology is no longer a nice-to-have, but a must-have. Organizations thus need to focus on people and using trusted technology to weather the crisis.
In our new post-pandemic world, there will be new eco-systems and modes of operation. Organizations need to change the way they operate and pursue partnerships as they expand into new business and markets. Choosing a technology partner is key to support the growth, agility, and operating models to capture the business opportunities and markets expansions.
Organizations recognize that they need to embrace a culture of innovation and that fostering an environment where continuous innovation can thrive is the key to long-term resilience and success.
Specifically, 74% of all organizations have found innovation to be critical or important to their performance and resilience. Even more leading organizations with a mature Culture of Innovation share the same belief (98%). To do this effectively, organizations need to strengthen the pillars of People, Data, Processes, and Technology, which will require hard work but can pay dividends in the future.
Thank you Connie.