Australia's Bankwest isn’t embarking on a digital transformation because it’s trying to be ‘cool or trendy’ or do something different to its competitors. The transformation is “absolutely about survival” and making sure the bank can exist in an increasingly digital environment, says its tech boss Andy Weir.
In a wide-ranging presentation at the recent CIO Summit in Perth, Weir, who is Bankwest’s executive GM, technology and transformation, quoted Peter Drucker who said: “The greatest danger is times of turbulence is not turbulence itself but to act with yesterday’s logic.”
Weir said that even if an organisation’s people understand what is happening in a given environment, still applying the same thinking and the same solutions to new problems in changing circumstances is not going to work.
He also drew on the wisdom of Jack Welch, who stated: “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”
“So the question we all have to ask is: “Are we actually keeping pace? Are we transforming at the same rate as the transformation that is occurring outside our organisation?” Weir asked.
The rise and fall of bookseller Borders was a classic case of digital disruption, said Weir. It was a failure of managers who became complacent about the retailer’s customer proposition.
“[Borders] believed that because its customers loved their proposition, this would never change. The greatest irony of the Borders story is that they outsourced their online distribution to small organisation at the time named Amazon. And I don’t need to tell you how that worked out for both parties.”
A ‘frictionless’ customer experience
Organisations like Amazon Go and Uber are delivering frictionless customer experiences that have implications for other organisations, said Weir.
“You can’t get any more frictionless than not being there at all; and the implication for any organisation from this kind of customer experience is that is raises the bar for everybody. For a bank that still makes people go down to the Post Office to prove their identity or asked for faxed information, how do you think that stacks up with customers who are able to do things in the way they can with Amazon and Uber?”
Weir added that system availability is also key to delivering a good customer experience, stating that “five nines availability is absolutely dead and buried”. The minimum expectation for system availability in financial services is around-the-clock, no exceptions, he said.
When Weir joined Bankwest in 2006, the organisation had a big outage where the majority of its systems were down for two days.
“We got one call from the local radio station over the course of two days," Weir said. "I can compare that to July 2016 when we lost a lot of our customer-facing systems for four-and-a-half hours in the middle of the day. It was Armageddon, we had news crews parked outside from virtually every major network; the phones were running hot, social media exploded."
This shows that in a very short period of time, customers’ expectations have ‘gone through the roof” from a technology and availability perspective, said Weir.
“We still do the shutdown between 12am and 2am on a Saturday night, Sunday morning when we need to do maintenance. We post it up on social media and apologise for inconvenience. There was a Facebook post from a guy in New York, who said, ‘it isn’t 12am where I am mate. It’s 10am and I want to do my banking.’ So the global context also kicks into that,” Weir said.
Threat from new, ‘digitally optimised” players
The arrival of new financial services players, with systems ‘optimised for digital’ also have big implications for Bankwest, he said.
Bankwest is 120 years old and Tyro is 14, he said. Last year, Tyro processed more than $9 billion in payments and now has a banking license.
“They [Tyro] have never had a system outage and they do that with 200 [staff] give or take. The type of competitors we are dealing with are fundamentally different and don’t have the legacy challenges that we have as an organisation,” Weir said.
“Incremental change is no longer acceptable; organisations really need to think about bold, transformational steps to be successful in the environment that they now operate in. This is not a technology issue, this is customer-centricity and a cultural issue.
“Organisations have got to recognise the need to change – that they have to think and act differently, do things differently and leverage technology, but it’s not about the technology itself. You start with the customer experience and then you work back from there.”
Bankwest’s ‘Halo’ payment ring – which enables users to make ‘tap and go’ payments as an alternative to cash or a contactless card – is an example of this thinking, he said.
The $39 product was launched in January and followed an internal trial of wearable payment with 400 Commonwealth Bank staff last August.
Weir said Bankwest has been “absolutely blown away by the take up” of this innovation despite refusing to divulge how many of these devices have been sold to consumers since the January launch. Halo won two awards at this year’s RFI Australian Retail Banking Awards in Sydney.
“At a time when the whole world is clamouring to towards Apple Pay and paying with [smartphones], we have tried to push ahead of that and show something that is even more convenient and a step close to biometric payments which believe me, are not going to be very far away.”