Tuesday,16 July 2024

In conversation with StanChart’s David Whiteing on technology, innovation, regulatory compliance and operational resilience

5 min read

Interviewed By Foo Boon Ping

David Whiteing, chief operating officer at Standard Chartered, discusses the bank’s digital transformation, its various digital platforms and partnerships to expand the financial ecosystem, and the technologies that are enabling sustainable finance.

This year’s Sibos 2021 conference theme ‘Recharging Global Finance’ explores how the financial ecosystem is redefining itself to meet client, regulatory and society’s demands of the future. David Whiteing, chief operating officer of Standard Chartered, discussed how digitalisation is transforming the way that banks and Stanchart in particular, as a cloud-first institution, do banking and finance; how Stanchart’s various digital platform and partnership have expanded its financial ecosystem to deliver consistent client experience, drive income while lowering costs; and how technology enables it to become a sustainable provider of finance.

Whiteing joined Stanchart as Group COO in September 2018 from Commonwealth Bank of Australia where he was the Group CIO. He is responsible for all the technology and operations teams and for delivering the Group’s strategic pillar of ‘world leading application of operations and technology.’ He is a highly experienced executive with a track record of delivering cultural transformation in Australia and around the world.

The following key points were discussed:

Below is the edited video transcript:

Foo Boon Ping (FBP): Welcome David, and it is good to have you with us. We see that the financial services industry is going through an extraordinary period of change. The pandemic has accelerated the shift and adoption of all things digital and mobile. In the past year, we have witnessed an explosive growth in the digitalisation of economies, lifestyles and everyday experiences. The increasing adoption of advanced technologies in artificial intelligence (AI) and big data analytics will enter a new dimension with the introduction of 5G and so will the migration to the cloud; open banking and ecosystems. And the maturation of blockchain technology will make central bank digital currencies (CBDCs) a reality. What will the role of banks and banking be in an era of blockchain, cryptocurrencies and the shift to decentralised finance?

I'd like to start first by discussing the creation of market leading digital platforms. For Stanchart, automating your end to end operations to support market leading digital platform is key to providing consistent client experience, drive income, and lower service costs. Delivering capital light products through sustainable finance franchise are also some of Stanchart's priorities. How is Stanchart essential responding to the changing operating and technology landscape, which has seen more regulation around customer data protection and privacy?

Responding to the changing operating and technology landscape

David Whiteing (DW):Thanks for the question. I think the context in which we operate has changed dramatically since the beginning of 2020. And so almost, by default, because of that context change every business globally, not just our bank has had to redefine and redesign how they do their jobs and how they engage with customers and fulfill those customer needs. And the really interesting thing with that context changes that it's required businesses to achieve things that they may have been thinking about may even go so far as to planning and providing to do them, but maybe had a three plus year timeframe, bluntly, have had to get stuff done measured in weeks and months rather than in months and years. There still remains some pretty important things that needs to be done that it will take longer. But the characteristics are very clear. And this is clear because customers realise that digital is no longer an option, that it's a necessity. And definitely more convenient, they realise that. But interestingly, they've also appreciated that it's significantly more resilient. So from a business continuity perspective, committing your business, regardless of which industry you're in, more digital characteristic is essential. And so whilst banks have traditionally been digitally focused, what we see is that across industries that that is becoming the mantra elsewhere. So for us, the things that we now double down on is, really making sure that we are consolidating and building platforms that are strategic in nature, but not as fragmented as we may have built technology in the past. So really committing to global platforms, both in the corporate side and institutional side, but also for consumers through digital only banks, such as what we've done with Mox in Hong Kong, and what we will be doing with NTUC in Singapore. It's also one thing to describe it, it's another thing as to how do they get provisioned and delivered. So really committing to cloud first approaches where we can deploy, iterate and partner in in real time rather than the lead times that have taken us before. Building those capabilities so that they are much more open and easily accessed through things like APIs. Creating an environment where we expect many, many more partnerships, because we are just one provider in the set of services that customers need to deliver an outcome for their customers. And so ultimately, our ability to think beyond just our customers’ needs, but into their customers’ needs, and seeing if we can provide services that support that will be helpful. And so that requires people to change, and adopt new tools and skills. It requires us to be extremely customer centric. And then with all of that comes a whole host of characteristics, like new ways of working, so we organise work around multidisciplinary teams. We shrink delivery times, by measuring it in days and weeks, rather than in months and years. We do a significantly larger amount of experimentation and iteration, often in partnership with customers, versus trying to guess what we think they need. And all of those, kind of gets wrapped up in a characteristic that we hopefully, over time, will see the bank moving faster, reacting more quickly to the customer needs, innovating more, and possibly partnering more as we as we think about the future. 

FBP: All these changes are great for consumers. They provide a lot of choices and lower costs and speed up transactions and convenience. From the from the regulatory perspective, are you seeing any shift, some of the regulators are kind of demanding more from institutions in terms of what they do to protect privacy of consumers data, and how you can use technology to access and use those data? 

DW:Globally, regulatory demands and expectations continue to increase, continue to remain important for us to be compliant. And I think there's no world in which we will operate, where we get a free pass that we will always be expected to meet those. You can think about regulation as a burden and a challenge. Or you can reframe regulation, and think of it as a failed customer need. Regulators will not regulate on data privacy, and conduct and mis-selling, if we had been diligent and not taken advantage of our regulators, or our customers sorry. And so when a customer feels that they have no other recourse other than to go to a regulator that suggests that we haven't, I mean, generically, the industry, not just us possibly haven't listened carefully. So when you reframe regulation as fulfilling a customer need, I think it changes the energy and it changes the way you think about that design, and you think about it as an opportunity rather than as a burden. And so yes, regulation will continue to be a challenge that we need to build into our plans. And it's just another requirement and our ability to think about that more holistically. Think ahead of the curve and anticipate some of these things. But ultimately, if you have an over indexing on thinking about what's really right for the customer, I suspect you're more likely to be consistently on the right side of regulation. And it's going to feel a lot less intrusive and a lot less of a burden. Then if you don't think about the customer.

FBP: In terms of driving aggressive digital adoption, obviously, the pandemic has helped accelerate that. And you have set quite ambitious targets to onboard 95% of your corporate, commercial and institutional banking clients onto your digital platforms by 2023. To this end, you've gone to the cloud, you introduced a slew of digital platform initiatives such as Trusple and Olea, a lot of it leveraging off blockchain platform. Tell us how is Stanchart leveraging this initiative to enable new business model and reinvent client experience? 

Leveraging digital platform initiatives to enable new business model and reinvent client experience 

DW:There are a lot of people that can get very excited about the technology and talk only about the technology. As someone who spent their career working in and around technology, I always come back to what's the customer need that we're trying to service. And every time we deploy a technology, it should make a customer's life easier, simpler, more intuitive, it should make our lives easier and more automatic, automated and safer. And so, in every situation, and blockchain is a good example, it solves some problems that have been around for a long time. So, in a number of these platforms, it's about us being able to offer new services to clients, where they've got complicated needs. In the past, we might not have been able to provide all of those capabilities, or deliver all of those requirements, we would have taken the activity to a certain point, and then everything would have been on the customer. By deploying global platforms and really committing to technology, we create opportunities for other partners to come in and provide those value added services for the component that we might not be skilled at, or don't have the risk appetite for, and that the combination of a partner with our capabilities and our platforms, means that the customer doesn't have to go and solve it themselves. They don't have to do fragments of a flow or a transaction in multiple different places. And so, I think these are the top two things that we that we look at and for us, whether they are built on the blockchain or some other new emerging protocol is a byproduct of the obsession with trying to meet that customer need.

FBP: And technology like blockchain, you're using it for two specific digital platforms, Trusple and Olea. And this you're applying to your digital trade platform. How do these platforms, or how do they change payment, settlement, and trade and what can we expect from these initiatives, in terms of how is Stanchart going to drive acceptance, adoption and usage? You need customers and you need counterparty banks to be on board as well.

DW:Olea is a joint venture with another one of our partners, Linklogis is a leading supply chain finance technology provider out of Hong Kong, China listed on the Hong Kong Exchange. Through Olea, we've just sort of fully digitised the trade finance origination distribution platform that brings together institutional investors seeking an alternative asset class with businesses that are acquiring finance. So it's a place where people with differing needs and risk appetites can come together and transact. The fact that it's built on modern technology gives it a convenience and an assurance that makes it easy and less friction involved. And that allows new participants to take part in the marketplace. But ultimately, those participants by virtue of their desire to be involved in other asset classes, and their capital makes the customer need get more easily fulfilled. Hopefully, a better value proposition to them. And Linklogis is an existing example is Yeah, then one of the largest supply chain providers for supply chain finance in China with about 20% market share. And essentially what they're offering is an ability to provide much more transparency of the risks and make sure that they are updated in real time. And that therefore people can be confident and have transparency around the ownership and the transfer of ownership and reconciliation of ownership as it moves through that supply chain. So really interesting cases, and there will be many more in other parts of the world and other parts of businesses and other value streams that we that we will always be alert to seeing whether that makes sense.

FBP: We touch on supply chain and Linklogis in China and some the platform. Trusple is a collaboration that you have with Antchain of Alibaba. In terms of working with China based partners, could you tell us is that with an insight into tapping some of the flows coming out from China?

Tapping into the flows coming out from China

DW:Well, it's no secret that for anyone who follows our strategy and looks at our results, China is a big part of our business. And in particular, the flow from China to the rest of the world and back is a key aspect of that. And so we're always going to be involved in that space. And by virtue of being involved with any Chinese business, they are incredibly technologically aware. There's a vibrant technology industry in China. And they lead the way in a number of areas, and they are ubiquitous in their adoption of technology, whether that's AI, distributed ledgers, such as blockchain, facial recognition, etc. So, all the way from consumer through corporate and institutional. So for us, it's just a fact of having to do business in that space, that if you want to be a trusted partner, and a partner of preference, then you have to be willing to engage and commit to a technology centric strategy around your business. And so I think we don't see it as anything special other than it is just the way we have to do business. And as finance has evolved over the centuries. New capabilities, new products and new technologies have been adopting them and understanding them and making them part of your business have been hallmarks of any successful business. We have been in business for over 160 years. So it's part of our DNA.

Maneuvered technology adoption and digitisation efforts to meet customer need in sustainability 

FBP: Now, the other topic that is of increasing interest now is sustainability. It is important today, and for the global transaction banking business, we see the topic around revolve around customer support to transition to greener operations, environmental, social and governance compliance, creating sustainable finance and supply chains. How has Stanchart maneuvered it's technology adoption and digitisation efforts to meet customer need in this particular area? 

DW: It's a complicated space, I think everyone is staring into how do you track your sustainable development and ESG performance? How do you capture the information? Different countries, different languages, different terms, they're not standardised. And tagging an item is very complicated. We run a bunch of experiments. And we're working through interesting stuff, such as using natural language processing to identify what kinds of assets are sitting in the underlying flows and what the underlying goods are. We've used those to try and estimate and calculate the sustainable aspects to try to integrate that into other platforms where some of the stuff might be tracked, such as the blockchain or or the internet of things, as we think about as you introduce 5G, that brings some massive opportunities, not just in terms of the speed and latency that relates to the data, but also the number of characteristics that start to get captured in a 5G world around an IoT item. And then as you capture that information, using it to attributes items, such as carbon or use of water or deforestation or child labour, all the things that become very important so that we are able to ascertain it, certify and guarantee its provenance as it moves through the supply chain. So all of these things become really important. So we will continue to work on that. I wouldn't say that we have a definitive answer or a flagship thing that I could say. But that there are a lot of experiments and a lot of work that we need to do in that space to continue to be leading the thinking and helping shape the future.

FBP: Now, the other area we want to touch on is with the increasing use of digital platforms, you're increasing your digital footprint. The shift to cloud, open banking, and banking as a service. Now, how are you balancing the very positive benefits of increased digitalisation with the need to maintain operational resilience and also reduce system vulnerability to what we see a lot now, cyber attacks, hacks and thefts, as well as potential third party and supplier concentration risk that they may pose?

Balancing benefits of increased digitalisation with the need to maintain operational resilience and reduce system vulnerability

DW: What we do is we try and look at the intersection of all of these aspects as if it's a Venn diagram. So thinking about cyber, and availability and innovation, not as three discrete things that we need to solve for individually. But how can we bring these together and find the overlapping space where, by virtue of doing something in the cloud as an example, we're able to make sure that resiliency and availability of service, is secure, because of the advanced cyber technologies that exist and our ability to overlay our own characteristics, and it promotes an environment that is open to high speed innovation. And that's the space that we're going to invest our discretionary capital, that's the space where we're going to over index on developing solutions. So I think that the first item I'd say is to stop thinking about these as discrete requirements, and, and discrete things that needs to be separately, but think about it holistically. What's the business outcome that I want to do? And by the way, with that business outcome, it clearly has to be available, it clearly has to be safe, it clearly has to be real time. And so you architect and build capabilities that have all those characteristics in it, and make sure that you do that well, and in a way that is enduring, so that you can then build on those foundations and offer new stuff. Whether it's cyber as an obvious one, but it's extending that thinking into our third parties that are participating and make sure that they are cyber aware. It's thinking about not just the data we collect and gather, but the data our partners are using, and the expectations that our customers have around the use of that data. Have we been transparent with them? Have we got their consent? And then can we flow through everything that we do? When we look at things like the advancing capabilities of AI and machine learning, are we adopting the FEAT characteristics that is talked about in Singapore? Are they fair, ethical? Are we accountable, and are we transparent? All of these things are just the future that we live in. Yes, it's more complex. It is what it is. And that's just the future of business that we need to work with.

FBP: And to that point, in terms of using some of this technology allows banks to be more innovative in terms of how they use that data, and the implication for customers, customers, by and large, and enjoy the the improvement in the customer experience and customer journey. But on the regulator side, they are worried about what big institutions can do with those data, there is increasing scrutiny and regulation around this. And the challenge for banks such as Stanchart is to balance the increased scrutiny over the continued use of such technology for innovation. 

DW: It comes back to the point that I made before is, I don't see the regulator is necessarily saying, “We shouldn't do it”. What they're saying is when you do it, is it is it clear to the customer what you're proposing to do? As a customer who uses a lot of digital experiences. I'm not upset when my data is used, and I get the benefit out of it. I'm upset when I'm surprised and upset when the company does something with their data that makes me uncomfortable or it's used in a way to have me deal with something that I wasn't expecting. That's the situation that I want to avoid. And so I think it comes back to the customer mindset. And if we think about our customers holistically. We are clear with them what data we have, we are clear with them the conditions and the terms under which you are going to store it, we're clear on the things that we think we're going to use it for, and make sure that they're comfortable with that, and where we're choosing to use it to a third party to create products that add value to that to them, they understand that and they appreciate what that value is. And we make sure that we're transparent around how that's happening. Now, in order to do that, that's a much more complicated world than we had five or 10 years ago, where we could do what we wanted with the data. and we didn't have to have those obligations. Clearly in the future, as customers are much more digitally literate, and their expectations are much more visible and concrete. It's incumbent on us to respond to that changing dynamic. So, again, I think it' just a fact of life, I think it's important to remain, have a growth mindset around how you can take and make your company better by adopting these higher standards. And I think those that take that mindset will be successful on the other side.

FBP: The payback from the increased use of this technology, obviously, in terms of driving income, and lowering costs, per se, in terms of a KPI. How does Stanchart measure some of these benefits? Do you measure the digital value capture, for example of an investment in such technology, beyond increased customer satisfaction, or increased adoption? 

DW: I know we walk past that, beyond an increase in customer satisfaction. I think a truly engaged customer, who trusts you, and talks about you and promotes you, and will suggest that you're a company that's probably going to outperform. So we shouldn't just say beyond just customer satisfaction, truly high value trusted relationships, where the customer is an advocate, and a supporter, is definitely a marker for high performing organisations. So stop there, you don't need to do anything. Yeah, there's a whole bunch of other things that we can measure. cost efficiency, is really important. So financial, non-financial. But in essence, it comes back to how those measures are supporting you in achieving those customer expectations. And if you over deliver on those customer expectations, you'll get more business, you get more business, you'll be more successful. 

FBP: And that's the way that Stanchart has been in terms of managing your business, high performing business, and you've been transparent, communicating a lot in terms of your values, and what you see as that relationship with the customer, building that trusted relationship. Thank you, David, for your time to join us today. And we hope our audience will have benefited from your insights and the sharing that you just had with us. Have a great day, everyone. Thank you. 

DW: Thank you very much.   

FBP: Thank you very much.


Keywords: Sibos, CBDC, AI, Big Data, Analytics, Digitalisation, 5g, Blockchain, DeFi, Cryptocurrencies, API, Regulators, Supply Chain, ESG, Sustainability, IoT, Cybersecurity, Mox
Institutions: Standard Chartered, Olea, Trusple, Linklogis, Hong Kong Exchange, NTUC Singapore
Country: China, Singapore
People : David Whiteing
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