Mox is among the first to obtain a virtual banking licence in Hong Kong.  It was created through a collaboration between Standard Chartered, PCCW, HKT and Trip.com and launched in September 2020. 

Barbaros Uygun has a wealth of experience in digital banking and transformation, bringing over 24 years of experience in digital transformation, business management, marketing, and product development. He was previously the CEO of ING Bank Austria, where he helped it transition into a full-service digital bank. Prior to this, Uygun held various leadership positions in ING Bank and Garanti Bank BBVA. 

Here is the edited transcript:

Foo Boon Ping (FBP): And now we're very excited to have Mr. Barbaros Uygun, CEO of Hong Kong-based MOX Bank, one of eightĺ digital-only banks licensed by the HKMA to operate. I think they started in 2020 and is one of the couple of leading digital banks in terms of number of users, and deposits that they have garnered. As CEO of MOX Bank, Mr. Barbaros is driving to bring a new banking experience to Hong Kong. Before he joined MOX he held senior positions at Dutch bank, ING Bank in Austria and Turkey as well as Garanti Bank BBVA, where he led the respective digital initiatives. Now, we are very happy and excited to have Mr. Uygun speak to us.

Barbaros Uygun (BU): Thank you. It's my pleasure and very happy to say that some of the themes that I will be touching today are already the points that you and Ms Pham (Pham Chau Loan, deputy head of digital channel and partnership development, Vietcombank) touched. So I think it will be a good follow up to the storyline that started already.

So Mr. Foo Boon Ping, managing editor of the Asian Banker, Dr Hung, Secretary-General of Vietnam Banks Association, our esteemed guests from Vietnam, other places, ladies and gentlemen, good afternoon from Hong Kong. Thank you for allowing me to share our experience and thoughts at the event today. I hope to discuss and examine the change drivers for successful digital transformation of banks. I hope some of the insights will help my colleagues from all around the region, especially in Vietnam, drive their digital transformation agenda.

But maybe before I start, a bit about Mox. So as you also touched before, Mox is a virtual bank in Hong Kong with more than 250,000 customers who are all engaged in the last 18 months. So in a short time period. We are backed by Standard Chartered in partnership with HKT, PCCW, and Trip.com.

According to a study at Sia Partners, globally we are the number one mobile banking app in Hong Kong and in Asia, I think it's a tremendous achievement considering that we have only been operating for more than a year. And on top, we already earned, in the span of these 18 months, more than 25 awards. We are the highest-rated Hong Kong virtual app in the App Store, both Apple and Google, and the most trusted virtual bank, according to a recent study in Hong Kong.

To put things into perspective, there are more than 160 licensed banks in Hong Kong. Many of retail banks have their own apps, digital channels. So right from the beginning, we had to differentiate. Our vision is to be the global benchmark for digital banking. And our promise here to our customers is to be safe, smart, simple and fun. Of course, safety is the underlying offer of all banks, it's our value model. But the following three, I would argue, smart, simple and fun can only be achieved with the right level of digitalisation.

So as a challenger bank, we are motivated actually to make banking better for society. This is what makes us get out of our beds. As a digital challenger bank, we introduce fair, transparent services into the market, which helps to transform the whole market. This is actually the practice globally for the last two and a half decades.

So we simplified the banking experience. And I think this is important, we changed the norm of time, normal time in banking, from days and weeks to minutes and seconds. So after onboarding to the Mox app, which takes about five to seven minutes, quite easy. Every other step, every other application for a new product or service is below two minutes of application, most of them around one minute or 60 seconds. Ultimately, we wanted our customers to take control of their finances and allow them to see banking as part of their lifestyle, not an add-on experience. I think this is very important for digital transformation going forward.

So COVID, we talked about it's just at the beginning brought a lot of changes to the digital world, to ecommerce. More than half of the world's consumers have increased their online shopping because of the pandemic. Especially in emerging markets, especially in APAC. I would say the pandemic has compressed almost a decade's worth of digital innovation and digitalisation in less than a span of two years.

For banking services, consumers essentially wanted their banks to be with them at home 24/7. So that's what actually triggered this. In Vietnam, the need for digital banking, I think is becoming more eminent, it has increased from some numbers before. A younger, digital savvy, population growing in prosperity, increasing financial inclusion rates, this all means that there is a pent-up demand for digital banking.

In a McKinsey report showed that it's already occurring actually. So between 2017 and 2021, the number of digital bank users has already doubled. We already heard these details. And it's actually quite good about 80% now, the penetration to the consumers. It showed a massive increase. Actually, it's higher than the other APAC markets as well, as far as we see in the reports, for both emerging and developed countries in APAC. So I think Vietnam is riding this journey quite well. According to market data forecast, the fintech market in APAC is expected to grow by 80%. In the next four years, 80% to around $180 billion range. This means clearly, and I underline this, the region will be moving at speeds that will not be matched by the Western countries. So the business case for digital banking transformation is extremely clear in Vietnam.

So here's the harder part. So how do you reimagine and reinvent. So I would like to keep it a bit precise on four points. That four key points, and they are in the order of importance, people, technology, partner, and process. Starting with people.

So digital transformation at the heart actually requires an attitude change. The traditional approach to banking created silos. bridging these silos can be a major challenge. But with the right people mindset, and the keyword here is collaboration. Bridging and breaking down the silos for a more seamless customer experience at the end of this process is key. This is the starting point.

Secondly, customers should be part of the team. So, everybody talks about customers being set in the centre customer-centric, this is a big step ahead. So customers being part of our teams, in the whole journey. So this is the whole design thinking that starts with the customer pain points, and in the build process, heading customer in the process, and after the process for the feedback. This is the second key, I would underline under the people part.

The technology, I think the keyword here is the data. So data is a tissue, I would say that binds everything together. So when we began MOX, we committed to becoming data-driven, allowing us to fine tune and to create operational efficiency to drive customer satisfaction. For example, we leverage data, all through our credit processes, cutting application times to less than two minutes, as I mentioned, even for a loan application.

AI and data analytics play a crucial role for the process improvements for customer onboarding, to access to credit. Our models which are constantly refined, help us with line assignments, pricing, risk management, and collection. So this is the way to create the speed but in a stable fashion. I would like to also underline here as a cloud-native bank, I think there's a lot of discussion about being cloud-based, or being cloud-native or moving to cloud by banks. So let me underline here. I think going forward for all banks, this is not merely a choice. It's a matter of how you do it. So I think the matter of whether it's good or bad is already decided globally. So it's a matter of how you take the next step. So the how piece.

So partner ecosystem is the third piece. In essence, all retail businesses, not banking, are inefficient globally, maybe except ecommerce. So, it's key to create partnerships both at the technology level, and also at the retail level, to create more efficiencies, and to gain speed. We partner with more than 200 globally best technology and fintech partners to create our platform. This is how Mox came to life. With tight integration of processes at the backend, allows us to move much faster to unique value propositions into the front end. All done through APIs, of course. We also leveraged retail partners, now more than 60, in a span of 18 months to create efficiencies on the retail experiences, and embedding banking experiences to those retail experiences. I think this is also key. I'm a big believer to underline here again, that banking experiences shouldn't be on top. Nobody really cares about mortgage experience when buying a house, the experience is buying a loved place for the family, there is no mortgage experience. So we shouldn't create one. For the process, I think it's very important because the model for all digital businesses is actually building a platform that is scalable, which means it has to be end-to-end digital.

Then as you grow your base, you don't grow your cost base. So marginal cost to serve should be negative. So this is how we make the winner models. Processes are important, both for this piece, so keeping cost to serve low and scalable, and at the front, for the customer to enjoy a seamless experience.

I would say that digital transformation is not a sprint. Actually, I don't think there's any finishing line here. So with the increasing speed of change globally, I think there are a few points that I wanted to underline with my personal experiences and I and my business experiences throughout Mox.

First, digitalisation can only be successful when they make both banking and technology invisible, embedded into the lifestyle experiences of customers. Second, successful digital information also involves an end-to-end company effort. It can't be done by a team. It can't be done by a department. Regardless of how big the team is, it has to be a company effort. It has to be with every single individual in an incumbent bank, including the branch personnel, including the tellers.

Last but not least, it's equally important to improve data and digital literacy throughout the company, throughout the bank. Again, not in the head office, not in a department, everywhere. That is the only real way. So before I conclude I also want to touch an Accenture 2020 global banking customers consumer study, which shows that customers, even if they are digital natives, digital savvy, or traditional customers, they want an emotional connection with their banks, period.

And unlike past decades, consumers have a choice. So as reported out, we need to repurpose tech and ensure human needs are taken care of. We need to refrain from tech innovation as a primary goal, as just merely a step to get to our purpose. I think this is also another hurdle which many banks face. We need the customers to be comfortable while making banking experiences fluid and invisible in their lifestyle. Customer is at the heart of everything we do as a challenger digital bank. So I hope I offered some food for thoughts and some insights at least. I'm equally excited to see how the Vietnamese banking industry will reimagine and reinvent in the coming years and hope to stay in touch. Looking forward.

FBP: Yes, definitely. Mr. Uygun. Thanks for sharing your story of Mox and your recipe for success. I wonder can you take a few questions before we move on to our dialogue?

BU: If we can, I will gladly do that. 

FBP: Now, Hong Kong is to many people, a very saturated retail market with many players, but the banks in Hong Kong can also tap into the Greater Bay Area. So you have not just eight million customers, you have potentially 70 million customers to tap on. How does the equation change when you look at Hong Kong versus the Greater Bay Area? That is one question, another question is, you're building a scalable business, are you just focused on Greater China? Are there ambitions to go outside of Greater China?

BU: Thank you, if I may answer your combined question. So as you said, Hong Kong is about seven and half million, the GBA region, the Greater Bay Area, is close to 80 million. And now with a Wealth Connect, even restricted, but still with business or leisure travel in the area, and organic links, actually make it the natural next step for GBA banks in Hong Kong, and Hong Kong banks into GBA.

What we call northbound or southbound. So this is actually key because as a digital bank going forward, as we are actually a scalable platform, the only thing we need to do is look at a different ID in the onboarding. The rest of the processes are more or less adjusting only for regulatory differences. So this is a natural next step, also for Mox to actually serve the GBA zone in the coming years.

To your next question. So this platform that we built, cloud-native with vendors, with different partners, this platform, the IP itself, intellectual property, is not a real local property. 70% is actually a globally scalable portable property. So that's why even in the span of the last two years, let's say Standard Chartered, ported our IP as Mox already into Singapore, into another virtual. So we already did the porting once, in the last span of let's say, 24 months, actually, more like 18 months. So we saw that it works. We saw that it's portable because it's modular in nature. So that's one of our goals, first to be a global benchmark here in Hong Kong, and then actually to provide our IP even into further territories.

FBP: Okay. My one very final question before we let you go is, what is your measure of success? The number of customers, NPS, profitability? What is the most important?

BU: Well, let me answer this way, digital banks, virtual banks, challengers are not a new phenomenon. This started two and a half decades ago and in the past, it was about building a customer base only. It was good enough to build a savings book only. Going forward, that's not success. For us, balanced value-creating growth is success. So we don't only care about mere customer growth, we need to care about the full body growth.

So of course, the growth speed is important as a challenger digital bank, but we look at how many products our customers use, how engaged they are, how many services they consume, can we become the primary bank. So our goal going forward is not to be a secondary bank for retail for average household in Hong Kong, our main goal is to become the primary bank for Hong Kongers. That's the aim. That's how we build our services. That's why for example, we started with current account, debit card, then immediately after, savings, lending, card. Now investments is in the build phase. So we are actually building a full-fledged bank with the same regulation structures like a normal incumbent bank, only digital in nature as a platform, which you create value on to reflect back to clients. And I think that's the future.

FBP: And on that note, thank you so much, Mr. Uygun. And I trust your comments and your insights, provide valuable lessons for our Vietnamese colleagues.