Prior to his current role at Security Bank, Dinn was the chief technology officer (CTO) and head of operations at Siam Commercial Bank, one of the largest banks in Thailand, as well as in the region, with significant retail and wealth management businesses. Before that, he was head of Enterprise Strategy, Architecture through to Delivery at ANZ Thailand. He also served as managing director (MD) of technology consulting at FIS in Greater China and had other IT leadership roles at IBM and StanChart, among others. 

Security Bank is a mid-sized bank in the Philippines, eighth overall in terms of total assets at $13.4 billion (PHP 650.8 billion) operating for 69 years since it was established in 1951. Very much a retail bank with a strong SME banking franchise and growing consumer finance and auto finance business, it has over 300 branches and over 700 automated teller machines (ATMs) across the country. MUFG is a strategic partner with 20% stake since 2016. It has a branded customer-centered proposition around a concept called BetterBanking, it’s a mobile banking platform called Digitalbanker. Amid COVID-19, it performed relatively well. Revenue grew to 48%, Net Income was lower at $152.8 million (PHP 7.4 billion). Amidst the challenging economic climate, it outperformed its peers in profitability and has one of the lowest cost-to-income ratio, and one of the best non-interest income to the total operating income for the year. It's doing different innovation around payments with SimplyPay. It's gone into partnership with Thailand's Kongsri Bank in consumer finance. 

The following key points were discussed:

• Dinn sees a great opportunity for Security Bank’s growth through its customer centricity strategy, despite the Philippine banking industry’s slow digital growth.
• Technology is not enough to achieve full digital transformation
• Regulatory compliance is seen as one of the main inhibitors to new challenger banks.

The following is the edited transcript of the interview:

Foo Boon Ping (FBP): Welcome to another The Asian Banker interview. We're very happy to be speaking with Colin Dinn, Security Bank’s executive vice president and Segment head of Enterprise Technology and Operations. 

We are starting a “Leadership Perspective” series on how digital transformation has contributed to the strengthening of organisational and operational resilience of banks during the COVID-19 pandemic. We want to capture leaders’ perspectives of how their personal and institutions’ transformational journey have created a stronger and more resilient organisation as well as operations. 

We want to use this opportunity to talk to Colin about his role in the bank. He's just joined in the past year, under a relatively new management team. Colin what are the key opportunities and challenges that Security Bank face in this age of digital innovation and disruption? And what is your specific vision for your role to drive digital transformation?

Colin Dinn (CD): The best question is what is the opportunity? This basically formed my thinking when I decided to join Security Bank. I have not seen the advancement in the use of digital and the transformation in the banking industry, or the business industry as a whole using a lot more e-commerce, using a lot more e-payments and all of these things. I've seen it very endemic in Singapore, Hong Kong, even in Thailand, where it's grown excessively in a very short space of time.  

I see in the Philippines a great opportunity to move. The maturing of the business and of the infrastructure is slower, but it's going to get there. Do I think the same strategies are going to apply that I’ve used in other markets? I think not. We've got to adjust to the local requirement and the local culture. So, we're looking at a blended strategy. The other opportunity of Security Bank is its size. I've joined and worked with a lot of the big banks, and size to me has always been, you've got size, you've got power. Now within the current economies and within the current technologies, size is a handicap, not an advantage because the affordability of the newer technologies is very good. We've already proven in other banks that we can scale with new technology very rapidly, do that more cost effectively, and build new platforms quickly, reasonably. What we're looking at is very much an opportunity to pay as you grow and see how we can actually do that in the transformation. 

Anticipating customer needs

Our strategy is customer centricity. It means really centred around our customer lifestyle, not around what products we can sell our customer. We are redesigning in a way in which we interact from a customer’s point of view, how we interact through services, through sales, how we actually support customers in a very different way than what has been done in the past. Those are the opportunities we see. 

FBP: Now, there are new digital-only banks that are coming out in the Philippines. Some of the local banks have also gone on digital transformation in a big way. So that's creating new competition, at the same time, you also have new e-wallets proposition, which is very important in terms of being able to get into the heart of customer transaction and being able to use that data and intermediate that data to create a more customer-centric solution, meeting lifestyle preferences and needs. How are you looking at that challenge in terms of being customer centric means designing your solutions around the customers and around the ecosystem that they revolve around? 

CD: You're right, there's a lot more competition coming in. I've looked at digital-only banks and we did a detailed workload on our strategy through 2020 and we assessed, whereas a digital bank has a greatest attraction and doing a startup, I find that most of them got a big challenge in getting to a point where they're breaking even, and they’re surviving on venture capital and things of that nature in the early days. That takes some time. We're not looking and waiting for these things to mature. We're looking at our strategy and how we can be relevant to our customers. So we are looking at a balanced strategy, what we call the three-legged stool, which is looking at how we get this customer centricity operational across brands, customer contact centre, and our digitalisation so that we can have that experience. In reality, we can manage as the maturity of the country comes through. We've got to wait until some changes are made from the government’s point of view. So if you’re really all digital, you’re then dependent on all the criticality of those things and the swing of the population and the migration. Yes, that's going to happen. But when is it going to happen? We're not all certain. We shouldn't really be anchoring our hopes on those things. What we should be doing is planning to address every eventuality. Payments is absolutely critical in relation to this. We are looking at how we actually step up in relation to those components so that we can make it far easier for our customers to basically do that.  

FBP: Today, accounts aren’t as embedded in a lot of transaction or there's a bigger challenge of embedding accounts in the transaction. But I also want you to unpack this whole concept of BetterBanking. That promise of customer-centric experience and how technology is delivering it. A lot of it is being able to do an account opening online and being digitalised on the front end. But in order to deliver the full experience, all the processes have to be digitalised, end to end and be able to plug into an entire ecosystem, whether you're the centre of it or some other platform is at the centre. That is key. So, tell us how are you delivering BetterBanking?   

CD: It started with the concept of service differentiation. Quality and service is a big differentiator. That's where you become relevant to your customer. Your customers will appreciate that. With that, we look at our service differentiation. Is digital going to achieve everything in BetterBanking? I don't believe it will. I think digital banking will. Do we want to be able to do everything on a mobile ultimately that you can do in a branch? Of course! That has got to be the goal that we do move forward with. We've done that and I've been a part of that journey in other banks, and that is eminently achievable. But you've got to look at what your customers want as well. Some of your customers will want to be in that space where they want to do everything digital. And some of the customers will prefer to get some guidance through a conversation on a phone, a video conference, or even at the branch. There's still a role for the branch. For 20 years, people have said the branch is dead but the branch is still surviving. The branch has to refocus on what it can do, and how it can be that provider of good advice and quality services that customers still want.  

Is digital a part of BetterBanking? We see this as blending all of our customers’ facing points so that they’re all really synchronised in the way in which they can operate. You can do everything from single contact via digital, voice, video, or in a branch. It is really up to our customers what they want. It is not for us to define how our customers should behave and should interact with us. We've got to give them the option. That's a goal that we're now moving through. And part of it will be digital, for convenience for the people who want to use it. Will we use chatbots? Will we use voice bots? Of course, we will. Because that's quick, simple, and very straightforward things. 

FBP: Your digital transformation is built around customer centricity creating better banking experiences, being more customer relevant, delivering more convenience. How do you define that transformation objective? Is it measured in terms of increased efficiency, lower costs? How are you making sure that you are not just optimising the current way of doing things, instead of really transforming and looking at delivering new value to customers?

Maximising technology for transformation

CD: What we're looking at is how do we measure it? We've got to look at not be kept preoccupied with technology as a means to an end. What we're looking at is what is the business model that we're creating? What is that custom operating model that we're creating? So you measure your customer operation through the customer satisfaction and that's where we'll be looking for, the measurement from a customer's point of view. You measure your service through cost to sale, cost to serve. We push more and more technology when we get further and further as an organisation away from our customers. So we don't believe that you just push technology for the sake of technology. It's got to be clear that there's a business model, there’s a business proposition that we can capitalise on, that we can see value for our customers. But we've also got to make sure that we design our digital transformation in a wider context in a way in which we can always make sure that we can interact when our customers need us. 

One of the things that you find about pure digital is it gets harder and harder to get hold of anyone when you've got a real problem that doesn't fit the norm. And we've got to be able to react then. We've got to be able to have that level of access. So it's a blended strategy around that kind of thing that we're looking at. So yes, cost to sale, cost to serve will be cross sell ratios, upsell ratios. Those will also be very relevant to us. But the bigger indicator will be share of wallets and the number of transactions per month, and the customer satisfaction. Those are the ways in which we measure it, but we look at it from what are we going to achieve as a business? The technology is the enabler to a business model or a customer proposition. The technology doesn't deliver by itself. 

FBP: Talk about COVID-19. What are your views on digital transformation driving organisational and operational resilience? That is a real test of the preparedness and readiness of the organisation, and your technology and processes. Tell us, how did the bank respond to the crisis? And how has that strengthened your operations?

CD: It’s a big tragedy this pandemic and for all of those that have suffered from it both from an economic point of view and from a health point of view. We looked at how is it going to be safe for our own staff? How is it going to be safe for our customers? The first thing we had to innovate so that we could continue to operate effectively was we get a huge number of staff working from home. Over 70% of our non-brand staff now operate from home so that they're all safe and we don't have to travel. From our customer point of view, we've been looking at different ways in which we can deliver the service to them in different ways, even with how we help them with the processes.  

So BetterBanking, the service differentiation, all of those things have been the product of what we're doing and we've got those plans and those projects on the way at this point in time. But that’s escalated into every business around the world. It’s that thought process of how you change your business model that is going to mean you're going to be successful. 

FBP: COVID-19, with social distancing and working from home, the fact that you can’t go to the branches and some of the traditional transactions cannot happen, you need to do a lot more contactless transactions, remote transactions. How has the bank been able to quickly respond to that? How has the bank been able to quickly react to it and facilitate customer transaction? 

CD: Within those we've got to be constrained within the regulatory framework of the country. Unfortunately, the Philippines is still primarily paper bound. So we found ways in which we can interact from that kind of point of view, more in relation to the collection and the movement or rather than digitisation, because you've got to respect the regulatory environment and the business environment. And not only will we be looking at how we can do that better going forward, but we will be looking at how we can work with our regulators and enable those things to become a lot easier in the future going forward for the market. 

The new way of working means that we are constantly living in a process of change. We do not see that this will be a static capability. We're constantly going to evolve and the technology we're putting in place, the thinking process, the design processes that will go in through within the bank at present, which is very different from the way we've done things before. These are designed so that it's a constant reevaluation of how we maintain customer centricity, how do we maintain customer relevance, because I can't tell you now what's going to be relevant in 2024. We don't know what's going to be there in 2024-2026. So we're designing a capability which will evolve and change as our customers’ demands will change, as the business environment will change so that we're best positioned to capitalise on both from a customer point of view and from a business point of view.

FBP: In Thailand, they've kind of adopted social media and e-commerce. There is a proliferation of e-commerce transactions on e-commerce platform and social media platform. Do you see that in the Philippines? What's the missing ingredient, if it's not there yet?

CD: You're asking the million-dollar question. If you look at the number of hours that people spend on the mobile, or on the tablet, or whatever, Philippines and Thailand have always been at par. One of the things that we've seen is that Thailand has actually moved very dramatically into e-commerce very innovatively in the use of technologies to create new business models. And I've seen that move into cryptocurrencies. A lot of that was instigated by the government's decision to move to e-payments. They were very visionary in the way they did that. They also had a very good infrastructure at the time. Those things enabled what had to happen very rapidly. 

What is the missing ingredient? There's a lot of debate. Some of it will be around the move to e-payments and all of that that's got to be enabled through government. The other factor will be the improvement within the telco infrastructure. Whereas the broadband links are good, the mobile digital networks are still having problems in rollout so they're not as pervasive. And you've got to remember in the Philippines, we' e got a bigger challenge in the number of islands. And so having a constant infrastructure over one land mass is very different from having this level of infrastructure. But the technologies are coming along. We are hopeful that those can get resolved. But those are primarily where the challenges are going to really spark the move into the same level of growth that I saw in Thailand in 2017-2018.

FBP: Earlier, we discussed a little bit about the competitive landscape, about the traditional incumbent banks versus the new players and how COVID-19 has triggered a flight to quality, for example, flight back to institutions that are trusted. And as you mentioned, the newcomers, the challengers are facing funding issues, venture capital (VC) funding, and what insights into resilience does this give you on banks and banking? What can we gain from this?

Challenges in regulatory compliance

CD: A lot of markets are actually opening up to the digital licence. Yes, it's the instigation of why they're doing that is to provide competition so that you can make sure that you've got cheaper cost in relation to some services. That's never a bad thing because it's good for the consumer. The hard part for a digital bank is it's easy to get set up technologically. But you've got to look at the massive regulations you've got to combat. 

Digital growth will always be constrained by the ability of these new companies to actually combine. The obligations to register related to regulations in any banking sector in any country in the world is very extensive, as it should be. We're a very heavily-regulated industry. So it's not so much the cost of technology. But it's the cost of being compliant in the regulatory environment that's going to be a big inhibitor to these digital banks. But I still think at present, the customers will still stay with the more established organisations because the one thing that they have opened above everything else is this level of trust and good governance within a bank is something that is still recognised as very important to not just the regulator's, not just in business, but to the consumer as well.

FBP: I want to know more about your personal journey in IP digital experience. Tell us your personal story up to this point. In terms of looking at technology and looking at innovation, and then transformation, what does resilience mean to you, personally?

CD: I'm very fortunate. I've actually looked at my career by what I have always found that interested me and gave me the opportunity to grow as an individual and learn new experiences. I'm not the youngest person in digital transformation but I still get excited by the different ways I'm learning something new all the time. Working with a lot of people has really challenged me. They've given me opportunities, they've given me challenges, they've given me trust, and they've enabled me to grow as an individual so I'm very happy with that. The reality is, if you're good and you've got passion, if you’ve got excitement in doing something, then you'll want to get it done. It doesn't matter if you're 21 or 91, you'll still see that you've got the passion to get things done. Age is not the thing. It's in the imagination. 

FBP: We’ve moved from one crisis to another, financial crisis, now we have a public health crisis. How would that build the leadership resilience? And how important is leadership resilience in the midst of crisis?

CD: Leadership resilience is really important. I really believe that rolling the sleeves up and working with the team if they've got problems, we work through the problems together, recognising all of those things. And alongside the teams that are going to make those changes, you're making sure you understand the detail. That's certainly something that I've always used in my career. I'm not a distant business manager. I'm a manager who works with the teams. I work on that kind of principle. I've not been able to do every single time and every single job, but that's what I always strive for. I support the team to actually get the job done, not the other way around.

FBP: Great. Thank you, Colin, and thank you for speaking with us. For the great insight.