Interviewed By Emmanuel Daniel
In his welcome speech during the Excellence in Retail Financial Services Awards Dinner programme in Tokyo, Japan, Emmanuel Daniel shares his views on the changes happening within the financial services industry, as well as how banks should be assessed today by considering the relevance of the customers and the impact of new technologies.
Here is the transcript of the video.
After World War II, when Japan started to re-organise itself for the new world and based itself in the models that came to us from the industrial revolution, and whatever the Western world achieved, the Japanese achieved better. Whatever they perfected, the Japanese perfected it better. And for a very long time, Japan became the ultimate benchmark of all that is the best in the industrial revolution.
In all that period, right up to where we are today, Japan has given itself the task of bringing together hardwork, a sense of community, a desire for perfection that is an art in itself and set the standard for rest of the world.
And all of us who have just visited Japan, get a sense of how beautiful this country is. Just coming into the country in the airport and the experience with the people, the food, the culture and everything that has been preserved with dignity and with a sense of self.
The problem with the world we live in today is that, that sense of self can no longer be configured in the way that we wanted to be. It is attacked from every corner of the world. Every other culture that we interact with, modernisation in itself and an ageing population.
So this is a society that is in transition while it is well and where of what it is itself. There are many societies around us that we are familiar with, that are in transition but on what as conscious of who they are and the dignity of themselves as people as a Japanese
The Asian Banker has a very interesting proposition today. We are no longer Asian because we are doing business as far as Nigeria and West Africa and South Africa; we have offices in Dubai, in Beijing, in the Philippines. And neither are we banker anymore because the financial services industry today is being defined by people who are not one of us. And is the same way the future of Japan is being defined by circumstances and people who are not one of them.
Japan is very close to my heart because I’m one of the few foreigners who have been so very fortunate that in my first trip to Japan, in the year 2000, on the train from Kansai airport into Osaka, I met a mother and daughter who said to me later that I look like a lost guy and I needed help for directions. The mother then invited me later in the evening into a house because she taught English to the kids in the little outskirts that they live in. And it started a life-long friendship where I attended family birthdays, I stayed in the house, and if I was Japanese, I’m from Kansai.
I’m sorry to the Tokyo people.
But it’s a country which takes a lot patience to build the relationships, the trust, but once you have the trust, you have everything.
And as we grow in The Asian Banker, we’ve been successful in other countries where modernisation came much later than it did to the Japanese.
If we were here after World War II, the Japanese would have said to us, “Yes please come in, teach us what financial services is, and make a difference to our society.” But a lot about the financial services industry in Japan was defined in preparation for an industrialisation era and now it is being re-defined and it is very difficult to find the DNA mechanism by which it captured the imagination of the banking industry here. And it is our job at The Asian Banker to figure out that story. When we think of China, we were there just when the government decided that the big four banks were going to be listed in the international IPO. And so all of the big four banks met with us, the chairmen, I met them, had lunch with them, dinner, got to know them over time, and they told us “come teach us what the international standards are and what we should aspire to.” So, we were relevant to China in a way that we could not be relevant to Japan because we were here much later in the process. And what a story China was because we were able to see how specific individuals could transform an entire country. So, when we gave the award of retail banker of the year to Ma Weihua of China Merchants Bank, if he did not exist, Chinese banks today would be highly industrial in the way that Japanese banks are. And in that respect, the Korean banks, the Mongolian banks, the Indian banks, and we saw the transition of many very competent retail bankers moving into the Middle East and defining the industry in that part of the world.
So, the main story of the retail financial services is at the end of the day, about people, about you.You may think that you belong to a large institution to which you are just a cog in the wheel, but actually, you’re part of the story of the transformation that is taking place in this industry.
In the last 16 years, we’ve predicated the criteria of the retail banking industry in the way, which we assess the scorecard according to what we believe the retail banking proposition should be – a secure, stable, long term, profitable, customer-centric proposition. This is the year that that proposition is being broken and thrown out of the window. This is the last year in which all of you will be assessed as retail banks according to the traditional criteria which, if you look at it, bases its assumption that the most important element in the business of retail financial services is the institution.
It’s no longer about where the banks come from, it’s no longer about the enterprise in which it’s structured, it’s no longer the technology that you invested in – it’s about the customer. And it’s easy to say that phrase “customer” in a way as if we understand it but we don’t. Because it is still being defined as we talk about it. And this morning, what we did was we brainstorm the largest annual meeting of heads of retail banks across the Asia Pacific region and a few Middle East friends. We brainstormed, reconfigured what is it that we need to look at when we say a successful retail financial services player. So, the first thing is that it’s no longer bank. So next year, at this same dinner, we expect to see our non-bank friends here and as much as our bankers. And the second is that we’re looking again at the elements that we thought that we were familiar with, credit. Hundred billion dollars are being created in new credit in countries like China by peer-to-peer payment platforms and peer-to-peer lending platforms to generate and to look at customer pools that we, in the banking industry, did not know existing, did not think it was possible to onboard them.
In the US, Lending Club goes out to look for customer pools that existed on the periphery of a well-developed economy. The traditional credits scoring model is broken, is inadequate to take us to the next realm. Then the question is, “what can we replace it with?” There’s a lots of talk about data and analytics, there’s a lot of talk about big data, but all of us are still learning as to how we harness that and make it a part of our assessment. So, in the next few years in this industry, in this dinner, in this annual meeting, we are going to be on a learning curve – on a journey together to redefine the industry. So, this is the last year in which you will be getting your awards based on a criteria that is designed to protect your enterprise, your jobs, your companies, your shareholders. And the criteria that is meant to plug in to something called the conversation that takes place on social media, on bots, on every platforms that we don’t yet understand, is still being defined. So, the best retail bank in the future will be the banks that are more likely or brave enough to give up the profitability that you have today in order to take on that journey that can redefine you and your relevance to your customer base.
As we grow at The Asian Banker, we want to continue being relevant to you. Just a few days ago we re-launched our website; even we are being redefined by technology. To be able to put together intelligence that make sense, that captures your imagination, it’s no longer just the written word – it’s video, it’s audio, it’s meeting, it’s all kinds of different platforms that are highly far more interactive and captures our imagination as people in a way that was not possible before. And as we organise conferences in the future, it should not be about retail financial services any more. They should be about themes such as supply chain, frictionless, cybersecurity – not the cybersecurity that we thought you knew, which is to keep the bad guy outside the door, because that same door is what you need to have open to do business with the good guys – but cybersecurity is the transformation in your mind about what is it that you are actually protecting in exchange for what you need to –
So, this is going to be the most fascinating phase in the industry ever and that puts the Japanese banks, the Chinese banks, the banks in a whole range of large economies from India, to Indonesia, to South Africa, to Brazil, to the United States, on a learning curve in the same starting point again.
So, with these initial thoughts, I welcome all of you to this evening. It is an evening for celebration but it is also an evening to start and say to ourselves that the future has just begun.