Our primary goal is to help you to understand FinTech and to become more confident and persuasive in your ability to analyze and make recommendations to executives within the finance industry regarding how to react to these changes. This FIRST MOOC ON FINTECH IN ASIA-PACIFIC offered by HKUST presents the views of several professors from the top business school in Asia as well as perspectives from industry professionals. HKUST has been ranked for many years as the number one EMBA program in the world, as the number one Finance program in Asia, and as the top MBA program in Asia by multiple independent rating and review journals and surveys. This course offers the combined strengths of HKUST in Business, Finance, and Technology as one the world's leading academic institutions on an important area of technology and business innovations. For students from outside Asia, this also gives an insight into changes happening in the most advanced FinTech markets of the world, since Asia leads worldwide in FinTech adoption and creative innovations. This course (FinTech Foundations and Overview) is part of the HKUST FinTech specialization, there will be 3 other courses in the specialization including FinTech Security & Regulation (RegTech), FinTech Risk Management, FinTech Innovative Disruption: Implications for Society. The FinTech specialization will be launched in Fall 2018, stay tuned!
4.5: Direct Banking
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Do curso por The Hong Kong University of Science and Technology
FinTech Foundations and Overview
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FinTech Implications for Established Business
Building on our understanding of FinTech market applications and FinTech technologies, we move in this module to examine the implications of FinTech changes and challenges for existing financial services companies, and we look at current and future trends in FinTech world-wide. This module concludes, after the final quiz, with a final course project in which students will present their recommendations for senior managers of a large, established Asia-Pacific bank to take advantage of and respond to FinTech challenges and opportunities.
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Theodore Henry King CLARKAssociate Professor
Information Systems, Business Statistics and Operations Management Department
One of the interesting opportunities of fintech is this idea of
branchless banking.
>> Yeah. >> HSBC obviously has many branches and
you're serious as a big bank, a traditional bank.
In the UK, there was a study done of virtual banks or branchless banks and
the number one branch bank, in terms of customer satisfaction, was Direct bank.
They have no branches.
They're simply a virtual bank.
HSBC came in number nine on that list.
>> Yep.
>> Why is that kind of an intriguing or interesting comparison?
And so let me give you a little bit more background about HSBC Direct.
I think you'll be to to HSBC Direct.
That's the number one.
[CROSSTALK] >> Well they just call themselves
Direct Bank.
[CROSSTALK] Pointing out it's owned by HSBC.
>> It's owned by HSBC.
>> [LAUGH] >> It was created by HSBC.
>> So it's a virtual bank.
>> Created by HSBC.
>> Created by HSBC, a huge bank.
>> Yes, yes, yeah.
>> So it's a fintech start-up.
>> You can say [CROSSTALK] >> It was a fintech because
when you started >> I think more than 20 years ago and
from banking bank, because at that time you used us for.
No branches, absolutely no branches.
>> Right. >> And they tested using ATM.
>> Right. >> And what I wanted to share with you is
this direct bank, this brand, and HSBC in UK.
They use the same technology systems.
>> Right.
>> They use the same ATM.
>> Okay. >> And often, from our customer services,
that HSBC is the direct or the direct bank rate number one on customer service.
>> Yeah, yeah.
>> And then, we are a little bit behind.
Let me just [INAUDIBLE].
>> So HSBC branch banking same ATM.
Same ATM. >> They don't like your ATM as much.
>> Yeah, exactly.
Same ATM.
>> Same ATM, same system.
>> Same system, same way of servicing.
No difference.
But they found that the ATM of First Direct is much better than ATM of HSBC.
>> Why do you think that is.
>> So the first thing to clarify is to take those in order, right?
So the way I see it is, if you are a virtual bank.
>> Right. >> Or a direct bank.
>> Yeah. >> You focus more on customer service.
Now- >> Why?
>> I'm not saying-
>> Why do you focus more on customer
service? >> I'm not saying that,
because fundamentally you do not have branches.
>> Okay. >> You do not interact with
the people directly.
>> So the only way you ever meet the customer is by phone?
>> Is by phone, right.
>> Or by the web, but yeah.
>> Or by web, right, but you've got to bring it real well.
Now, I'm not saying that HSBC or link the other banks,
they do not focus on customers, they do, they focus on customer service.
Very much, [CROSSTALK] >> But they may do other things as well.
>> Exactly, it's multiple channels, it's multiple areas.
So I think the focus is one thing.
>> Right. >> The second thing of course is
the management.
When we created this bank, we, Explicitly,
by design, it's first direct, but it's not just first direct, different branding.
>> Mm-hm.
>> Okay?
And when we do the commercial, in order, it's a completely different bank, so
people perceive it's a different bank, okay?
>> Right. >> So, that's a how we start to, and
the management will separate it.
Okay?
So I think- >> Separate people,
[CROSSTALK] HR systems.
>> Separate HR systems, and incentives.
And separate type of employees because it's a direct bank.
So the employee who take customer call,
most of them are part time staff.
And most of them are housewives.
>> So that makes them less profesional.
>> No, they got and maybe by the way because of this occasion,
we do better training, we do more training.
>> Okay.
>> To them.
>> Okay.
>> But most importanly, the public they understand the customer more.
Yeah because they are the housewives.
>> And it may also be cheaper.
>> And most of all I know [INAUDIBLE] that we use, we enumerate it.
>> Okay yeah okay but.
>> But the management of it.
>> But they really understand the customer, they can relate to the customer.
>> The focus on the customer the better.
So at the end of the day what I was
saying is be customer focused, we need understanding the customer.
And the practice of customer focus is not easy.
We gotta make sure that we do that.
>> But what's interesting, is if you do a great job of customer service and
you keep your products simple, you have a simple product line.
>> Simple product line, you mentioned.
>> Then the customers like
everything about you >> Yeah
>> So if you like Amazon,
you like all things about Amazon >> Yes
>> Even if
something is the same as somebody else you don't like his thing, but
it might be the same technology >> And of course the things that really
reminds me is that when we did the first direct.
>> Yeah.
>> The best thing they offer,
is the customer can contact them 24/7 through phone.
>> What you can't do with a normal bank?
>> We do not offer it as a normal bank branches, okay?
>> Right.
>> And also, you gotta think about the mind set.
>> Yeah. >> The first thing that come to mind is,
well I've gotta go to a branch.
[INAUDIBLE] Now, banks offer telephone banking and internet bank services.
>> Some banks do.
>> Yes.
And they may not put enough focus to offer the best,
most convenient service 7/24 through the phone.
>> So I have a bank in the US that has 7/24 service.
I've been with them for over 30 years.
They're pretty good.
A large bank.
But I'm not always happy about talking to India when I call the US.
And I feel like their focus is on cost control, not on my quality of my problem.
>> So again I think they are right idea of execution,
having a phone banking center, or business center.
>> And having it 24 by 7 is good.
>> Yeah, exactly.
All with the right intention.
It's the execution, and it's the implementation to understanding
[CROSSTALK]- >> And I don't even mind talking to India,
but it would be nice if they didn't tell me, they're from India by their accent, or
their manner of speaking.
>> Be transparent about that, right?
So that's the [CROSSTALK] >> Train them to speak English well,
people can learn,
but pay more for good people from India, >> Who I don't know they're from India,
and I don't care.
>> That's a good, right?
So another human example, right?
I see some of the BPO service.
>> Right.
>> And as a call center in India, in the center there,
they have TV to broadcast CNN News.
>> Yeah.
So they know the situation in state they were a US citizen.
>> And some of the best BPO people will train you in regional dialects.
>> Yeah.
>> So you will learn to speak like you're from Boston so when you're answering
the phone for Bank of Boston, You say, hey how about those Bruins, man?
Didn't you love the way they beat the Canadians last week?
You know?
>> So at the end of the day >> You talk right, you sound right,
you know the news right, you know what Trump did last week.
>> So then it's customer service and so on.
>> Right.
>> And you talk about this area.
>> Right. >> And
the next generation- >> Yeah.
>> Will be robot.
>> Well, that'd be cool.
>> Will be very intelligent robot.
>> I probably wouldn't mind talking to an intelligent robot.
>> But then, we're going to be,
well trained and aligned with the customer expectation.
>> In fact, one of my friends said that his goal in life.
Is not to have to deal with MWEs.
Now we have lots of acronyms.
MWE is minimum wage employee.
>> [LAUGH] >> And he says,
give me an ATM anytime over a bank teller >> I haven't heard about this.
[LAUGH] >> He says, give me the technology,
please.
Give me a good voice response, not a stupid voice response.
Give me a good robot, versus a bad person.
>> Absolutely.
>> Now I'm not saying a bad robot is an improvement.
I've dealt with lots of bad tech.
>> Yeah. >> [CROSSTALK]
>> But the technology has the potential
of getting pretty good.
>> And with the new fintech and so on, right, and then the technology there,
there's some very intelligent and good ones emerging, nowadays.
[CROSSTALK] is better.
>> Our university did a test with a moot course,
where they had a virtual TA to assist with the course.
Then they had five TA's, four of them were people, one was a computer.
>> Yes. >> The highest rating were for
the computer.
>> For the computer, right.
Yeah, [CROSSTALK]. >> And the reason was because
the computer's there 24 by 7, it gets back to you in seconds, it has answers,
if it doesn't know the answer it says let me check with somebody else.
And so if refers all the hard questions to the humans, who have all the tough
problems, and then they take time because they're trying to figure this out.
So the humans are slow, the computers fast but it only deals with the easy problems.
>> Yes [CROSSTALK] >> There's a bias in the rating, but
it was interesting.
>> Yeah but see, it's interesting and
then it apply into other market, including banking services, that's one of them.
>> Okay.
>> Good.
>> Thank you very much.
>> Thank you. >> I appreciate that, and
I find it delightful that HSBC is both
a large traditional branch bank and a virtual bank.
>> Yes. >> And a fintech space.
>> And fintech space, exactly.
>> Yeah, that's kind of cool.
>> Good. >> So you have both sides.
>> Yes. >> Thank you very much.
>> Thank you, thank you.
>> Okay.
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