UBS' digital chief Ketan Samani tells finews.com about the newest developments for private banking in Asia, why the Swiss bank doesn't buy fintechs, and why he views a doomsday scenario of banking dramatically exaggerated.
Ketan Samani, two years ago, we met for the first time, shortly after Evolve had been launched. You said that speed was a crucial factor for innovations. Are you still advancing at full speed?
You could say so, yes: Evolve’s (UBS Evolve, the Centre for Design Thinking and Innovation) five team members tested 32 ideas last year, out of which 14 functioning concepts have been generated. Speed remains an important factor in the innovation process, but this year we will probably progress a little more slowly.
Why is that?
We want to make some of the concepts ready for the market and introduce them. That requires a slightly slower pace.In the development of new applications, we work closely with relationship managers. Counting in the technical fine tuning, it is a very intense process.
Are you happy about the results?
I can’t provide you with a percentage for how much more clients are engaged. But the degree of digitization and the use of digital channels in wealth management today are roughly proportional to the levels in retail banking. The more digital channels we launch and improve, the more clients get engaged.
What about the development of Evolve? Are you expanding?
We are. We need more data specialists and want to expand our programming and design capacities. Which means that we want to do more in-house, not least because the applications we develop are highly specialized.
You are working closely with an industry that uses the slogan «banking is dead.» What do you think about this?
I don’t think that banking will die. But the banking ways will change.
Fintech is attacking the revenue streams of banking, with commoditized products at discount prizes.
The main driving force behind commoditization in banking is a massive increase in demand. The client base of banks in Asia is expanding at an enormous pace. Automation and commoditization are the only way to satisfy this demand.
For this you mainly need banks.
Many arguments used by fintech futurists about banking are correct. But do they always have to put in such drastic ways? The fact that banking clients become more digital doesn’t mean that their lifestyle or demand for money and transactions will change completely.
But banks surely are being affected by the changes in lifestyle. Needs and behavior have changed dramatically.
Banks will disappear if they don’t build their business around the client, if they don’t listen to their clients and if they don’t provide a value added.
Aren’t fintechs doing this?
If I may be critical: more than 90 percent of fintech startups fail, because their product isn’t right – not because they don’t get the risk capital they need. They develop an idea that is based on their own experience with banking, but not on the one of 100 million people.
Investors for quite some time have put their money into any fintech startup. The high point seems to be behind us.
I think that investors have become more realistic. Today, ideas, concepts and algorithms are better tested for what they are worth. Investors want to see more than just a proof of concept, they want to see products that work and for which there is a demand.
Evolve is the smallest innovation center compared with the centers in Zurich and London?
Yes, by quite a distance. But this isn’t so important, because Evolve in Singapore is part of an important fintech ecosystem, from which we profit.
In what way?
I believe in the innovation motto of being quick and nimble and this only works with a certain size, because otherwise creativity tends to suffer. We use the ecosystem of fintechs, startups and advisers to create a better basis for the ideas we develop. The ecosystem gives us a broader horizon which has proven to be very helpful in the development of our concepts.
There’s enormous competition for the best technology, not just in Singapore. Does UBS demand exclusive rights from fintech partners?
Let’s put it like that: our brand and size helps. If we can provide an environment in which a fintech can develop, many of them are ready to work exclusively for UBS.
Does this require specific incentives?
The biggest worry for fintechs, when they agree a cooperation, is the loss of their right to the intellectual property. The reality of such cooperations almost inherently entails a blurring of borders. Which is why such cooperation agreements need to be negotiated properly.
UBS could solve the problem of the intellectual property by simply acquiring the fintechs.
To do so you need management structures which we don’t have at UBS: the management of intellectual property, the valuation and the creation of an asset for the bank – these are specific business operations. Furthermore, UBS might get into a conflict of interest because many fintech investors are our private clients.
Couldn’t you take advantage from of the combination of bank, investor and fintech?
It would indeed be possible, because the value of each fintech that enters into a cooperation with UBS, increases manifold, which makes it very interesting for investors. With each cooperation, UBS could approach the fintech investor to get a further round of financing. That way UBS could keep financing costs low, while investors would achieve a massive increase in value. But for the moment, this remains but a thought.
What are Evolve’s upcoming innovative products?
The first will certainly be a communication application enabling clients and relationship managers to exchange on a public platform.
Wechat in Asia?
Exactly, this will entail a quantum leap for our Asian clientele. The second application will be a personalized and visualized method for client reporting. It mainly aims to deepen the relationship with clients. And it will be available globally for wealth management at UBS. A third application, which already is being tried and tested, is an app which allows a client to fully integrate all his banking data and to visualize them.
Didn’t this come from the cooperation with Canopy, which won the 2015 fintech challenge of UBS?
Yes, but we finished its development at Evolve and we are very satisfied with the result.
Canopy entered into a cooperation with Credit Suisse in March. Are you concerned about this?
No. Canopy stuck to the agreement and worked exclusively for UBS for a year, supporting us very well.
Ketan Samani is UBS chief digital officer in Asia-Pacific wealth management and also boss of innovation center Evolve. Prior to joining the Swiss bank from DBS in 2015, he held digital transformation roles at several firms including Standard Chartered and Barclays. Samani and his family live in Singapore.
