Contributing writer Lina Zhu, Hong Kong
In early 2018, Deniz Güven, Global Head of Digital Banking at Standard Chartered, was tasked with leading a team of 10 people to create a new virtual bank for the 160-year-old bank.
"Our starting point is to build the future operating model of the banking industry, not just a new customer interface. [Virtual Bank] looks like there's no end, it's a marathon, but I'm enjoying it," Gu Hai, CEO of MOX, Standard Chartered Virtual Bank, laughed in an exclusive interview with 21st Century Business Herald.
After graduating from the university majoring in new media, Gu Hai, who did not take the usual path, "mistakenly hit the right" and entered the banking industry full of aura. Prior to joining Standard Chartered, he was Senior Vice President of Turkish Garanti Bank, a subsidiary of Spain's BBVA Group, and co-founded iGaranti, Turkey's first purely mobile bank.
After three months of intense preparation, the team led by Gu Hai submitted an application to the Hong Kong Monetary Authority in August 2018. In March 2019, Standard Chartered announced the establishment of a virtual banking joint venture with Hong Kong Telecom, PCCW and Ctrip, with Standard Chartered as the majority shareholder holding 65.1% of the shares, and successfully stood out among many applicants, becoming one of the first three companies to be licensed.
In just two years, the team led by Gu Hai has expanded to about 160 people. It is reported that MOX has now begun to be tested internally by staff and will be officially put into service within this year.
Gu Hai, who loves running, has participated in several marathons and knows the way to win in long-distance running: starting with every small step.
How can we surprise and win in this journey and effectively hit the pain points of customers? Gu Hai said frankly that Hong Kong customers attach great importance to account security, so the bank recently cooperated with Mastercard to launch the MOX card, which is a physical card with both credit card and ATM card functions. The biggest feature is that the card does not have a card number, expiration date and security verification code (CVV), which helps reduce the risk of personal data being stolen. Compared with traditional bank cards, all the information of MOX cards can be read in the app, and once the user loses the bank card, the account can be frozen on the mobile phone immediately.
Gu Hai, CEO of Standard Chartered Virtual Bank. Infographic
<h4>No intention of conducting a price war</h4>
21st Century: Hong Kong is one of the world's major financial centres with banks. What do you think are the main pain points you face as a customer in terms of using Hong Kong banking services?
Gu Hai: This issue is very important to us, and before discussing products and services, solving customer pain points is our main goal. Only by understanding the pain points of customers can we truly distinguish us from our competitors, so this is also our starting point. In order to understand the needs of our customers, we conducted a market survey and interviewed more than 2,000 Hong Kong customers. Usually large institutions classify customers according to indicators such as age and income, while we abandon traditional demographic indicators and instead group them according to customer behavior habits to understand several major pain points in retail banking.
For us, [virtual banking] isn't about issuing a new credit card or launching some new product. From the perspective of products, the Hong Kong market is very mature, but in terms of digital banking services, it is difficult for customers to find a platform to meet all their trading needs. As a result, most virtual banks will be service-led rather than the product-led model of traditional banks. This is not to say that virtual banks will not have traditional products, but that our products will have better interconnectivity, whether from the inside or outside.
For example, opening an account in Hong Kong takes some time and you have to go to the bank in person. Hong Kong customers like to compare the rebate and point policies of different bank cards, but at the moment they cannot see the changes in the points of their accounts in real time. We hope to be able to solve large and small pain points, on the MOX platform, we can provide customers with one-stop real-time services, improve the transparency of transactions, and achieve better connections between different products and services.
21st Century: There are currently more than 150 licensed banks in Hong Kong, while the local market has a population of less than 8 million. The HKMA has now issued 8 virtual bank licences, how will this change the competitive landscape of Hong Kong's banking sector?
Gu Hai: There are still great opportunities for the Hong Kong banking industry, which is still the most profitable market in the world's banking industry, from the perspective of traditional banking products, this market is very mature, but there is no platform that allows customers to complete all transactions in real time. There are still great opportunities for retail banking, and in the Hong Kong market, there are still many "underserved" customers who are not without bank accounts. Abandoning the traditional criteria of income or population as the standard of customer classification, we must grasp this long-tail market and use new technologies and digital platforms to provide customers with the best service.
21st Century: How do you think the advent of virtual banks will reshape Hong Kong's banking sector? What changes will occur in the short term?
Gu Hai: Frankly speaking, MOX has no intention of engaging in price wars, we will provide fair pricing for each customer, of course, it is not excluded that some banks will do so. The difference from traditional banks is more in the customer experience than just the price. There are about 500,000 early customers of Hong Kong virtual banks, and they will have a very different customer experience. Price wars are not a sustainable strategy globally. As a result, MOX constantly emphasizes service and customer experience. For the final performance appraisal (KPI) of MOX, it is not market share, but spiritual share. After gaining market recognition and reaching a certain scale, the KPI of the business can be considered. At this stage, our focus is on increasing heart share. This indicator can be comprehensively evaluated by downloading leaderboards in the App, real-time user survey data, etc. For the assessment indicators of employees, we do not look at whether how many customers join in a month, but whether we can shorten the waiting time for customers to open an account, etc., to ensure that the whole process is very smooth.
<h4>Both defensive and offensive! </h4>
21st Century: You have worked in traditional banking for many years, what challenges do traditional banks face? How do they compete with virtual banks?
Gu Hai: Our office receives potential customers every week, even though they may have a small transaction amount or just a small product. All staff and management, including me, are constantly aware of the needs of our customers, which is a challenge for large institutions like traditional banks. We will build a virtual bank that is completely in the cloud, all transactions are real-time, and we can also find difficulties encountered by customers in the transaction process in real time and provide timely assistance. MoX currently has about 160 employees, and with the help of technology, we have the ability to launch new products every month, which is a big advantage compared to large organizations. As far as I know, the usual cycle of large institutions to launch large new products is 9-12 months.
While everything starts over with our virtual banking, we have partners, including HKT and Ctrip. If you want to enter the daily life of your customers, you must understand their different needs. HKT has a customer base of about 4 million, and they provide various network and data services that we can combine with banking products. Ctrip is Asia's largest online travel booking platform, and Hong Kong citizens are very keen to travel. Standard Chartered Itself is a major bank in Hong Kong with a history of 160 years, and the banking industry itself is a trust-building industry.
21st Century: As a fully licensed bank with a long history, why did Standard Chartered Bank choose to build a new virtual bank from scratch? What are the considerations behind this?
Gu Hai: Our starting point is to explore the future operating model for Standard Chartered, under the independent virtual bank, we can have more flexibility and can easily launch different marketing to acquire customers. The banking industry is facing a lot of new entrants, a lot of tech companies are entering, so we need to fight on both sides at the same time, both defensively and offensively. This means that we need a new operating model, which is why Standard Chartered decided to set up a virtual bank.
<h4>Virtual banking is a marathon</h4>
21st Century: Among the eight virtual banks licensed by the HKMA, many are leading technology companies from the mainland, what are the advantages of MOX in the competition?
Gu Hai: We were founded by Standard Chartered Bank and have been rooted in the Hong Kong market for a long time. At the same time, we have strong partners working together to build a brand that customers trust, and these elements are very unique and the main difference between us and other competitors.
21st Century: What are the key elements for achieving sustainability and profitability in the operation of virtual banks?
Gu Hai: The customers we target are called the MOX generation, which is a whole new generation, and they are used to handling anything on their mobile phones. It has nothing to do with age, they may be 18 or 80 years old, and the common denominator is that they like digital consumption patterns. I want to emphasize that our virtual bank is not for 2020, but with an eye to the next decade or more. Gaining customer trust, an ecosystem, partners, and leveraging technology to provide the best service are all very important elements. Frankly, it's too early to talk about profitability, and based on the experience of other markets, the timing of profitability is a little later. Virtual banking is a long journey, the equivalent of a marathon, and I enjoy it. At this stage, we will focus entirely on retail banking, but the specific target customer group cannot provide too much detail for the time being.
21st Century: Your own experience is very special, in addition to many years of experience in the banking industry, you have an educational background in new media, and you have been writing for many years, how has this helped you in your current work?
Gu Hai: I call myself a banker, but most bankers have a strong technical background, in addition to their understanding of digital technology, I am very familiar with the operation of self-media. Communicate effectively with target customers on the right platform to create a "conversational" digital banking experience. My background is helpful in this regard and this is already the second virtual bank I have worked with.
"21st Century": Compared with other countries and regions in the world, the pace of Hong Kong's development of virtual banks has lagged behind, what do you think about this?
Gu Hai: Indeed, some other countries started earlier. About five or six years ago, virtual banks appeared in the Uk, the US, and Germany. However, there is no real virtual bank in Asia yet, and Hong Kong can be said to be playing a pioneering role. Currently, globally, only a handful of virtual banks are built entirely in the cloud, and MOX is one of them. This means being closer to the local market and responding to customer needs in real time. Perhaps as soon as next year, the Hong Kong market will emerge as a success story of virtual banks, some of which are even larger than the participants in the ANL market.
For more information, please download the 21 Finance APP
![Review of the One Piece Theatrical Version[fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)