Digital disruption was a core theme running through the 14th Leasing Life conference in Tallinn. A panel discussion centred around both the freedom of digital accessibility and the potential burdens caused by its regulation. It was chaired by Lindsay Town, chief executive at IAA-Advisory. Contributors were John Rees, chief commercial officer at Société Générale Equipment Finance, Pascal Layan, global head of business lines at BNP Paribas Leasing Solutions, Patrick Beselaere, chief executive officer at ING Lease Belgium, and Brendan Gleeson, group chief executive officer at White Clarke Group. Christopher Marchant reports.
Lindsay Town: Is there a risk when looking at digital transformation of a two speed industry developing, the heavyweight finance providers and the fleet of foot service providers?
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Brendan Gleeson: I think that’s a real risk. You’re in a business world where you can’t forget your traditional customer base. You also have to consider what percentage of your business comes through a digital channel today, what’s coming through the dealer channel, and you have to accommodate both.
It is difficult for any organisation that has a long history to take itself from its existing position and transform itself in an agile operation. Organisations can be built on economic models that go back to the Industrial Revolution. For instance, who in this room has a business that does not have departments? But if you look at it from a digital world, it’s not going down that route.
The customer is on a journey that’s almost going at you horizontally and you’re hitting a bunch of vertical departments. It’s not a simple thing to experience; often there are multiple channels being brought together. You have to get the people right, the process right, the technology.
That is why the new entrants are trying to pick off elements of that food chain. You could be faced with a situation where enough of those start to pick
off the business that they find easy, they can rent to the digital world and then you’re left with a rump that looks like a utility. That to me is a real risk.
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By GlobalDataLT: How do you overcome these challenges as part of a large multinational bank?
Pascal Layan: A big change is through flexible systems. The Kintessia project, for example, that we developed as a startup, turned out as the development of a P2P platform across sectors. We decided to externalise the process and complete it in three months.
Patrick Beselaere: I don’t think it’s so much technology as organising yourself in a very agile and open way. This means being able to spot what is going on in the world and how it can affect your business and what it means for you. We have an IT legacy, but technology is now in that phase that systems are easy and connectable, so you can find solutions. Within ING we are organised in the new way of working. These are not the days of disciplined teams working separately, but now where you have all disciplines together working towards solutions – solutions you have to build and offer to your customers. This works very well, because this opens the view of tech, legal and risks analysis.
John Rees: You have to be careful not to create systems that the customer is not ready for. You might build a digital solution and the customer turns round and says: ‘Actually, I quite liked it when the sales guy called on me and brought me a cup of coffee.’ Sometimes I think we’ve developed digital systems with all the challenges that you’ve mentioned in a big bureaucratic organisation, and then we’ve forgotten to actually ask the customer whether they wanted it. Big organisations can put a new product out there, but there’s a much lower usage than perhaps they would like to admit because the customer base is still used to a phone call. It becomes a question of whether we are focused on today’s customer or are we focused on the customer base in 15 years’ time, which will be a different generation of people which will work in a different way. On the other side of the debate, I’ve got a young colleague in my team who has no interest whatsoever in owning a car. If we try and incentivise him, saying: ‘Soon you’ll be eligible for a company car,’ he’ll say: ‘I don’t want a car, I have a car subscription.’ We need to be prepared for this kind of market shift.
LT: Is this not the best argument for what Pascal mentioned of externalising earlystage development? If you look at large banks, they are inherently unable to look that far forward themselves.
JR: Pascal’s externalistion is a great way of developing the digital tool, but then you have to ask is the customer using that tool? PL: I have heard that 70% of digital developments by companies are not working, so a lot of people are investing in a new tool for the customer, but are not using it.
LT: Is that a function of digital, or a function of anything that’s new and creative? PL: We never underestimate the change management, the need to explain what’s in it for the customer. What is the benefit for our people, for our customer’s debt? We invest a lot of time in developing these solutions. This is a challenge, but if you do both things – if you look at the customer experience and you work on it, and you can make sure that the customer get benefits from the solution you deliver – then it’s easier.
BG: Everyone wants to be customer-centric, but what does that actually mean? If you’re an established business, there’s value in that. Having 30 years of knowledge and experience, that’s an asset, but if I want to be customercentric in this digital world, then I have to switch from inside-out thinking to outside-in. These are trivial things to say, but hard to do. If you design your business based as if you’re the customer looking in, the first thing you’re going to get rid of are your departments because that doesn’t work for a customer: they’re going horizontally through this experience. Then you have to look at the customer journey; you have to design it with care and attention.
PB: We still have a very large role to play. The fintechs can help us in designing solutions in a customer-friendly way, but you have to implement it in a broader system. It’s not only the banks you have to deal with, it’s also the legal system. Look at the complexities of something like anti-money laundering checks, what you have to do and the criteria you
meet. Combining this with customer-friendly journeys can be really tough.
BG: Another thing to remember is, to some extent, you’re moving into the entertainment industry. The experience has to be engaging. What is the bar for an online customer experience? It’s Amazon, it’s Google, it’s Apple.
LT: We talk about the Google experience, the Apple experience; we talk about externalisation – all that is great – but as a financial world we are regulated, and we’re also in an increasingly protectionist world as well. How do you square the circle between the Apple experience and the fact that we have regulatory regimes that are increasingly intrusive, increasingly feverish in how they treat us if anything goes wrong?
BG: I don’t necessarily think regulation is a bad thing. Efficient regulation is one thing and bad regulation is another. You could look at it again from the customer experience. If my channel is regulated, I as the private individual can now feel comfortable that I’m being treated fairly and transparently, therefore I trust this channel. The other side of regulation is it can increase the level of trust that your end customer sees in that channel; you then have to figure out how to do that efficiently. There’s tons of regulation that is negative, but it’s up to us to figure out how we make that efficient and protect the customer.
JR: I’m not totally convinced that customers are trusting banks more because they’re
regulated. Nobody’s going to say: ‘I’m going to work with a BNP, ING, SG that makes me feel more confident because they’re regulated,’ as opposed to working with Apple or Amazon or someone that’s not regulated as a bank. My personal opinion is that, because we need to be so regulated, it actually gives a negative feeling to the world. Our own industry experience with GDPR is when we try and go and get customers’ consent, we send them what seems like 28 separate pieces of paper and say every one has to be intialled and double-signed. For Apple it is just somewhere at the bottom of a thing you never scroll down to that has one little square box. Who is more trusted in that environment, us or them?
