 Felly, wrth gwrs, gwnaeth ddweudio'r gwasanaeth ynglyn â mynd i gwaith o'r ysgol ffordd i'r Ffordd Llywodraeth ynglyn â Llywodraeth Cymru. Ydw i fy nghymru ynglyn â'r newydd yma yn 2015 mae yma gydig y dweud o'r lliwyddiad hynny. Rwyf yn gweithiol i'r sgolion santerfynol a'r cyfnod o'r gyfer ynglyn â Llywodraeth am ysgrifennol I welcome to my guests. I'm very pleased to be joined by Andrew Padwardan, Chief Innovation Officer, Standard Chartered Bank, based in Singapore. Andrew's role will be quite indicative of the subject of this issue briefing. We're talking about banking in the digital age. If there's been one word that has been ever present at this year's meeting, it's disruption and often in a technology space. Banking is not alone in being a very, very industry that's been ripe for disruption. There's been lots of change, and there's going to be lots more change happening here. I'm going to start, Andrew, by asking you a question. I'm going to frame that question around a comment made in this room by Anders Borg, one of my colleagues at the World Economic Forum, who told me yesterday that he believed a year ago CEOs of the banks would probably have said regulation was their biggest headache, but now he thought they would probably say that thinking technology is a disruption caused by technology is one of the biggest challenges facing banking today. Would you agree with that? I wouldn't say it's changed so much. I think it's been the same for the last couple of years. Banking as an industry is at an inflection point. A lot of people do think that it's regulation which is reshaping banking, but that's only half the story. The other half is indeed technology. Banking is an entirely digitizable business. Technology is the key enabler for innovation and digitization in banking. It's the means to better returns, better customer experience, better fraud risk management, credit risk management, and various other areas. Most banks are focused on using technology for the benefit of the customers and the organization. I would say that overall the digital revolution is a positive for the customers, whether it's from the banks or the technology companies. A lot of people like to say that banking is being digitally disrupted. I would like to think of it as something that's being digitally reimagined or digitally re-architected. It's good for the consumer, as you say. I'm reading from the notes I took in your session yesterday about the democratization of banking as well. Is it good for banking? What are the implications? We're obviously seeing barriers to entry lowered through technology and various disruptions. I would see that more as a collaboration and a partnership going forward between banks and technology companies. It is true that in some of the markets like U.S. there are components of banking which are now being run by the technology companies. There is more competition, which is in some ways good from a customer experience and it keeps everybody on their toes. To manage some of these areas and to help us prioritize what we do, for example, we have an innovation lab in San Francisco. It's called SC Studios. It's been there for five years. The primary purpose of that lab is to make sure that we as an organization stay connected with the latest technology developments and with everything that's going on in that part of the world and then connect it back to our business needs and customer needs in Asia, Africa and Middle East. In the innovation role, our priorities, for example, are the largest priority is to provide business solutions and business outcomes. My role is to use emerging technologies and data science better to support that. We are also building up an innovation lab in Singapore to complement our lab in Singapore. The Singapore lab will be closer to our business heads and our customers and it will work very closely with the team in the U.S. We also focus on other areas such as thought leadership and monitoring trends on what's going on in this space. Where do we want to engage? Where do we want to monitor? The third focus area for us is regulatory and industry engagement. We work very closely with the regulators. There's been a significant shift in the regulatory attitude towards financial technologies in the last two to three years to the extent that some are offering Singapore, for example, recently announced a financial sector technology and innovation fund of $225 million, which is available to financial institutions to set up labs or to do innovative projects or to do innovative stuff at an industry level. The third piece, like I said, is working with the regulators and the industry, which could be the accelerators, universities, research organizations, and then the last piece is client engagement. How do we share what we know about all the emerging technologies and latest developments with our corporate clients, with our private banking clients? How do we support them in this area? I would probably say that while there is a lot going on, my view is that the banks and the technology companies are destined to work together in a symbiotic relationship going forward, where each benefits from the other. It's going to be more of a competitive collaboration as opposed to competition. Let's look at the structure of the industry going forward as well. How is it likely to change? Are various areas going to get more prone to disruption, possibly? Are they going to become outside the domain of traditional banks or do you see banking becoming more competitive in other areas? Do you see the structure and the nature of banking changing as a result of technology? The very fact that there is competition in specific areas for the banks is forcing the banks to be agile and innovative and use technology better. I think the banks that are able to move faster and adapt to these technologies faster than others and integrate them well with their legacy systems will be the winners. I don't see banking fundamentally changing. I think the banking products, the banking needs, the essence of banking will remain the same. But the way these products and services are delivered, the channels through which they are delivered is likely to change quite a bit depending on consumer needs, depending on the demographics of the customers, depending on the geographies we operate in. For example, mobile is a big revolution in many of our markets. I was recently in Africana holiday and I went to a Masai village. It was very interesting. They didn't have electricity, they didn't have running water, but they all had mobile phones. The same in a remote village in Assam, I went on a volunteering trip, same thing, no phones, sorry, electricity, but they all had phones and they had very innovative ways of charging those phones using car batteries. So with so much of data being gathered, the way customers will operate in the future, the channels that they will use will change the way we bank. So you are optimistic for financial inclusion. You talk about the democratisation of banking. Yes. I'm very optimistic about the democratisation of finance. I'm very optimistic about financial inclusion. We are working, like I said, the partnership part of it. We are collaborating with several telcos in many countries where we are doing a direct integration with the telcos so that customers who don't have bank accounts but have mobile wallets, we are able to put funds directly into their mobile wallets where needed. We work with an NGO affiliated with Johns Hopkins in the US and when they need to pay their partners in Africa, earlier it used to take two or three days to send the money. Now with the direct integration with the telcos, the money can be sent in almost real time basis to those customers. So many people, even though they don't have bank accounts, are now able to take the advantage of the fundamental banking clearing networks and the banking rails. That's brilliant. Andrew, you were given the role of chief innovation officer, eight months ago I believe, or maybe even less. Two and a half. Two and a half months ago, so possibly a little bit earlier to ask your experiences. But bearing in mind, you've set up your first lab five years ago and you've been in the job as chief innovation officer. A brand new role, I understand, at the bank. What is your experience about the culture of change within banking or within the bank where you work? So before I moved to this role as the innovation officer for the whole group, I was the global head of risk innovation where I was covering innovation initiatives for the risk function across all products and segments and it covered credit risk, market risk, operational risk, etc. And I think that role was a great experience because it set the foundation for us on what we as an organization need at this stage, what works, what doesn't work and how do we want to operate. And while the role is new, that doesn't mean that innovation wasn't happening in the organization. There were different pockets of the organization. There are many people in the bank who are still innovating. What the lab will do is to facilitate the learnings, to become a nucleus for better engagement between the business and the external technology companies to make sure that what we learn in one part of the bank is translated to others to share the successes. It will be a center for better collaboration. It's not at all to say that the lab is the only place where the innovation will happen. Everyone owns innovation and it's happening all the time in the whole organization. It's normal at this stage where I open the floor to questions. Do we have any questions from the floor? At which point I'll move seamlessly onto the questions that we received via the social media channels in the preceding hours. One which I quite like, Andrew, is what is the most exciting trends and the most exciting innovation in banking today? I think if you look at it from a business model innovation, the biggest one that has been very impactful is peer-to-peer lending or marketplace lending as it's now called in the US. That's been a big one. There's a lot going on in the payment space, both digital and mobile payments. I talked about mobile wallets. We also have launched a wallet in partnership with Singtel, for example. The third one which is being talked about a lot is around cryptocurrencies, blockchain and distributed ledger. I think there is a lot more talk about it right now. There are a few projects which are going on, but the real impact I feel is still a few years away, if at all. The one that I would talk about two others which are picking up, which are of interest to us as well. One is on the data science, use of data, use of machine learning algorithms, faster tools and technologies nowadays, and allow us to process this data faster, use it better for actionable insights. So data in my mind, it's the new natural resource. Banks traditionally have had a lot of data. Most other organisations are trying to collect data. Banks probably use less than 20% of what they already have, and there is an opportunity to use it much better. The last one would be in the area of using biometrics, digital identities, variables. I think that's another one where we'll see a lot more happening in the next few years. Biometrics and variables sounds fascinating. Tell me more. Well, today when you try to log into your account or if you go to an ATM or if you call into a call centre, typically you have to answer several questions or you have to remember various passwords. There are various projects going on in different parts of the world on how do you move away from those passwords and how do you use biometrics better? I don't mean just voice, typically multiple biometrics, like how could you use facial recognition and voice, or how do you use fingerprint or wings combined with facial recognition for verifying your identity so that you don't have to remember all these passwords? Very interesting. I'm just reminded of the young scientists we had in this room just under an hour ago who was working on using facial recognition for a range of applications. He hadn't thought about banking, so I may put you two together. It sounds like it could be quite interesting. Fascinating. Let's just go back to the data science. I was intrigued when, again, my colleague Anders and Randall Crosner on our global financial regulation issue briefing mentioned the fact that in the new competitive landscape of banking you'll have an interesting situation whereby new entrants may be free from some of the regulatory constraints and compliance of large banks, but then on the other side established banks have amazing wealth of data that they can really capitalise. Give us an idea of how that could play out and how that data could be leveraged for greater value. So just to give you a few examples, we started off working with the Silicon Valley company and we did four or five projects a couple of years ago. The projects were very helpful for us. They taught us a lot about our own information, what we could do with it. They also taught us a lot about the constraints around using third parties when it comes to data mining around anonymising data, privacy issues, etc. So what we're doing now is we're setting up an internal data science team and also we're setting up a partnership, a lab with one of the leading research organisations in Singapore. In addition to that, we are working with Silicon Valley company on cyber analytics and financial crime analytics. These are really advanced analytics. This is like using structured and unstructured data, using internal and external data to do analytics and to generate alerts which the analysts can then work on and do things much faster. Just as an example, most banks today on the retail banking side, they probably have an aggregated view of a customer's mortgage data, CASA accounts, credit cards information and perhaps they use it together for analytics. But I don't think most of the organisations combine the data across their retail clients, corporate clients, private banking and SME clients. And then on top of that, if you overlay the bureau data from the external organisations that we subscribe to, the combination can be very powerful. It can be a means for greater productivity in the organisation, means for greater insights and it also means that we then engage the customer in a much more meaningful and relevant manner. I also want to touch on the regulatory aspect too because that's something which has been coming up quite a lot. Technology is changing fast. Is the regulatory toolkit fit for purpose in terms of tracking it? You mentioned examples in Singapore, but do you think the framework for regulating the fast pace of changing banking is where it needs to be right now? I would say that the digital revolution is challenging the regulators too. I think most regulators are in a catch-up mode. Some are ahead of others. But what has changed in the last couple of years is that there's a lot more engagement between the regulators and the industry on how to move faster. A lot of the innovation also requires conversations with the regulatory authorities and many of them have set up separate teams within the organisation to engage with the innovation teams in the banks to say, OK, what are the barriers? What are the issues? How do we help you move faster? There has been a lot of activity in the last two years and I would say many of them are very progressive regulators. Singapore, I mentioned on how they have set up this fund. They have been doing industry consultations on how to make Singapore potentially into a fintech hub for ASEAN or even Asia. It does have the right ecosystem in terms of universities, research organisations, technology companies and banks. There was a paper published by the UK government or perhaps Bank of England a few months ago where they stated their ambition to be the global fintech hub of the world in the next five or ten years. Within that, they have a chapter on how do regulators need to evolve to support that ambition and that chapter is called RECTEC. How do they support the agenda? Even in the US of late, the US Treasury has just started doing a consultation on marketplace lending. They worry is that these lenders don't have skin in the game. What does it mean from a consumer protection perspective if the credit cycle turns or there is a liquidity squeeze when the rates start going up? They have started asking the questions on how should these be regulated. We will have to see how the space evolves, but I think where it is moving in some areas is that there is a lot of debate on whether they should regulate activities as opposed to regulate institutions. If a non-bank is doing a banking type of activity, then should it be regulated like a bank which is doing the same activity? We have already seen some movement towards that in the payment space in UK and in Hong Kong. I do believe that we will see more of that happening. If you could ask just to send this subject for a moment longer. If you could ask for one thing from the regulatory community, what would it be? One of the things we've been asking for in our footprint is how can the regulators facilitate an industry level initiative on some of the innovative projects. Sometimes you don't have sufficient data within one organization. I'll give you two examples where we're working a lot with the regulators. One is on the cyber security space. I think most banks recognize that it's one of the biggest issues and not just for banking. I think across all industries, cyber security is a big issue. Banks are starting to collaborate and starting to work with the regulators. The one area where it's sort of on our wish list for the regulators is to set up a centralized KYC registry for individuals. If you have five bank accounts, you have to give so much information to five banks at the time of onboarding and then again every two or three years. It's not really a very efficient use of time for the customers or for the banks. In most countries, that data is already available centrally with the governments. We've been saying that is it possible to set up the equivalent of a credit bureau but more for the data that's needed for client due diligence. I think if we could do that in our footprint countries, that would be a huge win. That would probably be number one on my list, KYC registry for retail clients. Fantastic. Last question. This is a meeting which we pride ourselves in bringing together people from science and technology and policy and business and small businesses. Has there been any one experience at this meeting this week, a session you've been in or a person you've met which has been particularly outstanding or you'll take away and may change the way you think about a particular subject? There were quite a few interesting sessions and even before I came to the meeting, I read the report that was issued by World Economic Forum back in June called the future of financial services and that was really interesting and useful report. Taking on from there during the meetings here, I would say one very meaningful takeaway for me has been getting to know more about China. There were several sessions on China and that was something that I learned a lot about. It was useful. It was also helpful to meet people from a lot of different industries, not just FinTech. One of the things I'm finding is that as I meet a lot of companies in Silicon Valley, we meet a lot of companies through the VC firms and PE firms. I'm discovering that a lot of interesting solutions for banking are actually coming from the non-banking industries. They have some solution and they haven't thought of using it for banking and then when we have a conversation and we say it could solve this problem. I've had a few of those conversations, bilateral meetings in the last two days which have been useful and I'm going to take some of those forward. Without giving too much away, of course. Any industries in particular, and again this is something where we like to see the industries that don't often talk to each other on a regular basis coming together. Any areas for collaboration that you can share with us? We've started working a lot with the telcos in many of our markets, so that's definitely one area where we are collaborating in many different areas. We're starting to look at some of the advances in the healthcare industry. In many countries there's a lot of focus on how to do healthcare and provide health services on a remote basis without having to bring them into the medical facilities. So they're looking at the use of sensors, use of video facilities, use of biometrics and we're trying to see if we could do some of the same in many of our markets and have a virtual banking experience for our clients so that they don't have to come into the branch. So that's an area for healthcare. We're looking at internet of things to see how we do collateral monitoring for our commodities business. So it's a whole different range. A whole range. Lots of industries out there. Lots of industries. Andrew has been fascinating. Thank you so much. I know you have a very busy schedule so I'm very glad to have you down here in the media village of the DITC. Thanks very much again. I'm wishing you a very successful end to the meeting. Thank you to our audience watching us here and online at weforum.org. This session is now closed. Thank you.