The financial future is here
For the man at the helm of Citi in Thailand, banks need to enthusiastically embrace all things digital and cashless to make their customers happier. By Erich Parpart
published : 7 Nov 2016 at 14:30
newspaper section: Asia focus
Like it or not, a cashless society is imminent. Both cash and cheques are part of a payment system that is becoming obsolete in a digital world where transactions increasingly involve cards, mobile and electronic platforms.
If you travel to Stockholm right now and you don't have a debit or credit card, you will be in trouble. First of all, if you want to buy a bus or a train ticket with cash you will not be able to because Swedish buses have not taken cash for years; it is impossible to buy a metro ticket with cash for the same reason. It is even difficult to find a kiosk or street vendor that will take your cash because retailers are legally entitled to refuse coins and notes.
Sweden is well on its way to becoming the first truly cashless society while many other European countries and the United States are rapidly embracing the trend. More and more US companies, including big banks, retailers and startups, are adopting Apple Pay, while more products from other financial technology (fintech) startups threaten to make ATMs obsolete in some countries.
Japan, Hong Kong, Singapore, South Korea and China are leading cashless society development in Asia because of their readiness in terms of financial infrastructure and technology. In Thailand, the government's professed enthusiasm for fintech has captured the attention of Jack Ma, the billionaire founder of Alibaba Group, which is planning to purchase a 20% stake in Thailand's Ascend Money, a subsidiary of Charoen Pokphand (CP) Group.
"I think this is very exciting. Why do you think Jack Ma came here?" Darren Buckley, the country head of Citi Thailand asked me rhetorically during our interview at Citi's headquarters in Bangkok.
In his view, fintech and the cashless society are not threats but rather challenges that banks have to address and embrace in order survive in the digital world.
"I can see these innovations coming and it is going to change the way people do their banking and it is going change the way companies do their banking and it is going to change our industry," he said. "Fintech, I think, is terrific and I do not look at fintech as being something that replaces banks. I see fintech as something that addresses where banks are bad at."
Mr Buckley, 50, believes that most fintech innovations so far have been addressing the "pain points" consumers experience in the banking system. Traditionally, what banks have been bad at is the customer experience, so they need to build "processes based on their customers' experience in a compliant way", according to Mr Buckley. This is what fintech is good at in terms of coming up with innovative ideas, developing them and then scaling them up so that they can be applied commercially. This is challenging banks to be better by trying to build better processes for their clients.
"I often joke that, as bankers, we tend to work with a compliance framework in mind, so first of all are the regulations, and then we are going to build the process around those regulations, but we tend to forget the customer experience and we shouldn't," he said.
Mr Buckley offers an analogy to explain how banks see a typical journey from A to B and why they have to change their thinking. "If you travel from Tokyo to Yokohama you have to cross some very big waterways to do so. While Japanese engineers built some state-of-the-art bridges, some fantastic bridges, if a banker had been asked to do this, he probably would have built a car ferry.
"Why? Because we can slow people down and we can make sure that people have lots of pieces of paper with lots of rules and checks and balances, things we can reconcile, things we can send back to head office, and things that we can put in boxes and store for 10 years because we like that type of stuff.
"But now we have to redesign everything right now and we have to get away from this and think about the customer experience."
He explains that what banks should be doing -- and what US-based Citi has been doing -- is to embrace some ideas from fintech by learning to build banking processes in an agile way. Alternatively, they can simply buy some fintech products or businesses and integrate them with a bank platform to ultimately improve the client experience.
"Citi Fintech is already set up in the US and we are looking to fund some of these startups. We are looking to embed some of these startups into our own processes," he said. "At the same time we have a team of people that are acting like they are a startup or a fintech business and they are coming up with ideas and creating in an agile way to test, deploy and scale as the idea takes shape."
With 24 years of experience at one of the world's most innovative banks, Mr Buckley believes that Thailand's support for fintech and movement toward a cashless society are steps in the right direction.
"We (Thailand) could be a cashless society today. We do not need cheques or cash as they are part of legacy platform payment systems that are unnecessary," he said. "With credit cards, with debit cards, with tap-and-pay, Samsung Pay, Apple Pay and all of these different things that are already in the market today, you do not need cash.
"Credit cards are used increasingly. They are easy and probably the best innovation for consumers and they never really get credit for what they are. If you use it wisely, it is the most flexible banking product you can have as a consumer. You got a credit line, you get a credit-free period, if you lose it you can get it replaced free of charge, and you have total security in terms of usage and you never are going to have cash problems, so it is a great product from that respect."
With mobile transactions, meanwhile, a consumer can have a virtual card on his or her phone and make payment with a chip-enabled system. Even the virtual card will soon be a thing of the past as tap-and-pay systems take hold, so "cash could go if you wanted it to", he said.
Corruption can also be weeded out via the use of electronic payment rather than cash because electronic payments are completely traceable, which adds a level of transparency that cash will never have.
"How much harder would it be for corruption to exist if there was a digital fingerprint, a footprint, or a digital trail of all payments at all times with absolute transparency? With cash it is fungible, you do not know where it comes from and you do not know where it is going to. It is also costly and dirty," said Mr Buckley.
According to CNBC, recent research by Tufts University shows that the cost of using cash to consumers, business and governments is about US$200 billion a year in the United States in terms of everything from ATM fees to theft to lost tax revenue. Meanwhile, researchers at New York University's Dirty Money Project have also identified 3,000 types of bacteria from analysing genetic material on $1 bills. The most abundant species they found is one that causes acne while others were linked to gastric ulcers, pneumonia, food poisoning and staph infections and some even carried genes responsible for antibiotic resistance.
Looking at the bigger picture, Mr Buckley contends that banks should seriously look into how digitisation is going to fundamentally transform the banking processes. If they do not, "those are the banks that are going to lose out". Data security, privacy and cyber security should now be some of the main concerns banks need to seriously look into.
"As an industry we need to be much better at collaborating to prevent cybercrimes," he said. "The more we use digital channels the more we are at risk from criminals that used to rob a physical bank branch but now can sit anywhere in the comfort of their own home while endlessly writing programs to try and embed malware in banking systems."
Citibank has built three cybercrime centres offering 24/7 coverage in New Jersey, Singapore and Budapest. They are constantly monitoring all threats to Citi platforms, from both external and internal sources.
Citi also employs "ethical hackers" who test the security of its systems and platforms, while collaborating very broadly with law enforcements and agencies around the world and encouraging other banks and industries to share information.
"At the end of the day, we do not look at cybercrime as being something that should be a competitive thing," he said. "This is a threat, not just to the banking industry, but it is a threat to all digitisation efforts in any industry around the world.
"The more we share, the more we collaborate, the more we can prevent and defeat it."
The banking veteran's passion for travelling has led him to visit more than 90 countries for vacations and work. His stops have included the United States, Singapore, parts of Europe, the Middle East and Africa and he spent around eight years of his Citi career in Japan before moving to Thailand in 2012.
Looking ahead, one characteristic Mr Buckley aims to maintain is the balance between Citi Thailand's international staff and local Thai talent. He says he is very pleased with the company's diversity in terms of staff and how it has managed to attract talent, while also investing heavily in developing and training staff.
Form his Bangkok base he is also responsible for Myanmar, Cambodia and Laos where he foresees future opportunities. The company's card business will continue to be the engine of growth along with its investment business which is growing well in Thailand and in the region, including cross-border mergers and acquisitions and the debt capital market.
Mr Buckley has no definite plan for the countries he intends to visit in the future, or where his next assignment will be, but he offers a hint that Citi Thailand is not going to be the last stop on his banking career. However, it is certain to be a place where he can watch his beloved Tottenham Hotspur football team one way or another, and somewhere he can fully enjoy his favourite pastime which is exercise, especially running.
And because of Mr Buckley's influence, Citi Thailand is now an official sponsor of Thailand's national football team. He says the bank wants to support the development of football in Thailand because children should be playing sports more than having their eyes fixed on mobile and gaming devices all the time.
"I am very clear in terms of what I see as the opportunity for us in these markets and I really do believe that Citi will continue to have some excellent opportunities in these markets. I feel very clear that I can see a real path to that growth but I want to see my team also to grow," he said of his current assignment.
"I have the honour of holding the baton today and at some point I will be handing it to somebody else. This is not my company, this is Citibank's company and at the end of the day I want to leave behind for my successor the strongest possible team that understands what they are trying to do to run this business ethically and in a responsible manner.
"At the heart of it, the only way we can succeed in these very competitive markets that have strong domestic banks is to make sure that we are innovative and creative in the solutions that we can provide to our clients, so that we can provide exceptional service," he concluded.
Thailand Country Head for Citibank
March 18, 1966, Rochford, Essex, UK
BSc (Hons) Business Finance & Economics, University of East Anglia, UK, 1987
UK Chartered Accountant (ACA), 1991
Honorary Professor, Dalian University and Harbin University, China, 2008
1987: Joined PwC predecessor firm
1992: Joined Citi, Central Eastern Europe, Middle East and Africa Division
1995: Moved to Citi New York
1999: Moved to Citi Singapore
2003: Moved to Citi Thailand
2004: Moved to Citi Japan
2008: Appointed Citi Japan CEO
2012: Moved to Citi Thailand as Country Head
Travel (has visited more than 90 countries), sports including running, football and golf