Customer innovation for incumbents – why it’s no longer at banks’ front-end – Luis Uguina, Macquarie Bank

Luis Uguina Macquarie Future Sydney 2020
Luis Uguina, Chief Digital Officer, Macquarie Group

The progressive adoption of Open Banking will see banks further leaning on their partners to deliver front-end services, with incumbent banks effectively “owning the product, but not the customer experience”, says Luis Uguina, chief digital officer, Macquarie Bank.

Speaking at the 2020 Future of Financial Services Sydney virtual conference on Wednesday, Uguina said Open Banking, as the rollout progresses and the industry adapts to the scheme over the next few years, will see incumbent banks become masters of complex back-end functions – digital transaction accounts and credit facilities, for instance – while letting others, including social media platforms or peer-to-peer app developers, take the lead on front-end innovation.

Customers today deal with a dizzying array of collaborative digital platforms, from chat services, like WhatsApp and WeChat, to any number of social media and engagement platforms.

Yet, Uguina said, the banking experience has become “extremely disconnected from the experience that [individuals] have in those applications”, which are not only far better attuned to consumer behaviours, but often already provide all-in-one experiences.

The need for customers to shift back into a dedicated digital banking app or service – to, for instance, make a payment or view one’s financial accounts – can serve to interrupt this flow.

“The problem is that, the way [individuals] work, they start chatting or sending photos or whatever it is they’re doing. And then, when they need to pay for something they say, ‘oh, we need to move back into a completely different experience’.

Customers, however, “are going to want to expect to transact and… move money through the same applications that they have been using,” Uguina said.

“In the near future,” he added, “we are going to see a change in the way our customers deal with us.”

Connecting to banks through Open Banking channels will allow customers to view their accounts “inside a model like TikTok, Instagram, WhatsApp or whatever application is in the market”.

It essentially pushes the current banking experience into the background, relying on a seamless back-end process that can effortlessly plug into innovative, often non-bank services at the front.

“The customer experience is going to be fully embedded in those [non-bank] applications. And what you will see is that our API, and the relationship with the rest of the application, is going to be the critical part.”

“This is something that is coming and this is something that will be a game-changer in the way that we are dealing with the customer and delivering our products.”

A bank-less future

Preparing for this new banking reality – whilst also augmenting existing customer experiences in place today – demands a revised operating model that ensures the complexity of back-end processes does not impede on front-end customer services.

The ‘above the glass/below the glass’ model demands that the complexity of ‘below the glass’ processes (“those crucial to driving business efficiencies, including technology and platforms, operations, and the distribution models that banks have in place for their products,” Uguina said) are not simply replicated in front-end or ‘above the glass’ services (“the digital sales and self-service capabilities, robo advisers and transactional systems, for instance”).

Above the glass services, he stressed, need to remain simple and adaptable.

“The most important thing here is what we need to be able to deliver a seamless and really simple customer experience above the glass, while all the complexity that we have as companies [sitting] below the glass.”

For Uguina, “if it’s not deadly simple, we will not be able to play a role in the new economy.”

Without removing complexity at the front end, banks and financial services will be ill-prepared for the API-driven Open Banking ecosystem into which the industry is transitioning.

“We don’t own the experience. What we own is the API that is going to be providing the product.”


Too often, banks are simply delivering – or perhaps exposing – customers to “what we have below the glass”, offering sub-par, overly complex experiences to consumers, he said.

“The way we design the system, we might have 29 screens [at the back-end]. But then we end with 29 screens above the glass. That needs to change.

“We need to change the model where, say, we might have 29 screens below the glass, but above that, we have a single API with a single screen that is doing everything beautifully.

“This is the big change that we have in adapting companies to the new world that is coming.”

For Uguina, this means banks need to create a “predictable roadmap”, concentrating on rapid innovation ‘below the glass’, and avoiding the temptation to simply tinker with bells and whistles at the front.

“We are working on no more than three-month increments and we are able to deliver every couple of weeks [below the glass].” Delivering in three- to six-month timeframes is a must, he said.

“But we need to be able to predict what is going to happen in the next year or year and a half in terms of functionalities between both worlds.”

Hanging on to sometimes decades-old legacy core systems in this new ecosystem is, for Uguina, simply not an option.

“The legacy systems we have today, and likely the legacy systems that we’ll have in the next few years, are not really prepared for all the things the customer expects,” Uguina said.

“In five years, if you think that all your legacy systems are able to deliver, you probably don’t have the right vision, and you’ll end up coming up a bit short.”


These legacy systems can seem immovable, however. Ensuring quick-fire adaptation to customer expectations requires an independently functioning “customer data platform” that, while sitting below the glass, is directly exposed to APIs above the glass, providing critical insight to drive front-end innovations.

“We need a completely different platform where we have all the data from customers and are able to provide that 360-degree view of them independently of how many legacy systems you have or what they are doing.”

Data’s explosive potential – a final warning

While it is often said that data is the ‘new oil’ of industry, for Uguina it is a resource that is far more potent in its potential (and potential misuse).

It is, he said, the “new plutonium” of today.

Handled with care, it has limitless potential to power incredible innovations, technological advancements, and the next generation of empowered consumers; in the wrong hands, it could lead to potential catastrophe.

“Data is really powerful. It can be used to generate massive amounts of ‘electricity’; but in the wrong hands or not handled with care, it is deadly. It could kill humanity.”

He adds: “Data is one of the most important things that we have in the companies. And we need to have really, really careful in the way we deal with it.”