An Interview with David Lynch


Wong: In your view, which countries in Asia are taking the lead in implementing innovative technologies; and which developments do you feel are most relevant to Standard Chartered in China?


Lynch: I am unashamedly biased here in saying that China is now already amongst the leaders in developing and implementing innovative technology. This is especially apparent in the mobile space. There is a general gap in design skills and user interface programming though I foresee that gap closing quickly.   


I spent a large part of my career in the car industry. We used to talk as though we were in the fashion business because design is so fundamental to the purchase decision and perception of quality. Who wants to drive a car that does not look good, unless it has an edge, e.g. if it is hydrogen or electric?  It might do the job, but it does not make you feel good. 


Great technology design and the user interface are really important these days. I still see most of very best in web design concepts originating from mature markets like Korea, Japan, US, Australia and parts of Europe. Design preference is a very individual thing and undoubtedly tastes are formed by the environment and stimulus that surrounds us. When I look around China at the cars, the white goods, the electronics and the online portals, I see this design gap is closing. The local designs are improving everyday. To me, this trend on design and usability is a permanent shift and you have to give Apple much of the credit for having raised the bar for the entire industry. There are a lot of people passionate about technology these days, and most of them are not technologists for a living.  It feels like the whole technology industry has suddenly woken up and realised that if you build great technology without great design and usability, it is just not going to work.  


To a large extent, the online/mobile trend has already happened faster here than in other markets. In many mature markets now, online is the preferred channel for banking.  In this regard, Korea and Japan are both markets I find very interesting.  They have some absolutely phenomenal technology but due to language and differences in standards, the rest of the world does not always get to see it. They are amazingly tech savvy countries as a whole and there are plenty of great ideas emerging from them, not just from the mobile handset/PC makers.    


Back on the local front, the internationalisation of the Renminbi is really big deal in terms of global economics. It may not be equivalent to the Y2K in terms of technology impact but you have many systems/traders all over the world hard wired for USD and Euro. The pace of uptake is faster than many expected.  We have been at the forefront of the RMB internationalisation and technology investment to support it.


Wong: What are your IT priorities for the next 12-18 months?





Priority 1: Electronic Banking and Automation
We exited the financial crisis in very good shape and have continued to deliver very solid financial performance. This has afforded us the ability to remain focused on our longer term agenda. 


Our IT priorities are very closely aligned with the business and support our continued growth aspirations in China.  We have made electronic banking and process automation a key priority over the next few years, having spent the last three building out our infrastructure.  This isn’t just about internet banking and the customer channels.  It is also about what we do behind the scenes to streamline our processes and services through technology in all parts of our business.  For example, we are giving significant focus to further automation of risk controls.  We are being very disciplined in tracking our progress here across all parts of the business and adding new capabilities. We setup a new dashboard in January this year on this and all key stakeholders in the bank are made aware of the progress we’re making. 


Priority 2: Capacity Planning and Infrastructure 
It is well publicised that the Chinese economy grew at nearly 12 per cent in the first quarter. In many of the smaller cities, growth rates were well above that. We have become accustomed to this kind of growth over the past several years.  It motivates you to plan well in advance for capacity. Our forward-looking infrastructure investments in the last three years and focus on the quality of our IT service management means we are probably ahead of the growth curve in terms of capacity.  But you cannot be complacent. We’ve worked extremely hard to get to this position and constantly looking to add capacity where needed. 


For example, we are currently constructing a new Technology and Operations facility in the Tianjin Binhai New Area that will have close to 2000 seat capacity once fully built out.     


Priority 3: Enabling Sustainable Growth
Sustainable growth is more than capacity and infrastructure. It is about anticipating trends and staying ahead.  There is a huge shift going on in terms of customer preference. We have seen huge increases in the uptake of both our Corporate and Consumer Banking’s internet and mobile banking capabilities. We see that trend continuing and are investing accordingly. 


To deliver on our new Customer Charter (a commitment to customer service), we are in the midst of upgrading our sales and service platform. Basel II and national discretion are also important to us.  People sometimes think Basel II is just about data management, but it actually goes right to the core about how you manage the bank and the sustainability of your business. 


Green IT is as much a priority as it is a passion for me. It makes good business sense too. Most of what is Green IT comes down to is finding creative ways to remove unnecessary waste. It helps your bottom line, helps the environment and many of our customers are as passionate as we are on this. 


We also have a bigger role to play here.  Working with our regulators to help standardise IT related policies and regulations for the benefit of the Chinese banking system as a whole is a priority.  I am part of a Standardisation Committee looking into this. 


Wong: From a technology perspective, what are the key challenges facing China’s consumer banking sector right now?




Balanced channel Investment
The trend towards electronic and mobile banking is phenomenal though you still have a significant number of customers who prefer going to branches. Investment across all our channels needs to be balanced. We will continue to invest heavily in branches as some of the demand is driven by customer needs; some by regulations. This requires a balanced strategy for investment so that we can deliver a consistently great Standard Chartered experience across all channels.




We have well established processes and technology supporting our branch network expansion. To deliver the consistency of experience and respond to the changing trends however, we have increased staffing and capability in managing our ATM, Online, Mobile and Call Centre channels. For the branches, a major focus area for technology has been doing away with paper payment slips and migration to our debit card PIN authorisation and processing. This has vastly improved the customer experience.


Making banking simpler
From the customer’s perspective, we want to make banking with Standard Chartered Bank simpler. Banking processes in general are complex in China for many good reasons. But we do not expect our customers to be the ones who have to navigate their way through that. 


Some of the complexity can be overcome with workflow, imaging and artificial intelligence. We have invested in both Filenet and Sharepoint in this space. We are also increasingly using alternative forms of media in our customer communications.  This is quite a shift for bankers to make but I am really excited by some of the talents we have in the bank who helping us to do this.


Infrastructure Consolidation
There are some industry-wide initiatives looking at further bill/online payment consolidation as well as with the national clearing system here. Ultimately, these will be very good for customer experience and the efficiency of the industry as whole. We are eager to be a market participant in that consolidation where it offers added convenience to our customers and as a key player here in China. I am from Australia and BPay has transformed the nature of Bill Payment for consumers. There are similar initiatives underway here in China to create something similar, but there will likely continue to be several players in the Bill Payments space for the foreseeable future.          


Wong:  China is the fastest-growing major economies in the world and the growing adoption of mobile technology in the region.  How does Standard Chartered plan to harness this budding user base?


Lynch: We moved early in the mobile space for this reason even though we knew the real demand would take time. More than the mobile adoption rate itself, it is the explosive growth in smartphone adoption that is of interest.




3G network speeds have changed customer experience and behaviour. Mobile data used to be prohibitively expensive. Poor speed meant mobile was just not conducive to wide scale adoption or a good experience. Though at this point, the mobile device has suddenly become a tool that can deliver an experience that can be as good, if not better in many respects than what you can get online.  You just cannot ignore this trend, especially here in China.  When you combine 3G speed and affordable data with the power of the “smarts” in the hardware, it is easy to see why the smartphone trend is going to further explode.


We launched our mobile authorisations platform for corporates last year – this is a solution targeted at the high end corporate client base. We expect to see higher adoption rates over the course of this year. In the consumer space, our SMS banking offering has been in place now for nearly 2 years. We will be enabling more SMS banking capabilities in the near future.  SMS / MMS has a role as well for marketing and customer education. 


We recently launched “Breeze Mobile Banking” for the iPhone in Singapore and it is now a free download on the iTunes App Store. Breeze really freshens up the mobile user experience for banking, just as the name suggests. There is a good chance that Breeze will come to China in the not too distant future.  You have probably read in the media as well, we are currently switching to the iPhone internally as our platform for staff mobility. We are one of first and largest organisations to make the switch. There is enormous opportunity here for us to take advantage of the innovation within the developer community. 


Our mobile innovation team has also produced one of this year’s Webby award winners – an iPhone based microblogging application called “Huddle”. You can expect to see us doing more things this year with mobile technology as we take on better ways to serve our customers.  It is not all about transactional banking. It is about tapping the strengths to create a great customer experience.


Beyond what we are doing ourselves, you have to take notice of some new industry platforms like UMpay’s Mobile Wallet solution utilising NFC technology – allowing users to swipe their mobile to pay for everyday services including public transport, make payments for utilities or shop for goods via SMS banking. This service has emerged in other markets but China is definitely at the pointy edge of mobile channel payment technology in terms of the speed of uptake.


Wong:  What is the most notable technology trend in financial services, here or abroad, that you are keeping an eye on; and how do you see these evolving in the next three to five years?


Lynch: The continued evolution of online, mobile and social commerce is for sure the most interesting trend, and how banks and non traditional players are participating in that evolution. The Western world is very familiar with eBAY, but its equivalent in China (Taobao) has a phenomenal following. Banks are no longer the financial intermediary of choice in the online and social space. You have interesting business models emerging, e.g. peer-to-peer lending. This is something the social communities are geared up to do well.  How you regulate that space is a huge challenge. You even have online players who are now in effect taking customer deposits in the form of credit, virtual money and other forms of stored value – some even offering quasi forms of interest on those things. Some are making those credits transferable inside their communities as a form of financial instrument. 


I do foresee a natural evolution towards tighter regulation on some of the more adventurous business models. People sometimes do not realise unless you’re a banker, how critical the entire credit and risk functions are to banks and how important they are in protecting people’s money. We will see some turbulence but some of these will emerge as real businesses that may result in a complete shift in the industry.


As banks, we see participation opportunities within the social communities. This requires a degree of openness that perhaps non-existent across the industry at this point. You can almost do anything in the cloud now if you have the bandwidth and the appetite to release some control. We can continue building our own software and that serves a need. But the undeniable trend is towards a greater degree of openness in design. Business value is being created through alliances, “mash-ups”, online content and delivering these capabilities at speed never seen before.  There is no question that the demands of Generation Y/Z population are going to give rise to a new kind of banking experience – especially in the Consumer space – and this generation generally do not have much interest in visiting the bank branch.     
Wong:  How far in an advance do you map out your local IT mandate; and how closely aligned is this with the Global group?


Lynch: Our system roadmap is currently planned intensively along an 18-month horizon though our strategic plans go out as far as 5 years. Our core systems are now in place and we have made appropriate provisions for future growth in these plans. Currently, a major focus is on delivering capabilities within shorter timeframes. China is unquestionably the fastest paced and most dynamic market I have ever seen. Delivering software in shorter cycles is really important to meet the demands of all our stakeholders. Product innovation is one need. Swift response to policy changes and relevant changes in technology support is another. Those changes can come from the banking system regulator, central bank, administration for foreign exchange or the securities regulator. We are committed to work closely with them and make the right changes happen.


To get our infrastructure right, we need a long term view.  We look at our needs over 3-5 years though there is also a need for flexibility in such a dynamic market. I look back on the last few years here and we have constantly been thrown challenges that were not factored into our plans or foreseeable. The Global Financial Crisis was one such example.



Though with a robust plan in place, we have a very clear view of what we want as an eng-game.  We build capacity to deal with those things that are not predictable and acknowledge that we need to deal with them as they come. Dealing with these challenges is mostly about having the right people in the team and the right attitude. So in that respect, the planning is actually more about ensuring that we have the right people to deal with the ever present technology changes and uncontrollable events.   


In terms of group alignment, the Bank operates in over 70 countries.  We operate in some of the most challenging markets in the world and that is a great opportunity for us.  We do not want to make the same mistakes twice, and on the flip side of that, we leverage what we can in terms of technology, processes and procedures to help our China franchise. One of the great things about the culture of our bank is the respect for the needs of the markets in which we operate and the decision-makers on the ground. Our group CIO is firm believer that “innovation does not just happen in the centre”.  For that reason, I have some of the most engaged technology staff in the group right here in China who take great pride in building new capabilities here and exporting those to our group. That is the fun aspect of my job.  For example, we recently ran a very successful proof of concept to improve SWIFT payment processing, which triggered further investment across our group.


Wong:  What is the potential of virtualisation and cloud computing within Standard Chartered’s IT quarters?


Lynch: We are a bank and there are certain technologies which makes no sense for us to be early adopters. That does not mean we are not interested or are not following the trends very closely.  For us, it’s customers first, and they value stability, security, service and product innovation. Compliance with regulations is also not negotiable and any new technology needs to be tried and tested to ensure we do not add unnecessary risks to our business.  


If I was running a small start-up, everything would be in the cloud but that does not fit our business model or risk appetite. You can expect us to be leading the pack in technologies which deliver what our customers and regulators need. Virtualisation and cloud computing in their own right do little to meet the specific needs of these stakeholders.  Having said that, we do have real examples at work within the bank but those initiatives are quite targeted towards non critical pilot areas, unless industry proven. 


We have switched our domestic network to MPLS technology. This has been very successful, having already done so for our international WAN some years ago. We are building out a virtualised server infrastructure which runs non-mission critical applications. One of its main benefits: energy cost savings and this is part of our Green IT agenda, which supports our Bank’s overall Environmental Protection initiative under the Sustainability agenda.


Although we are investing time, effort and resource to pilot some cloud computing applications, we will continue to be cautious on these.  I do think the time will come where the banking industry has a greater appetite for computing in the cloud, but the movement must be gradual.  With internet speeds continuing to advance, cloud storage and cloud computing concepts are really market ready and highly suitable for many industries. In the near term, we will be looking to derive the benefits of these concepts mostly by applying the same principles within the bank itself. 


Will the day come when we see banks running cloud based office automation tools, hosted mail, hosted VOIP wall to wall and mission critical applications on fully virtualised servers and storage? It probably will happen, but it may not be anytime soon – certainly not in entirety. Sometimes to make these kind of shifts, it is better to address these issues at an industry level. For now, I think we should take a sensible approach to virtualisation and computing in the cloud.   


Wong:  With mobile technology and social media gaining significant mileage across the financial services sector, what do you envisage will be the next frontier of customer channels in China?


Lynch: For sure, we are not just watching this space. We are participating in the use of social media where it serves a need. The Bank has a very youthful workforce and I spend a great deal of time with them, listening to their preferences as customers of the bank as well. The characteristics of Generation Y Chinese are rather unique. They have been a great source of creativity and innovation for the bank. It seems very simple, but it is just like what happened with mobile bankers in the past. The concept of the banker going to your office or home in some countries was revolutionary. In the online and social media space, it is not much different and we have to be relevant in the space that our customers are in. Many of them spend large amounts of time inside these communities.   


The next frontier is all about breaking down these physical and virtual boundaries of banking further. All the technology is there and it is mature enough now to apply in the channels. The hardest part is not the technology itself, but understanding how to support these and integrate them into your overall value proposition. It is quite easy to see how instant messaging and video are going to play a role. Then you take that forward and say, if you can do it online, you can definitely do it on a mobile now and it really is a matter of seeing whether customers are actually ready for that. You also have to think whether you have a role in their communities.  Nobody likes the pushy salesman. Banking customers too are typically quite cautious with new technology but the near term trends are visible.  


From a marketing perspective, we have been using LinkedIn as part of our Priority Banking branding for example. We have marketed our Personal Loan product in and commonly make use of digital/ touch media in public spaces such as screens at the back of taxis. We have some really great stories and educational materials in the area of social responsibility too. Social media is a very powerful channel to distribute this and we feel we have something these communities will value.  


Wong:  You are also the Chairman of the Standard Chartered China’s Environmental Council. What are some of the green IT initiatives the environmental council is currently undertaking?


Lynch: Green IT has been an obsession. We have a value system inside Standard Chartered that makes it very easy to fulfil your social responsibilities while you are in the workplace. We are very encouraging of staff to get involved in the community and to take paid time away from work to get involved in any of our social responsibility programs and that includes our environmental activities.  The work on Green IT is well supported and the benefit it has on the bottom-line really helps on all fronts.


  • Quick highlights on our initiatives: 
  • The Bank joined the US EPA low carbon IT Campaign two years ago to reduce PC power consumption. We are extending this further this year by deploying more technology in this space
  • We have been running a Green Data centre initiative since last year and reduced our energy consumption more than 20 per cent already, with more to come through virtualisation
  • Paper reduction: We have invested heavily in workflow technologies like Sharepoint and Filenet and have been focusing on removing waste and paper from our business processes. We run multi-function devices with swipe card access to track print consumption by user and department and have made some huge savings there
  • Within the technology organisation, we became “paper neutral” this year in China by planting 6,000 trees in Inner Mongolia recently to offset our own consumption. This was funded through paper savings and a programme we call “Green your flights” where we donate USD70 from every flight booking to environmental initiatives.
  • We have some of the most advanced electronic statement and advice capabilities in the market and we are meticulous in tracking the uptake
  • We are also getting heavily involved in green building technologies and we have a new building under construction in Tianjin which should be a showcase

My team really enjoy working on these projects and the bank really embraces it. There is nothing competitive about it either, so I have been increasingly spending time outside the bank sharing our best practices with other organisations. We will soon release a white paper containing all the best practices we have learned for paper saving. Our Environmental Committee would like to play a role to increase the adoption of these things both in China and internationally. 


Wong:  Every leader, particularly at your level, has a legacy they wish to be remembered for. What is yours?


Lynch: I would like to be remembered as the having made Technology and Operations a competitive advantage for the Bank. If our customers regarded Standard Chartered for convenience and simplicity, I would consider this a success.


On a personal level, developing our talent and doing business in a sustainable way are both very important to me. I hope my team with be regarded as being amongst the very best in China, but are also making the right changes happen for the industry, the country and environment.