ASB Bank’s Executive General Manager for Technology and Innovation speaks with FST Media about how banks can fight the threat of disintermediation in the payments landscape.

FST Media: What are your IT priorities for the next 12 to 18 months?

Jones: We have our base workload of the refreshing of our infrastructure and upgrades to applications, coupled with a number of specific initiatives to support our strategic objectives. Within the Technology function, we are continuing to leverage agile and dev-ops to improve overall throughput and delivery speed.

FST Media: What is the ‘holy grail’ that technology and innovation are yet to deliver in financial services?

Jones: ASB is well known for its great customer engagement and long term technology leadership, so a ’holy grail’ for us would be the achievement of genuine flexibility and tailoring of the customer experience at scale. While we can do this individually in certain systems, we aim to be able to treat every customer as a true ‘segment of 1’, in the channel of their choice, at any time they choose.

FST Media: What are the next steps for ASB to strengthen its real-time banking offering for customers?

Jones: Our proven real-time capability positions us extremely well as customer expectations are now a basic hygiene factor. Our customers are already benefiting from the integration of our banking systems, with real-time accounting systems like Xero and MYOB, and we have aggressive plans to add further functionality and data access. The API capability we launched last year enables us to securely realise more functionality at an increased pace, enabling real-time banking to power the digital economy.

FST Media: How can banks fight the threat of disintermediation in the payments landscape?

Jones: As we are seeing in the US, potential disruption with mobile payments through companies like Apple Pay, Square, Google will eventually replace traditional plastic card-based payments in both physical (face-to-face) and remote (online e-commerce) situations.  In New Zealand, we have one of the world’s leading domestic payments environments, with Kiwis enjoying seamless payments at POS (EFTPOS) with resulting cash usage rates the lowest in the OECD. However, EFTPOS and credit card payments are primarily based on older magstripe (‘swipe’) and chip (‘dip’) technologies, and these are being rapidly outmoded by the faster, more convenient ‘contactless’ tap-and-go payments now being made available on smart devices. 

Defending payments in the mobile landscape will require EFTPOS and bank credit card functionality to be available on mobile smart devices and easily integrated into mobile banking applications. The industry-wide ‘NZ wallet’ approach (joint venture known as SEMBLE) is one positive step in this direction. On launch, SEMBLE will offer ASB and BNZ customers the ability to load virtual credit cards and make NFC contactless payments at POS. Extending this capability to domestic debit cards (EFTPOS) and non-payment cards such as store cards (loyalty) and transit, has the potential to continue the great EFTPOS success story for future generations of Kiwis.

FST Media: What is the value in ASB Bank providing a public-facing Application Programming Interface (API) for the bank, customers and app developers?

Jones: Banks provide critical services in the digital economy, and as the need for speed and integration increases, we have to remove traditional constraints and position ourselves differently in order to remain relevant. At the moment we are on the critical path looking for new capabilities, and we recognise that we cannot realistically address all development and access demands. Through our API capability, we can provide developers and partners with secure access to the data and functionality that they need, to build customer experiences, create new value eco-systems and address real challenges and opportunities for customers. 

FST Media: How will the implementation of PayTag technology deliver value to customers, and how do you plan to drive the adoption of contactless payments in New Zealand?

Jones: PayTag offers a simple option for customers who prefer the convenience of ‘tap and go’ payments using Visa Paywave technology, with all of the security features of a normal credit card.  The value for the customer is not just in the Tag and its associated novelty, but in the ASB mobile banking application linked to the Tag.  With security as the priority, upon receipt by mail, customers can activate PayTag via online banking and also choose their PIN. ASB’s PayTag customers are then offered the option to turn the tag on or off, or link the Tag to accounts of their choosing, such as debit or credit, a joint or personal account. The PayTag does not need to be attached to a phone, but there is clearly a great potential there, given that customers have their phone with them, and the capability for this to become a ‘payment device’ is compelling. On Android phones, the PayTag may become less relevant over time as phone manufacturers provide built-in contactless NFC capability. We also recognize that, for customers with pre- iPhone 6 devices and ApplePay, there is no NFC capability, so PayTag is a convenient bridging technology.

Over the next few years, alongside ASB’s own PayTag and Host Card Emulation (HCE) mobile wallet initiatives, we see initiatives such as SEMBLE helping to drive the adoption of NFC contactless payments, especially as consumers increasingly demand the convenience of ‘tap and go’. However, payments is a two-sided market, with card issuers on one side and merchants accepting cards on the other. In conjunction with Paymark and SEMBLE, we believe that the merchant environment requires a substantial boost, to drive acceptance of contactless payment. Only approximately 25 per cent of merchants in NZ have the contactless feature activated in their terminal fleets. In our view, the causes are related to affordability as well as environmental issues including customer education, security concerns regarding contactless technology, as well as terminal fleet readiness.

Paymark and a number of NZ banks are working together on a new online EFTPOS capability announced late 2014 which is scheduled for launch later this year. The extension of this will provide a contactless proprietary debit EFTPOS capability, via a plastic card or via a smartphone or wallet like HCE and Semble, as well as addressing merchant affordability concerns.

FST Media: How have customers responded to ASB Bank’s partnership with Xero to deliver B2B cloud payments?

Jones: The response from customers and financial advisors has been extremely positive with strong initial and ongoing uptake. The integration has enabled efficiency gains for business owners and for the accountants managing these businesses. When you couple this bank transaction data and payments integration with the ability to upload historical data into Xero, we are definitely delivering on our goal to be the “easiest bank to do business with”.

FST Media: What role does social media play in enhancing your interaction with customers?

Jones: We have found that social media plays an important role in  connecting with our customers and it is complementary to our traditional communication channels. By conversing with our customers in the channels they choose to use the most, it makes it simpler, easier and more convenient for them to connect with us. Not only are we able to collate valuable feedback from customers directly, we have also seen social media in action, as a way of spreading advocacy via word of mouth. Additionally, our social media platforms are an ideal opportunity to showcase some of our community sponsorships and events that benefit not only our customers but also the wider community.  We will continue to grow and evolve our social media presence as these platforms develop; for example, we recently launched our ASB Snapchat account and we have had tremendous feedback and engagement. Social media is a rapidly changing space, so we are continually keeping an eye on developments to see how we can leverage these for the benefit of our customers.

FST Media: How do you encourage a culture of innovation in your team?

Jones: One great example of our culture of innovation is the establishment of our Innovation Lab team, which excites and motivates through the creation of prototypes and exploration of other interesting concepts.  However, innovation is everyone’s business at ASB: we consider it part of our DNA and it is ingrained in our culture, so we just need to keep providing appropriate investment, leadership and focus around it.

FST Media: What are your thoughts on the evolving nature of the CIO role in banking and to what extent has technology shaped their career trajectory?

Jones: Banks are being confronted by a tidal wave of change, driven largely by technology and digitisation. This digitization can be seen with new business models, new entrants, digital-only businesses attacking key value-chain components, lower costs, changing customer preferences, dwindling branch traffic, increasing expectations around mobility and increasing cyber threats. There has never been a more critical time for bank CIO performance and leadership – strategically, operationally and commercially.  

FST Media: With respect to career development, what is the best advice you have ever received?

Jones: I think the best career development advice I have ever received was: “When considering a new role, always think about the next+1 role and if the next role does not provide a clear path to the next+1 such as by leveraging strengths, addressing weaknesses, deepening or broadening relevant experience , then it is probably not the right one”.  

FST Media: Every leader has a legacy they wish to be remembered for, what is yours?

Jones: I would like to be judged by my results and hope that they speak for themselves.