There is no doubt, that if banks want to stay competitive, they need to face the digital revolution and the ‘FinTech boom’. Opening to digitalization and new technologies becomes the only way for the large financial institions to move forward. And banks are undoubtedly paying attention, as growing resources are being allocated to implementing digital transformation across their business units.
We asked Zbigniew Jancewicz, business head of the ‘Lab branches’ project in PKO Bank Polski – the largest bank in CEE, how the banking as we know it can be transformed and what startups have to do with it.
Let’s imagine a situation – a customer enters a bank, they sit in front of a bank’s employee, present their personal ID, sign a pile of papers, and finally get a receipt with a stamp. This is how a visit to a bank has looked for years, is there a space for improvement?
This is how it looks today, but in the future it will be completely different. Transactions will be made in different ways: instead of placing a signature on paper – you will place a signature on a touch screen, or maybe via an sms. We will also test customer identification and transaction authorisation with help of biometrics. The role of self-service banking will increase. This will not be limited to payments and withdrawals, but also other services will be available in devices that customers will handle themselves, and what is more – outside of branch working hours. We assume that paper’s role will be significantly decreased in the future.
Do you think that a bank without a paper is realistic?
Paper documents are inconvenient, time consuming, and too engaging for bank’s employees. From customer’s point of view digitisation of processes provides higher safety of transactions and easier access to electronic files. Therefore, in its strategy, PKO Bank Polski directed its efforts to eliminate paper and digitize processes. We are now looking for various technological solutions that would support this direction.
Are you looking also among startups?
Everywhere, inside the organization, and outside of it. We observe startups that apply to the accelerator that we partner with, and analyse which of their solutions we could use.
We await all possible ideas. Even the ones that at this moment are unimaginable to us. Sometimes we get approached by companies with a finished product, but there are also companies that have the idea for a solution but do not know where it could be applied. Their solutions are not embedded in any banking processes. Then we are the ones who look for a space in bank ‘s operations where their technology could be used, we help navigating around the corporation that already has experience in implementing startup solutions. Then we become a mentor for these young companies.
What does the bank look for when estimating if it is worthwhile to take interest in a startup idea?
First of all, it has to fit into our strategy. But we do not close ourselves to other ideas. The key is whether the new solution will be convenient for the customer, and whether it will help our employees, e.g. by speeding up procedures or facilitating their work.
Another thing are bank costs. We verify whether particular solution allows us to save on consumables, archiving, time it takes to provide service to our customers or furnishing and equipping service stations.
Let’s assume the bank finds a company with an interesting tool that facilitates the interaction with a customer. What are the next steps?
Then we test the tool in the lab branches. They look like regular bank branches, but that is where we pilot new technologies. This way we verify the technology itself, but we also answer the question of what benefits we can get if we introduce the new solution across the entire network or if we equip majority of the branches with the new technology. In one lab branch we test at most 2-3 new things from different areas at once, it can be a solution related to current customer service, traffic management or something supporting the back office.
Why do you test only two or three solutions at once? Isn’t that too little?
We do not want to frighten the customer with a large number of technologies in one place. Especially that they are sometimes contradictory, e.g. we plan to test three different methods of authorizing transactions.
What technologies is the bank testing currently?
A month ago we started to pilot the IC Pen. It is a digital pen – the customer signs a document as if with a regular pen and at the same time their signature is scanned and transferred to the electronic version of the document. The IC Pen does not change anything for the customer, but it decreases amount of paper and time necessary for archiving the documents on our side. This allows our employees to save time required to serve the client at the bank branch. We expect that IC Pen will be the transition solution before full digitization, or in situations where the customer does not accept electronic documents only.
Is the IC Pen an idea that came from a startup?
Yes, it was developed by a startup called IC Solutions, whom we met thanks to the accelerator that we partner with. This was a ‘ready to go’ solution, working already in other industries, where it is required to fill in forms. At first we had to put a lot of work on the bank side to adapt the tool to our needs, integrate it with the bank’s print and customer service systems. What is always important when implementing innovative solutions in a bank, are the legal issues related to allowing such technology in bank’s operations. It happens often that the regulatory barriers are the main obstacle in this process.
Do you think that the IC Pen will become a permanent part of bank’s operations?
We will see after the pilot. We need about 6 months to see how the new thing is perceived by the customers. With technologies less noticeable by customers, 3-4 months of testing are enough. Only after such time we can say whether a new solution is useful to us or not.
What happens if the pilot shows that the solution is not of use for the bank?
If a given solution does not work or the customers do not accept it, then it is a signal to us not to go in that direction. It is also valuable knowledge. The success of such pilot is measuered by both, positive and negative recommendation on the use of the technology in the bank. For the startup the experience gained when working with a large financial institution is the added value itself.