Neal Cross, the chief innovation officer of DBS Bank in Singapore since April 2014, has introduced a broad swathe of changes to the bank, building its capacity to innovate and adapt to the disruptive market developments of the future.
An industry veteran with stints in senior management at Microsoft and Mastercard, Cross is an industry thought leader, with more than 20 years of experience in technology, innovation and financial services. A strong advocate for innovation thinking and culture, Cross previously hailed from MasterCard Labs, serving as a spokesperson for innovation, as well as engaging in planning and rolling out engagement programmes.
With stints as the financial services industry as director for Microsoft in Asia, as well as the banking innovation lead in the Microsoft Australia subsidiary, he’s brought his wealth of knowledge and experience to DBS. He has been charged with creating and managing innovation programs, spanning ideation to commercialisation of innovative payment solutions and more.
A regular presenter at events like the Asian Banker Summit, Next Bank Asia, EFMA Round tables and Microsoft TechEd, he credits his early career as a games developer for giving him a long-term appreciation for usable, intuitive and engaging software.
In an exclusive interaction with DEALSTREETASIA, Cross discusses the future for DBS in the field of financial innovation.
Excerpts from the interaction:
A decade ago, you’d have barely heard of a chief innovation officer in any company’s leadership. Today, companies from AMD, Citigroup and Coca Cola to DuPont and Humana have one onboard. Johnson & Johnson and Unilever themselves have senior leaders who manage innovation in effect. Why CIO’s now and what do role do they play for banks?
CIOs function to centralise innovation efforts in organisations, which tends to happen concurrently in different areas within the organisation. It’s more about standardising innovation processes, so that they’re using the same methodologies and language to communicate that innovation across to others.
Every CIO has a different strategy and there’s no single book on being a CIO. I took the approach where I didn’t come in with any set strategy but invested my time in listening, looking, understanding what DBS is currently doing, seeing where the gaps were and formulating a strategy, based on what I’d seen, to provide holistic framework for innovation strategy.
What are the precise contours of the CIO role in banks and how does it add value to the operations of the bank?
Every bank is different. My role is to ask: How do we create a culture of innovation? DBS has over 21,000 staff and no single strategy can work for all of them. The trick is asking how to get them inspired and be innovative in their day-to-day roles and making our products, services and offerings a lot more successful through various innovation practices.
The CIO role is one of thought leadership and bringing in external organisations and learnings to help refine the bank’s practices. Where CIOs go wrong is when they tend to work in their own team and just invent things, coming up with prototypes that are unaligned to business issues, not investing time with customers to understand their needs or helping businesses with their challenges.
A CIO has to ask themselves “Who has the resources, what can we partner with them to work towards and what sort of value can we offer them as clients?” One example is crowdsourcing for ideas within the bank. DBS recently ran its first hackathon, where we partnered bank staff with startups to solve problems.
It’s a highly configurable program designed to drive towards solutions for the business challenge. Business people gain insight into business innovators, while entrepreneurs gain insight into how banks and corporate cultures operate.
Given the proliferation of FINTECH like Ripple, Bitcoin and other cryptocurrencies, what are DBS’s long-term strategies in implementing them and mitigating the disruption to the traditional business model of the banking sector?
We are certainly interested in the technology behind these cryptocurrencies. We are looking at blockchain and doing a blockchain hackathon later this year, as a collaboration between SMU and Startupbootcamp. We’re not primarily interested in the currencies but the technologies. That exchange of contracts can pretty much be anything and we’re spending time exploring that. Apple, Google and Alibaba are the biggest disrupters in general.
The crucial thing for DBS is to prepare for dealing with the disruptions that the different FINTECH developments bring. E-commerce changed how we approach data and innovation. We currently have a joint research lab with ASTAR on how to solve problems with data, focusing on data innovation. We are learning from tech companies, which maintain their competitive advantage via future casting.
We’re focused on developing human-cognitive equivalent technology. A recent example is where DBS engaged the IBM Watson program for our wealth management segment. There’s also significant efforts in growing internal capability in human-centred design, as well as lean startup methodologies to be rapid and agile as an organisation.
Rather than directly compete against disruptive organisations and events, we want to be able to cope with them via engines of innovation embedded within the DBS infrastructure. We are building the ability to disrupt within the bank, so that we can become more agile. And maybe even drive some of that disruption in the financial industry ourselves.
What would you see as another game-changer for the financial sector, in either the FINSERV or FINTECH fields?
I see a new wave of financial services entering the market such as social and peer-to-peer (P2P) payments, crowdfunding and foreign exchange innovations. All of these innovations attempt to take the bank out of the financial process, being dis-intermediating platforms. These have the short-term potential to disrupt banking services.
In what ways has DBS invested in innovation and incorporated it into its innovation culture during your tenure?
In the past 9 months? Plenty. Looking at the big things, we have reinvented our internal training and development processes. We worked with our learning and development team to completely reinvent their training processes and methodology. We launched a series of week-long hackathons where we take our top talent and bring in startup ventures to solve identified business challenges.
We train them on lean startup methods and human centred design. We also get them to pitch to executives from within the bank, with rewards granted to startups as compensation. The startups get exposed to banking culture, with DBS staff gaining cultural exchange on how startups innovate and execute towards a prototype.
They get to quickly visualise a solution, rather than use the traditional bureaucratic process, with tenders and other procedures, which is time-intensive. We also encourage our people to be ‘scientific’, in the sense of how they can creatively produce solutions for our customers, in a systematic manner. We ran 120 experiments within the bank across numerous departments. And we will run 1000 experiments in 2015 across many more departments, in order to understand the fundamental mechanics of successful products, especially before launching them.
What are the challenges of implementing innovative measures in an established firm like DBS, with an established corporate legacy?
I’ve been asked what made a successful CIO. And I say “Pick the right CEO”. And that’s it, I picked the right CEO and the right bank to join. There’s a strong commitment from senior management to counter disruptions through innovation practices, but there’s still a lot of human and culture change that needs to happen though.
We think about communities and look at groups within the bank for insights on how to initiate change. Our executives have committed to innovation, which a lot of staff want to do. And the mid-level management is where it takes longer to change.
We have been organising ‘hackathons’, which help to rapidly prototype and test innovative practices, services and products. Being innovative is part of our corporate values PRIDE!, which stands for purpose-driven, relationship-led, innovative, decisive and Everything fun!. These values help to shape the culture of the company and help move with the times. While we have had initial success, it is an on-going journey.
What is DBS’s role in the Startupbootcamp Fintech Singapore?
We are the primary bank sponsor, as well as helping them with their selection of startups. DBS will be present during the final selection in each country. We are also partnering with IDA and having a presence in Block 79. We will have staff mentoring startups, teaching them how banks operate and supplying technology mentors and other resources.
We have smart and intelligent people, so there’s a cultural exchange between our talent and the startups, with a strategic advantage for both sides from the exposure. We can look at how to leverage them within the organisation, in terms of the benefits derived from intellectual property (IP), customer and talent acquisition from working with startups.
Who was the main mover in persuading Nektarios Lilios to set up the Asian edition of Startupbootcamp Fintech in Singapore? Why not explore other financial centres like Tokyo and Hong Kong?
We had an accelerator in HK with Accenture and engaged with those startups there. We’re looking at an additional accelerator in Hong Kong. The Startupbootcamp Fintech move to establish a Singapore base was driven by government engagement, primarily from the IDA. The Singapore public sector is performing excellently at attracting talent to Singapore and collaborating in a mutually beneficial manner with the private sector, hence our partnership with IDA.
What does DBS look for in FINTECH or FINSERV startup ventures it may want to acquire,?
DBS looks at things that improvate (improve & innovate) our customer service. And the three things that we evaluate are going to be intellectual property (IP), product and customer base. That’s what we look for in dealing with our customers. We’re also looking at integrating the culture into the totality of DBS’s own corporate DNA via the accelerator journey.
You started your professional life in the software industry. What are the practices and other methodologies existing in the software industry that you feel would be beneficial for banks and finance firms to look at adopting?
The big things are built around ecosystems. I learnt a lot from Microsoft and I think it’s the most underrated innovative company out there. Microsoft has huge ecosystems of developers, retailers, trainers and stores. And they monetise these ecosystems, leveraging on them to make themselves highly successful. Banks need to look at developing ecosystems in an increasingly digital world to make them successful. As for best practices? We are looking at methodologies from IT, like agile software development. We are already learning and adopting from them.
If you were an entrepreneur in the FINTECH space now, what would you be looking at doing, and why would you choose Startupbootcamp Fintech Singapore to do it?
A lot of startup ventures look at what’s happening now, rather than what’s going to happen in the future. So now you get startups building method of dealing with cryptocurrency. What’s beyond that? What’s beyond mobile banking and corporate payments? Entrepreneurs need to think about and build for that.
If I were an entrepreneur in the fintech space, I would look at what’s next, future-casting how consumers are going to interact with banks in the next five to ten years. Then I would build a product around what I projected to happen in that space. I’d choose Startupbootcamp Fintech, because they have a track record, smart mentors and a history of success.