Marc Mathenz was recently named Financial Technology Executive of the Year for his achievements leading Fiserv to consistent double-digit growth in APAC. Ed Glass sat down with him for an in-depth conversation.

Fiserv is a leading global provider of financial services technology solutions. With 24,000+ associates in more than 80 countries worldwide, they have 6,000 associates in Asia Pacific (APAC), and offices in Singapore and Sydney. The company supports clients in 16 countries across the region, including some of the largest banks in Australia, Thailand, and Indonesia.

Congratulations Marc on being named Financial Technology Executive of the Year at the SBR Management Excellence Awards 2018. Can you let us in on your secrets for success?

I am a proponent of the saying “Hire people who are better than yourself”, so my goal was to assemble the best talent and take the region to new heights. I acknowledge that workplace culture is crucial and had made deliberate efforts to inculcate a culture of ownership, allowing equal opportunity for growth to all staff. Employees in Fiserv aren’t just another face in the department, everyone is given a product, solution or geography to own and is provided with the opportunity to grow it.

Fiserv in Asia Pacific has witnessed tremendous growth.  The business has been transforming continuously – from a declining and loss-making region to a business that has been growing 20% profitably each year for the last 2 years.

One of my first initiatives was to aggregate high-performing solutions into focused business lines, streamlining systems and processes into four key product lines. By creating coherent and functional business unit structures, I consolidated the available expertise and knowledge into dedicated pillars. Leveraging this, I established Fiserv’s local presence in Asia Pacific, deploying trusted country leaders to pursue partnerships and solutions within specific geographies.

As we know, since the global financial crisis, banking regulation has evolved and new rules have been implemented – particularly in Europe.  Financial institutions have had to adjust their business models, often resulting in more cost. But it has also opened up the market to new entrants that are more agile and unencumbered by legacy technology, and less hampered by regulation. How have financial institutions responded to this? Do you think their efforts have been sufficient?

We can see from the Open Banking regulatory roadmaps that banks are going to be required to continue to innovate quickly to keep in step with what the regulators want.

Focusing solely on initial compliance will inevitably lead to greater cost and time investment in the long term. Meeting a deadline for compliance is not the endgame, it is merely the starting point. Banks that direct massive amounts of resources toward building a solution internally from the ground up risk reaching this starting line and realising every change from that point will require a similar amount of effort and cost.

Facing the prospect of continual change, some banks are starting to see the appeal of fully-managed services. By adopting platforms and practices which allow them to get and to stay compliant, and also move at a faster pace, they will be able to implement and manage change continuously, smoothly, at the lowest possible cost and with the least possible impact on the bank.

This has the added benefit of freeing up the banks’ internal resources to focus on other high-value work.

Freeing up resources will also allow banks to focus on the larger impact of Open Banking and its potential to change the way financial services will be delivered and consumed. Rather than being overtaken with compliance-driven tunnel vision, teams can innovate and look ahead at the opportunities available to them.

As the regulations develop, banks that foster an agile view of technology and implement platforms that can keep up with the pace of change will stay a step ahead of the competition.

As banks, regulators and the FinTech community work together to deliver and meet PSD2 and Open Banking regulations on time, engaging third-party providers and the developer community en route, the impact of these regulations will begin to spread. Those banks that collaborate, partner, invest in and support new FinTech innovations are ultimately the ones that will be able to leverage the capabilities of these innovations, get new services into production and provide customers with new experiences, reflective of specific wants and needs, at greater speed. Ultimately, it’s the banks with the best ecosystem of FinTech partners that will emerge as winners in this era.

What do you see as the biggest technology disruptors for 2019 and how can financial institutions best position themselves for success?

I see a lot of big technology disruptors for 2019. But how they affect financial institutions is debatable.

Let’s take a look at a few of them:

Digital becomes mainstream

A couple of decades ago, many financial institutions built “e-business” units. Ultimately, the “e” went away, and this became the new normal. Internet development and large technology investments drove unparalleled advances in efficiency. Today’s “digital” wave has the same DNA: separate teams, budgets, and resources to advance a digital agenda. This agenda extends from customer experience and operational efficiency to big data and analytics. In financial services, we have seen this approach applied to payments, retail banking, etc.

At Fiserv, we see this trend affecting our clients as well. Digital change, however, is not just about technology, it is about the change in mindset and a change in the way that banks or financial institutions set themselves up operationally. On the short to medium term, we see “digical” as the new operating model, this is a combination of digital and the physical bank.

“Digical” brings the best of both together. Digital technology for on-boarding digitally, with the additional ability to interact, e.g get cash in and cash out, through physical presence.

“Customer intelligence” will be the most important predictor of revenue growth and profitability

Technology advances have given businesses access to exponentially more data about what users do and aspire to. It is an amazing opportunity for whoever can use analytics to unlock that information, to give customers what they really want.

At Fiserv, intelligent solutions and intelligent experiences for our customers are paramount. By focusing on a digital transformation that is customizable, and that delivers intelligent solutions based on data and AI, delivered via various channels, financial institutions can solidify their status as the preferred destination for financial management solutions for their customers.

China is now the world’s largest peer-to-peer (P2P) lending market and has more smartphone users than any other country. What other key trends in banking technology innovation are you seeing in China and Asia Pacific versus Europe and North America?

Yes, as you pointed out, Asia leads the charge in the adoption of mobile technology, with the world’s largest base of mobile internet users, social media accounts and online marketplaces.

However, the rate of digital adoption differs across countries in Asia. Data from The World Bank’s World Development Indicators show that countries such as South Korea and Singapore are out front, while others such as Sri Lanka and Indonesia trail behind.  As access to digital financial services increases, there is an opportunity to enhance the efficiency of business and improve the lives of consumers.

As banks undergo a digital transformation, business models, products and services are steadily being disrupted. In developed markets, the move is toward more sophisticated omnichannel strategies, with a focus on a tailored, intelligent experience and differentiation through digital. In developing markets, the move is toward building out digital capabilities and providing education on their potential/creating a digital mindset.

According to KPMG (Journey to the Cloud 2018) investment in platform-as-a-service (PaaS) will grow from 32% in 2016 to 56% in 2019, making it the fastest-growing sector of cloud platforms. How is this trend affecting financial institutions?

As significant as the shift toward cloud-based computing has been, it is just getting started. Today, many financial institutions use cloud-based software-as-a-service (SaaS) applications for business processes that might be considered non-core, such as CRM, HR, and financial accounting. They also turn to SaaS for ‘point solutions’ on the fringes of their operations, including security analytics and KYC verification. But as application offerings improve and as COOs and CIOs get comfortable with the arrangements, the technology is rapidly becoming the way that core activity is processed. By 2020, more core service infrastructures in areas such as consumer payments, credit scoring, and statements and billings for asset managers’ basic current account functions will be well on the way to becoming utilities.

As more financial institutions move to the cloud, do you think we will see an increase in cybersecurity threats? Does hybrid-cloud offer a safer solution when it comes to data protection?

As financial institutions move to the cloud, the threat of cybersecurity is ever more present. It is imperative for banks to undertake measures to protect themselves, in this case investing in resources to ensure all bases are covered in the new cloud system. It is vital these financial institutions and their customers are prepared in all possible scenarios to continually provide customers with fast, safe and reliable banking services.

Hybrid-cloud offers more data protection than a public cloud, but less protection than a private cloud. Hybrid-cloud allows more sensitive data to be stored on the private cloud and less sensitive data to be stored on a public cloud, allowing banks to reap benefits of both clouds. Hybrid-clouds provide more protection compared to a public cloud, where data is managed by an external provider which banks would have little control over. On the other hand, a private cloud gives banks 100% control over data which is built and used in-house.

In my opinion, banks will first move from on-premise installation to 100% private cloud before moving to the hybrid cloud and then finally to a 100% public cloud. A private cloud allows more data security, but a public cloud allows greater scalability for banks to manoeuvre when required. Ultimately, it’s about what your bank needs.

What will have a more significant impact on banking and financial services – blockchain or quantum computing?

Blockchain is currently being tested around the world in various industries: energy, healthcare, border control, and even fishing. In the banking industry, blockchain is being explored for cross-border money transfers. Blockchain offers inexpensive, direct payments for both merchants and consumers since intermediaries such as banks and credit card processing networks would be by-passed. It can be used to track transaction details, promote financial inclusion and prevent fraud with a blockchain-enabled digital ID.

With the more prevalent use of blockchain compared to quantum computing, the banking and financial services would, I believe, first move to blockchain first, before eventually evolving to quantum computing.

Thank you, Marc, for your time, and your insights, and congratulations once again for taking the title of Financial Technology Executive of the Year at the SBR (Singapore Business Review) Management Excellence Awards 2018.

Ed Glass

Ed Glass is a Principal in the Technology & IT Services Practice at Odgers Berndtson. His background is in recruiting senior-level executives in the Software and IT Services sectors with a particu...

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