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Banking Blueprints

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Episode 2

The next generation of customer experience: How product innovation is your bank’s next top priority

Banking Blueprints
Banking Blueprints
The next generation of customer experience: How product innovation is your bank’s next top priority

In this episode of Banking Blueprints, we unravel the complexities of modern banking systems, where innovation meets tradition and shapes the future of financial services. Learn why banks must reimagine their products and pricing strategies today to ensure the future of their banking operations and provide new value propositions for clients. 

Join host Dharmesh Mistry and special guest Charbel Safadi, Chief Executive Officer at Zafin, as we discuss how banks can unlock new capabilities and uncover the strategies that will define banking success in the digital age. 


BW: Welcome to Episode 2 of Banking Blueprints! In this episode, we unravel the complexities of modern banking systems, and engage in a thought-provoking discussion about the delicate balance between customer experience and product innovation.

Learn why banks must prioritize product innovation and reimagine their products and pricing strategies today to ensure the future of their banking operations. Join host Dharmesh Mistry and special guest Charbel Safadi, Group President at Zafin, as we discuss how banks can unlock new capabilities and uncover the strategies that will define banking success in the digital age.

DM: Welcome everyone to the Innovation Beyond Core podcast hosted by Zafin.

And this week I have a very special guest, Charbel Safadi, and I’m going to ask him to introduce himself and just tell us a little bit about his role in Zafin.


CS: Well, thanks a lot. I’m not sure I’m that special, but name is Charbel Safadi.

I’m the President of Zafin. I’ve been here since the 3rd of January this past year.

And prior to that I spent 20 plus years in consulting at IBM, working in financial services and many, many other industries. And my role effectively today at Zafin is to lead a lot of our product and client delivery initiatives across the organization. So quite excited to be here with you and to spend some time talking about product innovation.

DM: Fantastic.

Look, in this episode we’re going to discuss why you think customer experience is not as effective strategy as product innovation.

And you know, just a caveat on this is I’ve been doing the web and putting banks online for far too many years. It’s well over 20 years. I think the first bank I put online was in 1997 and since that time it’s all been about customer experience as far as it goes from like a web or a mobile perspective.

You know, banks have been told consistently that they have to focus on the customer experience.

A poor experience means that you’re going to lose the customer, blah, blah, blah.

But tell me your perspective on this, right?

CS: Well, hopefully we don’t start a big, you know, a big debate in the market around what, whether it’s customer first or product first.

It takes me back to when I went to Business School around what comes first, strategy or structure, structure or strategy. But you know if I if I think about it and the way we’ve been thinking about it from it’s not even as a from perspective it’s a Charbel perspective.

I think customer experience has been the area of low hanging fruit for the past many years, right. If you think about the advent of the web and then mobile first capabilities, a lot of the organizations gravitated to creating and constructing experiences. If you think about it, it kind of makes sense in terms of where the market started and where bank started. Because even though you could construct product innovation, if you can’t deliver those products in an experience that customers can consume in a very simplistic way, then the product construction, the product innovation and the product dynamics don’t really come to life. Now having said that, there’s also complexities on how to construct product innovation.

So I would argue that customer experience has been easier to support and bring to market, whereas product innovation is very, very complex and nature of that is how banks, as you know, Dharmesh, they’re actually been structured over the past 20-30 forty years. They’ve been vertically structured, right. So each product sits in a vertically aligned part of a P&L within a bank and then the underlining systems associated with that are also vertically structured. So, so I would say product innovation is something that banks and financial services organizations are very much focused on. But it’s much more difficult than creating an experience layer that allows them to consume and abstract a lot of those product systems that have existed for many, many years, if that makes sense.

DM: Yeah, yeah, it does. And you know, like we, we in the previous episodes, we kind of discussed a little bit about the things that hold back the innovation, right.

Largely to core banking systems, right. That’s really what that’s been the holding them back from driving some products innovation, right.

CS: Yes.

DM: I mean I have to defend the customer experience side of it a little bit because

CS: –which is good, I’m good, I’m good with that.

DM: I only say that. I only say that because where you said it was easy.

CS: Easier, easier!

DM: OK, OK. It’s easier to kind of address the customer experience than to change your core banking system to drive innovation. That I totally agree with, right. I mean, there’s no dispute and I don’t think any bank is going to dispute that, that they–

CS: Oh, I don’t think so.

DM: –Drive, you know, a better experience or work on the experience better than they can on their cores, right. So that’s not disputed. The tongue in cheek part of this is really that I still see banks you know struggling with customer experience. I’m like, by goodness sake, just copy somebody else’s great experience.

CS: But they’re much if you think about it right, they’ve gone as far. I mean, we’re generalizing for the most part. But if you think about the mobile first era, you know post the web era, they’ve gone as far as they can with the limitations that exist around how the products actually are designed today, where they sit, how they live, all the constructs behind the product. Like if you think about a product, a single product within a bank, if you go into the DNA of that product and this is, you know, I talk a lot about the DNA of a product.

There’s over 200 dimensions and attributes of a product within a bank.

And you multiply that around 4 to 500 products across an organization that are active and probably another 2 to 3000 that are either dormant or you know a grandfathered in, you start to see the web of complexity that that make up the product ecosystem within a financial institution.

So when I say easier from the experience layer perspective, yes, as in terms of presentment, being able to show a unified front and be able to browse the various capabilities of products, that’s been accomplished or being accomplished.

And the various degrees of success are dependent on the bank and the right strategy and right execution of that strategy. But we’ve we’re coming to a place where there’s only so much more you can do at the experience layer, right?

There’s only so many origination workflows and ecosystem workflows that could stitch things together. It’s getting to a point where product innovation fundamentally has to change, like the way products are structured, both from a technical dimension perspective, but also from a business orientation.

The way the business model is executed in a bank, the way the P&Ls are structured, the way you start to think about loyalty and horizontal capabilities around product design and product construction to serve the client through an amazing customer experience layer is the era that we’re entering into which unlocks a lot of I would say value to both the end customer to the financial institution around stickiness, loyalty and wallet share.

But it also introduces a dimension of regulatory complexity and understanding the presentment, the suitability, the eligibility and how these products are brought to bear.

But I would say it’s a necessity now, right. We’re reaching a stage in our match where the product innovation, the product transformation, the business model evolution in banking is now a necessity, no longer an optionality.

In my mind.

DM : I’m going to come back to that because that’s a really good point. But you know, just going back to the experience side of things, you know, we, we, we love to talk about Uber experience. So great.

DM: You know, I don’t have to carry any cash and I can see where the cab is, etcetera, right.

And you know, I even I’ve written several articles on Uber-izing banks and stuff like that, right.

And then you know, lo and behold, literally every kind of taxi company has somehow managed to cobble together an exact same experience. You can, you know, load up your, your cards, you can see where the cab is, you can order one, choose the different types of cars that they’ve literally copied the Uber experience. So the experience is no longer the differentiator, right? And that’s, I guess, you know, one of the weaknesses of experience is that it’s not very defensible, right?

Like, you know, as soon as it’s out there, like every bank.

Now you can—not every bank–

CS: –but the vast majority of banks

DM: — from the fintechs, right, that you can on board somebody without them having to physically go into a branch and and provide a physical signature or physical copies of their passport and things like that.

You can do it all online in, you know, a matter of minutes, right. So you know, once somebody has, you know, created a compelling experience, it’s actually the, the problem with that is it doesn’t last for too long, right. So my point on the product innovation is, OK, so is product innovation as easy to copy? You know, what makes it more defensible than the customer experience?

CS: Yeah, no. It’s you’re making a very valuable argument in terms of where we are from an industry perspective, right?

The experience layer, it can be easily replicated.

It has been easily replicated and continues to be easily replicated and you reach that.

You know, a lot of these organizations have reached the me too mindset, right?

They’ve all from an AML KYC verification to origination to onboarding.

It’s pretty much the same, right? Anybody can open an account in less than 5 minutes. That claim to fame was great in 2010, 2012, 2013, but absolutely now we’ve reached a place where what’s next?

And it’s your point, product innovation is not an experience layer there.

There is a lot of sophistication and complexity that if banks do it right, they have a competitive advantage both from a market share perspective, but also in terms of competitors copying that dimension. You think about, you think about, you know, changing a product. It’s not creating a new mobile app capability. It’s fundamentally going back into the deep part of the organization both technically as well as structurally in terms of how the business model operates. And you’re effectively re-engineering a lot of the processes and the technology aspects. And to the point of the taxi cabs, you know, you think about those organizations, they effectively have one core right.

Whereas in banking, you know, credit card is a core, mortgages is a core, deposits is a core. All these products sit in these different systems and all the business units operate, you know, independently.

Yes, it may all surface up to 1 leader who runs for example, retail banking. But structurally the way the P&Ls are oriented, the way they’re effectively measured in success is individual product dimensions versus the notion of reimagining products to become more horizontally aligned.

And that’s where the banks that actually are spending the time, effort, energy and focus on this and money are going to be in a very competitive advanced positioning than the organizations that are still thinking about it. And the advent of a lot of the fintechs is they don’t have that history, right. People think that the fintechs are constructing phenomenal experiences.

The only reason why the experiences are phenomenal is because they don’t have the complexity on the back end. So they can’t construct these very unique product propositions that are very much horizontally aligned, that create the notion of depth and loyalty where you’re rewarded for net deposits and total deposits and they start to unlock capabilities and features across our product sets.

That’s something that they can do that effectively creates this phenomenal customer experience. But the experience is constructed on the back of product innovation, not purely from an experience layer perspective. So they’re symbiotic in my perspective that we’re reaching a stage where you can no longer create transformational experiences without product innovation.

DM: 100%. Yeah, no, 100%, I agree with you. I mean, you know, a lot of the banks, you know, I can feel the frustration in some of the banks, right?

CS: Yes.

DM: Because the fintechs have come in with no legacy systems, with no legacy business, you know, into an environment that’s, you know, purely digital. So they’ve been able to do things far quicker, far cheaper and you know, far more easily than a bank.

It’s not because they innovated necessarily. Banks have had these ideas, but they’ve been held back by their systems. They’re as you say that you know the different course, each one of them has their limitations on how quickly you can put change out, right.

But the fintechs haven’t had that.

And you know the other advantage that a fintech typically has, it’s a monoline products, right?

It’s one product, it’s not mortgages, credit cards, accounts that are there, right.

So, so I think you’re absolutely right.

You know fundamentally, you know the defensibility is those that have the power a system to allow them to define products easily, right, are going to gain competitive advantage against the banks that are still sitting on old cores with old ways of defining products, right.

Because I would agree.

DM: You know the case in example is like when I talk a lot about like product innovation, how bad banks have been at it. But I know the reason it’s because of their systems, right.

CS: Sorry to interrupt but the reality is a lot of the innovation ideas come from the banks like they know like the reality is, you know, you get consultants and I was a consultant.

You know I’m a recovering consultant and we go into these financial institutions, these banks and say oh you got to do this.

And they’re like, yeah we thought about this. We know this, right? We know that we need to do this, but what’s holding us back right is, is, is to the point that you’re making, is history. And you know, incumbency is, is a competitive advantage. But it’s also it could hold a lot of organizations back and the organizations that innovate during incumbency and reimagine the way they think about their product models or product designs.

And what we coined at Zafin, as an example, is this notion of a new product architecture, right?

It’s ‘how do banks think about the bank as a product’, right, in its entirety. And the capabilities of the products unlock themselves based on the experience of the client with that financial institution.

And we’ve been spending a lot of time, effort and energy in our organization trying to create that layer for banks to give them the opportunity to start to construct these new product architectures that fundamentally leapfrog them in the marketplace.

And that’s where I think a lot of organizations I’ve spent time with over the last six, 7-8 months having these conversations around how do you really get to new product modeling? How do you get to new product architectures?

How do you start to get to a place where products are looked at horizontally and served to the individual from a client experience layer perspective.

But, effectively, you’re absolutely right.

The next generation of client experience will only be derived, from my perspective, through product innovation. There’s only so much more tweaking we could do at the experience layer, at the UX layer, at the UI layer, at the orchestration layer.

Everything else now needs to come back to what is my product, what is my value proposition and how do I individualize that product through an amazing experience to that customer.

That the notion of ‘segment of one’ as you know has been discussed ad nauseam for the past 20 plus years. But the ability to serve that means that I could serve products unique to that individual not serve a new UI with colour schemes to that individual, yes.

DM: Yes, so I mean I guess you know this in answer to the question of, you know, is product innovation defensible.

CS: Absolutely.

DM: The reason it’s defensible is because everyone else isn’t able to create the parameters or the product as easily in their in their older systems, right?

CS: Correct.

And you know what, what’s interesting, it’s like you don’t even have to really innovate, right? More recently, if we look at, if we look at the very basic fact that inflation has driven interest rates up, right and now savers are expecting higher rates.

Yet in the UK the only players to increase their savings rates, right, which is beneficial not only to the end customers but also to the bank themselves, have been the new banks like the Monzos and the Starlings, the peoples that are on modern core banking systems been able to make that rate adjustment very easily, right.

So even at that level, a simple change is going to take, you know, six or seven months, right? And that’s why it’s defensible, right?

CS: Well, that’s why it is defensible. 100%, right. It’s a simple change.

DM: If you want to do something brand new like BNPL, well, how many banks have got that? Because that’s a whole new product set, right? It’s not, you know, tinkering with a rate or a charge anymore–

CS: Correct. You think about the deposit outflows right to the point that you’re making right if Monzo or even you know in Canada, Wealthsimple as an example, it’s everywhere, right? These fintechs giving you 5% interest for example, on your checking account. Think about that right, in Canada, on your checking account. On your payroll deposit, the money that comes in from your payroll that lands in your payroll account, the current account is earning you 5% interest right now how do you square that away if you’re a traditional bank? The argument is fintechs don’t have incumbency, but what they’re doing is they’re chiseling away, right?

I envision this big boulder and what they’re doing is just chiseling, chiseling, chiseling and these moments of high interest rates are giving them the opportunity to chisel a bit faster than customers, right. And once, once customers make that pivot because the notion of switching is a very difficult proposition for a lot of these clients, but when they make the switch, the ability to bring them back becomes a much more difficult proposition.

So I would argue it it’s defensible, but it’s a necessity at the same time because you have to have an outlook of the next three to five years, right, not today: outlook of three to five years. Because if you don’t start to create these compelling product capabilities, these innovative products, these products are cut across the verticals. You’re effectively putting yourself in a non-competitive landscape of organizations that are chiseling away at the customer base.

And at some point we’re going to reach that tipping point where if you haven’t innovated, your ability to compete and survive become a very difficult proposition. I know a lot of people say, oh, that’s a, you know, that’s we’ve been saying that about banks for the past 20 years with the advent of fintechs and Open Banking that effectively the incumbency will diminish.

But it is. It’s diminishing, right?

And it’s about looking at the long term, making changes today to support the capabilities that clients expect today, but also the next three to five years. Because if you’re not prepared, we’re going to reach this tipping point where it’s going to go from left to right very quickly.

DM: Cool. I mean, I so you know, I’ve made note of a few questions etcetera, and I think that’s kind of all of them… You know why haven’t banks focus more on product innovation and I’m like I’m guessing you know the core of this answer is because of their legacy cores right, because they’ve been haven’t been able to?

CS: Yeah.

DM: Anything else?

CS: You know to give you some perspective, you know every conversation I’ve had with Head of Retail, Head of Lending you know our conversation we’re having with our corporate commercial client base, they’re all thinking about this. It’s become a priority, right.

But I think that the way you’ve answered it is, is, is the area of their concerns.

So from a business perspective they all need, they know they need to innovate.

What’s good of what’s happening in the marketplace is the need to innovate on product has become a top priority.

The question is how? How do I innovate? How do I reimagine the product design?

How do I see what my competitors are doing?

And then how do I make the fundamental changes without waiting for the next three to five years to replace a core system that will allow me to innovate.

Because innovation cannot wait five years from a product dimension perspective, it needs to happen now.

So, I would say we are seeing the interest spike. We are seeing it become a priority and become part of the strategy of a lot of these organizations. I think what they’re trying to figure out is how do I accomplish that and make that a reality in the short term, in terms of bringing value to clients, but also create a sustainable innovation life cycle around product design that allows me to continue to sustain product innovation because fundamentally product innovation, you think about any, any, any industry, right?

You think about this, Dharmesh, you think about, you know, the electronics industry, you think about our phones, right? Imagine any one of these providers just stopped innovating their products, right?

Imagine that.

Imagine Apple decides that we’re stuck on iPhone 15 for the next six years, right.

What’s going to happen? There’s maybe competitive pressures. They’re eventually going to go out of market. Their market share will come down significantly.

So I would say we are seeing the advent of product innovation as a priority at the board level and at the most senior executive levels of a lot of organizations we’ve been spending time with.

The question they’re asking is how do I accomplish it with speed?

DM: Yeah, Yeah. I mean, it seems like on the electronic– The thing is you brought up the analogy.

I’ve looked at some of those companies like your Samsung’s and Apples, etcetera, right. But they not only have a road map for their products, they’ve already tested features and functions and they’re holding back the innovation. I mean like the innovation that we see on a new release is only what they’ve decided that they want to put out this time round.

And if you know, three months down the line, Samsung has issued a phone with a new, let’s say, GPS device, etcetera, you can bet your bottom dollar that Apple has probably been sitting on that innovation thinking, right, OK, we’re going to launch that in our next phone.

CS: But if sounds like we have a library, it’s like we have a library of innovation. It’s ready to roll, right?

DM: And this is where banks need to be, right, is we’ve got this roll call of stuff that we’re going to put out on a regular basis, right. But we’re going to, we’re going to be in control of it, not held back by anything else, right.

CS: I think you just hit on the point where you know when you started the conversation around customer experience, I just believe product innovation is the new frontier for customer experience innovation, right.

A lot of these financial institutions, these banks spent the last 10 years in innovation labs, digital entities. They’ve constructed all these sidecar initiatives. But to the point that you were making, they were all focused on innovation at the mobile layer or at the experience layer, right, Which is understandable because you know, customers were expecting that level of simplicity.

But I would argue, you know, the focus now needs to be to the point that you just made, which is deep product innovation, the core of what they do, you know, a bank is 2 things, its customers and its products.

I always say this, right, two things. That’s all a bank is.

It’s the customers and the products they serve those customers.

Everything else is a supporting cast.

And if you’re not focusing on the customer experience, which you know, a lot of money and time and effort and energy has been spent there, and you’re not focusing on product and product innovation, that means you’re not focusing on your business. I just still adapt to that simple level of one side of the coin is the customer, the other side of the coin is the product.

Now we’ve reached the place where if the product innovation isn’t heavily invested in and it’s not focused as a priority on a continuous basis, then you’re always going to be you know, one step behind, not one step ahead.

And this notion that a banking product needs to stay idle and dormant and the way it’s been structured for 10 years, I think we’re well past that notion. And for any organization thinking they could get away with that and then when a customer needs a different product they have to do with this crazy product switch mindset.

I think they’ve lost the plot. So fundamentally, I’m well-aligned with the way you positioned it and I do think product innovation must be the top priority for a lot of these organizations.

DM: Yeah, I mean, again, you know, I’ve written about this before where, you know, I’ve said, look, you know, an 18, like a child, an 18 year old, a 35 year old with a family and a 70 year old, you know, that’s retired, all probably have exactly the same current account. You know, if they went to the same bank, they all probably have the same account, no differentiation whatsoever.

And that’s got to change because, you know, our needs as consumers are totally different in each of those life stages, right. Yes, there are variations that you can get, but they ain’t too great, you know?

CS: Yeah, but let’s be clear, right? Like our perspective is product innovation doesn’t mean it’s just purely financially constructed, right?

A lot of the technical investments that banks are making in technology, those features can also be attributed to a part of a product design, right.

So, so if you’re if you have net deposits of X as an example, not only do you get this interest rate and these benefits and these features, but they also unlocks technical capabilities like you know, dynamic tagging or analytics, complex analytics or third party ecosystem capabilities.

You got it, you got it. So, so you know the bank spent a lot of time thinking that we are tech companies with a banking license.

No, no, let’s get back to being a bank that you know has products that serves its customers but also is technology-centric where the technology investments can also be monetized as part of the product modeling.

And I would even go one step further. The customer experience layer, right?

The ability to call into a contact center, the level of prioritization ties back to the value chain.

And you know who’s done this really well?

Airlines have done this really well. Right? Well, that’s not to say the airline experience is outstanding, but if you think about the loyalty dimension and the way they’ve monetized every dimension of their product model within an airline, they’ve done an effective job about creating stickiness, loyalty, right, as well as monetizing all dimensions of the product modeling.

So, So I’m not to say, you know, banks are an airline, but the notion of creating that loyalty, that stickiness and this continuous product innovation is going to be a necessity for every bank we foresee going forward.

DM: OK. Look, I’m going to play devil’s advocate on this question, right? And see how you bite.

CS: It’s all good. All good.

DM: Right. So like an account is an account, It’s got rates, it’s got charges, you know, it’s got maybe some reward points, etcetera. I mean, how much more can you innovate on a basic product like that? Yeah? I mean is, is there really opportunity for innovation on all these financial products?

CS: Well, individual, so you make a very, I like where you’ve opened this up and you and I did not rehearse this. So this is wonderful.

I would argue if you look at one product and that product that stands on its own and it’s a current checking account, whatever type of account it is, there’s only so many dimensions of attributes of value you can construct around that, right as a stand-alone product, as a product of 1.

So yes, you could give it, you know, loyalty points, maybe you could do six ATM withdrawal fees or maybe unlimited.

You can maybe create priority support. But where the value starts to come in is when you start to look at products as an end-to-end value chain across all product dimensions, right.

If a bank is trying to win on a checking product, they’ve lost the plot, OK.

Winning a customer is not about, you know, we’re all consumers and we don’t bank with a bank because we want one product. We need many products to live our lives.

We have families, you know, there’s tuition, there’s investments, there’s mortgages, there’s all these different things that we need. And banks play a very important part of our lives in multiple dimensions, from our lives to our partners’ lives to our children’s lives to our futures.

So if you think about it from that dimension, there isn’t a significant amount of product innovation that needs to occur when you start to bring products together.

This is what we coined the new product architecture. It’s effectively decoupling all the features of a credit card, of a mortgage product, of a savings product, of an investment account and be able to bring them together and start to design a proposition that’s unmatched, that’s unique to Dharmesh or unique to Charbel.

And that’s where we see the product innovation pivoting to, but to achieve that you need to be able to start having the capability to innovate on that checking account because you can’t even innovate on that simple checking account. Then how are you going to do everything I just said which is this multi-dimensional new product architecture that really focuses on the experience of the consumer through product innovation?

DM: Right, right, right. So let me backtrack a little bit on this.

So what you’re saying is there is, you know, I mean if you’ve got 200 odd parameters around a single product, that’s a lot of factors that you can control anyway. But when you start to combine that with other products, so let’s say behaviour on your deposit account and your current account, affects rates or rewards on your investment account, those combinations create a new product behaviour, right?

But, from one product driving behaviour in a different product, that’s what you’re saying, right?

CS: That’s exactly what I’m saying, which is now we’re focusing,

DM: I love that!

CS: But it goes back to how we started the conversation, the customer experience, right.

So, so you are no longer creating an experience that is you know one to many, you’re now creating an experience that’s behaviorally driven which means the product innovation, the product capabilities across the horizontal dimension of the bank start to unlock the value proposition to the behaviors of the individual.

So the more I engage with the bank, the better the bank engages with me.

The more experiences that I get, the more value that I get from mortgages to lending to deposits to all the dimensions of my financial well-being as a as a consumer.

And that’s, that’s the competitive advantage.

That’s where, you know, the fintechs are not encumbered with the past where they can start to think that way, construct that way and model it that way. And not only that, the notion of a new product architecture is that everyone starts at the starting point, OK? But your behaviors, your investments across all the product sets start dynamically unlock capabilities

So as you engage more with the bank, you, you, you create more loyalty with this institution.

The institution is more loyal to you, it gives you more and it creates more value for you and it helps you live a better life and it focuses on your well-being, versus treating everyone equally, the same.

It’s not about treatment of the individual, but more of the way the product model is structured that the product capabilities start to dynamically adjust themselves based on the engagement of that consumer.

So that’s where we think and we fundamentally believe and I fundamentally believe that product innovation, this notion of a new product architecture is going to be the competitive advantage and the banks that achieve this or begin the journey to achieve this will be lightyears ahead of any of their competitors

DM: Yeah, yeah. I mean it’s interesting because you mentioned earlier on and I’m big fan of you know the one to one marketing side of it. But what’s actually happened in the decades since that book was launched is people have kind of like, oh we’ll have, you know I’ll tell you what if it if it’s a Platinum customer, we’ll you know change the content, we’ll improve the layout, the colours, whatever–

CS: New logo!

DM: –personalized the experience. Well, great. What you’re talking about is personalizing the products.

CS: You got it.

DM: –dynamically based on what they already have.

CS: I mean the holistic products, all of the products and they all work together in the in this dynamic way where my engagement with the organization gives me a unique product proposition that’s unique to my behaviors, my engagement and my commitment to that organization,

DM: OK, I mean that sounds compelling to me.

CS : It does.

DM : How does the bank do that if they’ve got multiple cores?

CS : So, so the reality, the way we position it, you know and I’ll use my Zafin hat just for a second and—I tend to give you my opinions, my personal opinions, but what we’ve been spending a lot of investment in R&D and our product development teams is the ability to take product and pricing out of every core.

So, so we we’re working with organizations that have 18 cores, 17 cores.

You know that they use you know hosted credit card core, excuse me, and our on-prem deposit core. What we’re doing and we’re starting the journey of this notion of core modernization to product innovation is by externalizing product and pricing outside of these cores into our Zafin SaaS platform.

And by doing so, it doesn’t necessitate or require the core replacement.

But what it allows for is these dynamic product experiences that we’ve just been talking about to unlock and start to be able to provide these capabilities and allow the CIO’s office and the CTO’s office to begin their progressive core modernization journey, while the business is effectively being able to create these unique product architectures today, not two years from now, five years from now, but today.

So two things are happening.

We’re taking product and pricing out of these legacy cores and we’re centralizing them in a next gen SaaS platform. And by doing so, it unlocks the progressive journey for the technology teams, but it also creates the value proposition for the product teams that are responsible for the P&L’s of the business

So we’re creating 2 motions, happening at once and that’s what, you know, from a Zafin perspective, we spent a lot of time doing this and we’ve launched a bunch of tools around this tool called Product and Price index as an example, where we go and we pull the top 250 banks marketable products off their websites and PDF documents using AI.

And we start to, every evening, we do this every day, every day and start to provide insight on what your competitors are doing and what their rates are and what their structures are. So we’re starting to bring that research capability to our clients so that they can understand what the market conditions are.

And we’re also doing this internally, the ability to bring data in and allow them to understand the DNA of all their internal products and then unify that to be able to construct and design propositions of the future in these new product architectures. So, to bring that all together, you know we launched this thing called Zafin Studio which is effectively the co-creation and the tools required to be able to start to think about new product architectures end to end. So that’s the plug on the product. I appreciate the ability to plug that just for two, two minutes there.

But, but fundamentally we’ve been spending a lot of effort, time and energy on the new product architecture capabilities for the business, all while still managing our SaaS capabilities that allow us to begin the progressive core modernization journeys for our CIO and CTO partners.

DM : Yeah, I mean, I’ve been speaking to your team quite a bit and you know, the revelation to me on the modernization piece was the ability to actually hollow out the core so that it essentially becomes a ledger. While you know, a platform like yours starts to handle the product lifecycle from researching what the product needs to be, look and behave like to defining the product and then publishing the product in its own lifecycle based on the modern stack. Which means it will be done much easily and more cheaply, right?

CS : 100% you, you succinctly, you succinctly positioned that much better than I did. So I appreciate that.

DM : I mean, look, I just try to simplify stuff. That’s what I need to do, right. So, but in all of this, it all sounds good to me, but the reality is in the bank, right, some guy, no matter how quickly you define the product, you’re still going to have to get through the product in terms of you know, regulations, does it comply, compliance, you know, audits, documentation, risk management, etcetera.

There’s a whole lot more to product definition in a creation than just the product features and its behaviour, right.

So you know can that be accelerated as well?

CS : So thank you, thank you for keying that up. You think about today, you think about the regulators around a regulator coming to a bank and asking show me, show me how you’ve done controls around product eligibility, product suitability. You have, you offered Dharmesh this product two years ago.

What controls were in place for this offer presentment or product presentment and was Dharmesh suitable and eligible for this product.

And you’d be quite surprised to hear a lot of the answers in terms of how long it takes to just investigate that type of contextual insight. So, so as I mentioned to you, this notion of the DNA of the product, these attributes that make up a product.

What we do inherently as part of our platform is around this notion of trust, transparency and fairness and banking and inherently as part of designing a product all the suitability and eligibility conditions are all constructed within our platform. So we become the notion of this immutable capability that gives us the ability to present in real time to whomever that needs to understand one during product construction, what was the risk rating of the product, when was the last time the product was updated. So we have all the auditability of all product dimensions in the life cycle.

But two, when it’s presented to a customer, whether a product is presented or an offer is presented or a proposition is presented, what were the conditions of that presentment and what were the behaviors that we’ve tracked that made that become a reality, the eligibility dimensions?

So all of that is immutable within our platform. We capture all that data, and we have all that data and all the reporting mechanisms to ensure that, in fact, you accelerate the compliance dimensions of what the regulators are expecting of a financial institution.

So by shifting to this notion of a new product architecture, product life cycle management within our platform and innovating new product modeling, you get the benefit I would say out-of-the-box that gives you the suitability, eligibility and the regulatory constructs around that information to be in compliance.

So in fact, you’re putting yourself in more compliance, in a position of compliance by shifting here then you are by having 16 cores all have their own suitability and eligibility dimensions and trying to track and trace that data for a single customer that cuts across the lifecycle in the current model today.

DM : Yeah, I mean, yeah, I can see how this pans out.

And you know what actually is amazing about this is that the more complex of product, it’s like no more complex to have all these, the compliance and regulation etc., because it’s actually just the standard way that it works. So it doesn’t matter if you create something more complex and dynamic and highly personalized, you just create a vanilla product. It’s all built in.

Therefore it just handles naturally.

CS : I mean that’s it handles naturally. It’s part of the logic of how our core engine operates, right.

It’s part of the logic. And not only that in some organizations what we’re doing is we’re creating what we call transparency capabilities that exposes and emits the, the, the transparency data, which is ‘why was Dharmesh offered this product’.

DM : Yeah, right.

CS : So they could not only that. You know, when we think about fee presentment, why were you charged a fee? Why was a waiver condition applied? All that data can now be put on a digital statement or through online banking. So a customer could understand why a fee was charged at the end of the month or why they weren’t charged a fee. Both ways. And all that data, because it exists within our platform, becomes another layer of presentment from an experiential perspective that does two things.

One, it gives them the confidence of the consumer didn’t say, you know, the bank is looking after me, They’re providing transparency and fairness data.

And two, it reduces cost because customers don’t need to call into the call center or the contact center to inquire about why was I charged this fee or why was this discounted.

That level of transparency becomes very important and if you could show that end to end, then what you’re doing is you’re creating a lot more trust in the organization. And then from, I would argue from a compliance and regulatory perspective, you’re providing that transparency data even further, showcases that, that a financial institution has the controls and mechanisms in place to ensure that trust, transparency and fairness is being applied equally to the consumer base.

DM : Yeah, I mean, I know we like to beat up the banks sometimes, but what you said to me earlier resonates because banks have been thinking about this for a long time and I go back to like my time in Lloyds Bank. I was there between 86 and 94, right. And in that time, I was involved in working inside the business.

So you know I moved from IT into the business to work on a few re-engineering projects and I remember in one of those we discussed personalized products, how do we get to personalized products and the big challenge then this was pre-the Internet, right? So you know the big challenge then was really like well, OK, firstly how do, how we will find this in our system and even if we could define in our systems, how do we get to train the staff and produce the material. And you know get this through, you know the compliance teams especially if it’s dynamic, right.

But things have changed now. We’ve got the Internet, we’re not necessarily selling through the branch and the call centers and brochures anymore. It’s done digitally.

So you know the audit trail is built into the process, right?

CS : Correct.

DM : And then second thing is obviously with a technology that isn’t monolithic that is you know like micro-services based or component-size now you can start to get the flexibility that you need to make these you know personalizations much more of a reality.

So you know, yes, you know technology changed, times have changed. But that’s why it’s–I’m seeing now that’s why it’s kind of possible now and it wasn’t you know, 25 years ago like you say banks have been thinking about this. It’s just not necessarily been possible for them before.

CS : Right. And you’re 100% correct.

And I would, you know, I would argue every time I go meet with a bank and their product teams, they have a list. You know what we talked about you should have innovations, you know, ahead of what you’re releasing. We have you know an extensive list of product innovations and capabilities.

But every time you ask them you know why haven’t you done it, it all goes back to the ability to do it from a technology perspective, it all circles back to the inhibitors which is why as I mentioned to you today for us as an organization we’re in the era now of product innovation and we’re in the era of helping banks execute that product innovation through simplification of the technology architectures.

So, so we’re in the right place at the right time, I would argue, with the right technology that we’ve invested significantly in over the years and that we continue to invest in from an R&D perspective to really you know to really show up and help these organizations effectively transform their business models through technology modernization.

DM : Fantastic, Charbel. Look, you’ve been very eloquent in in explaining this to me. I am, I am a convert. I am a believer of innovation. And I understand, I mean, more importantly, I understand you know how it’s possible, why it wasn’t possible before and you know why that you know, banks can do it now, you know, and why they should be moving towards this. It’s become really important. Thank you so much.

CS : Oh, thank you. I appreciate it.

DM : Definitely love to discuss this topic a bit more with you in terms of like examples and case studies of innovation, but you know, let’s save that for another day.

CS : Let’s save that for another time. And it’s retail, corporate, commercial banking, it’s all the way through. So we’d love to spend some more time on those use cases.

DM : Fantastic. Thank you.

CS : Thank you Dharmesh. Take care. Bye, bye.

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