" class="no-js "lang="en-US"> EXCLUSIVE: "Anatomy of a neo" - Dr Dennis Khoo, TMRW and Georg Ludviksson, Meniga in 'The Fintech Magazine'
Tuesday, May 28, 2024

EXCLUSIVE: “Anatomy of a neo” – Dr Dennis Khoo, TMRW and Georg Ludviksson, Meniga in ‘The Fintech Magazine’

Georg Ludviksson, CEO and Co-founder of Meniga, has been working with banks as an innovation partner for more than a decade. He has been part of many digital banking transformations and new digital banking projects, and ranks TMRW as one of the most impressive he’s witnessed. Here, he interviews Dr Dennis Khoo to drill down into the creation of TMRW digital bank by UOB, the Singaporean multinational banking group.

GEORG LUDVIKSSON: You’re world-famous for being the mastermind behind TMRW. Can you tell me a little about the project, it’s objectives, and why it was so successful?

DENNIS KHOO: When we started in 2017, the objective was really to protect the future of the consumer banking business within UOB, and to think about how people want to bank, and also how we could expand outside Singapore. An interesting point is that we didn’t start with any solution. We started with a clean slate. We thought ‘what’s the problem, who do we want to serve, and how can we bring something very different to the market?’. We didn’t use any of the buzzwords, such as AI, machine learning – they all came later. We were very focussed on providing a great experience – the fundamental transactional banking experience, the onboarding experience, the credit experience, and also how we could resolve service. Of course, the aim is to not have a problem, but when a problem does occur – provide great service and then use data to prevent problems happening in the first place!“It helped that, as Singaporeans, we were operating in Thailand and Indonesia – countries more foreign to us. We therefore really had to do our foundational homework and talk to customers. We ended up doing lots of qualitative and quantitative research to boost our understanding, and that ensured we were very customer-centric. Today, when you ask people who are very knowledgeable in this field, they often cite TMRW as a benchmark design. That’s something that makes me very proud.

GL: Can you provide an example of how you modified TMRW’s organisational design to increase the chances of success?

DK: One thing that was very apparent was that we would need great process abilities. At the time, we had process people, but we didn’t have a senior enough person. So, the first thing was to find one, and then I basically collapsed the experience piece, the service piece, and the process piece under this individual. Our structure back then was a little unusual – people couldn’t understand how we could divorce all these pieces from the product, because they used to belong in the product area. So that was one of the first things I considered.

GL: You talk a lot about the net promoter score (NPS) as a critical measure of advocacy. Why did you choose that metric, as opposed to conversion rates of sales, or other economic metrics?

DK: Incumbent companies don’t have access to cheap funding. There’s no VC that’s going to give you $100million. Money is hard to come by, and so capital is a very scarce resource in banking. So, in order for you to make sure you can get to marginal profitability faster, you’ve got to make your customers recommend your product. You can’t make your customers recommend it if you don’t have advocates, and you can’t have a high rate of advocacy if your NPS score is very low.To be able to achieve the high numbers we did – the 40s in Thailand and the 60s in Indonesia – is incredible, considering we built TMRW from scratch. It often takes years and years for an incumbent bank to comachieve these kind of scores. So that was very pivotal in setting the right approach from the beginning: in getting the advocates and then quality customers.

GL: You worked with some partners on this project, including Meniga. Can you tell me a little about your partner strategy?

DK: My thinking in this area may be quite controversial, but I don’t believe banks write good software. Fundamentally, bank technology is about integrating. There is so much pressure to modernise, lower costs and improve experience, that banks don’t really keep track of code properly. The strategy was therefore if we could find a good vendor, like Meniga, then we can rely on that vendor. Why would we try to create something when there’s thousands of fintechs who’ve already done it? We monitored everybody in the data-driven engagement space so that we could be the first to contact them, and, hopefully, build a barrier for competitors following us.

“People often cite TMRW as a benchmark design. That makes me very proud”

Dr Dennis Khoo, TMRW

GL: Looking ahead, what do you think will work in terms of engaging customers? Is it tools, or proactive insights, or product recommendations? What kind of personalisation or experience are customers going to engage with?

DK: There’s no one-size-fits-all answer here. Every time you find an area where there are permutations, there’s learning. And where there’s learning, you can move ahead of your competition. That’s why I conceptualised something called an ‘engagement lab’ that brought together a multifunctional team, encompassing analysts, marketers, tech people – we even had someone who understood psychology. The team worked out what engages certain people, by segment and that helped us to quickly get ahead.

Georg Ludviksson and Dr Dennis Khoo recently spent some time in our mobile Fintech Finance studio to face a quick-fire round of questions from our community.

FINTECH FINANCE: “What are some examples of the best digital banking launches you’ve seen?”

DENNIS KHOO: Besides TMRW of course! I think some of the ones that have really broken through are KakaoBank (South Korea), WeBank and MYBank in China, Nubank (Brazil), and Starling here in the UK. I think these are all examples of companies that offer a really great experience.FF: “What are the biggest mistakes banks make in their digital transformation journey?”

GEORG LUDVIKSSON: Well, there are several. But the I’ll highight is failing to keep iterating after they launch something. That, to me, is the saddest thing. You’ve spent a lot of energy and effort to launch a great solution, and sometimes, with 10 per cent extra effort, by listening to feedback after you launch, you can maybe double or triple the impact. That happens too rarely.FF: “What’s the next big thing in digital banking?”GL: The transformation that’s already underway, but I think we’ve only started scratching the surface. For digital banks to be transactional, they need to be much smarter advisors, in a broader sense than most people think about banks. With all that data, if you get it right, you can really help people become smarter consumers. In time, I think you won’t choose your bank, you’ll choose your smart advisor, which will then maybe choose your bank for you.

FF: “What’s the craziest feature you’ve seen in a digital bank?”

DK: Frankly, I thought the feature that had a chance of not working was the savings game we created at TMRW. But it was a big hit in Thailand. They simply loved it. In the game, every time you save more money, your city grows bigger. Interestingly, when we tested it in Singapore, they didn’t like it; they were saying ‘don’t tell me how to save’. So it varies by country.

FF: “What’s the favourite feature you’ve seen inside a digital bank?”

GL: I’m not the typical user, I’m a personal finance nerd, so I’m a big fan of algorithmic-type features, where I have a lot of control – for example, if I can make a conditional transfer in the future, depending on what the balance in my account will be. Some banks have features like this, which give you a lot of control.

FF: “How do you measure if your digital bank is successful?”DK: The first key measure is your Net Promoter Score (NPS), which is really a representation of how many advocates you have, and these advocates are the ones who are promoting you because your experience is so good. And then, of course, you’ve got to look at things like how many active customers do you have? What’s your revenue per customer? And does it exceed your cost of acquisition and your service cost per customer?

FF: “What are the key steps to building a successful digital bank?”

GL: That’s what Dennis’ books are all about! But, to name just one: organisational design. Think about the process. That’s more important than technology. And how are you going to execute? Execution is more important than ‘where am I going?’.


This article was published in The Fintech Magazine Issue 25, Page 71-72

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