The Future Of Risk & Return In Banking: SCBX On Balancing Heritage With Change & Innovation

With high growth on the cards for SCBX, shortly after they announced that the Siam Commercial Bank Public Company Limited (SCB) signed a sale and purchase agreement to acquire 100 percent of the charter capital of Home Credit Vietnam, the consumer finance business of Home Credit Group in Vietnam, we caught up with CTO, Dennis Trawnitschek to explore how innovation and heritage are moving SCBX forward.

There’s a common narrative in today’s world of innovation: out with the old, in with the new. As technological advancements dominate conversations and threads on LinkedIn, it’s easy to imagine a digital world shedding its old skin and starting fresh. However, time and time again it’s proven that there’s a unique magic in brand heritage—the blending of old ways with new and the development of hubs that cross-share information and learnings and build literacy to better create a fusion of heritage and modernity.

With this in mind, we look to the future and those who are embracing disruption while staying true to their core values and beliefs and we ask – What rewards await those brave enough to swim against the current?

Speaking to Dennis Trawnitschek on our latest episode of The Forward Podcast, we explored this alongside the cultural shift required for transformation and how to navigate the changing landscape of banking. Renowned for his forward-thinking approach to technology adoption and AI integration, Dennis shares the captivating story of how SCBX is becoming the mothership of financial technology while still staying true to its 100-year heritage. As the driving force behind the group’s Technology Centre of Excellence, Dennis leads the charge in cloud computing, cybersecurity, and Data/AI initiatives, paving the way for sustainable change within the industry.

Heritage & The Mothership of Financial Technology

Aziza: Dennis, SCBX is often described as the mothership of financial technology. Can you explain what you mean by “mothership” and what triggered this transformation from a traditional heritage bank to a leading financial technology hub?

Dennis: To answer that we have to go back to our heritage. We are very proud of our heritage.

We’ve been the first bank in Thailand, the biggest or second biggest depending on how you measure it. This was before I joined, but our CEO always said, the banking business used to be low risk and low return. But we don’t believe it’s going to stay like that. The role of the intermediary of banks overall is challenged by all the things that are happening around us. And I mean, we had a bit of a crypto winter, but there’s still the belief that you actually can remove the intermediary from the whole system and you don’t have an issue with that. Number two, to really change fundamentally, it’s very difficult if you carry a proud heritage with you. So SCB has been, it was still the bank has done a lot, right? We were the first ones to drop fees on QR payments and change the whole system in Thailand. We did a lot of things, but fundamentally the incubation of change was difficult because a bank is still a bank and a bank needs to be run risk-averse to a degree that you can actually do it.

People entrusting you with your money. There’s regulators that want to make sure for a very good reason. So that’s why the idea was born. Why don’t we try to think about it differently? And why don’t we start to look into building purpose-built areas, purpose-built companies that actually serve different segments, different areas, even different technologies, different purposes than the original bank and spread it out into a group to help us to change better, to embrace the change, right? And that was the inflection point when basically the idea of SCBx was born.

Why are we the mothership? Because we were also the actual legal entity SCBx, which is no stock listed. We delisted the bank and listed the holding company, which owns most of our subsidiaries 100%.

It’s safe to say we are the custodians of the change but we actually need to create value. And the idea was to say we have the bank who is… posted a record profit basically with the bank, right? And we’re very proud of our bank and they are very strong and doing very strong work. But what we said is, why don’t we use the profits that the bank generates and seed them into other areas of business to make us future-proof? Because while we’re there for over 100 years, we want to be around for another 100 years. So that’s the idea.

And the mothership, why are we the mothership? Because we have to steer that transition. We have to make sure we orchestrate everything within the group of companies while giving them a lot of independence as well because you cannot be really good at what you do if you follow everyone following the same structure. The fundamental thought was to say, we do not believe that it’s going to be low risk, low return forever so we have to adjust to that. We have to be ready for the future and transform now while we still can before we’re in crisis mode.

AI & Embracing Change

Aziza: AI is a big part of SCBX’s strategy. A recent study from Cisco showed that only 14% of leaders felt equipped to implement an AI strategy, with barriers like policies, infrastructure, and culture. How has SCBX managed to place AI at the center of your strategy despite these challenges?

Dennis: So, first of all, I think AI is for us, not a tech topic, right? One thing we do make very clear is AI is a topic of every chief and it’s not just for tech. We also have a subsidiary, DataX, that specifically takes care of data and AI. But it’s a team sport, right? That’s number one. It’s also very important we embrace the change from the top. It starts with our CEO, even up to our board.

AI is an important topic and we do believe it is a big disruptor and enabler at the same time to new businesses. I wouldn’t necessarily say that we’re that much better than anyone else. We all have our struggles. But I think if you look at the recipe that we’ve tried so far, there are a couple of things to mention.

Number one, the tone from the top and then the top needs to walk the talk, right? So this means you have to constantly showcase how you’re using the different AIs from Gen AI over more traditional MN learning and other things basically to help drive how we measure that impact? It starts with small things that you use yourself, you embrace the change.

Number two, what we are doing is there’s no AI without data. So we take our data infrastructure and the ability to use data very seriously. We have a dedicated subsidiary called DataX that’s taking care of that part. It’s obviously not easy because we are in a highly regulated industry. And if I look at the things that make it most difficult for us, it’s not about technology. It’s a lot of making sure we do all of this, being fully aware that we have to be making sure we are compliant, we’re doing all of this right. It’s not that easy, that part, because the regulators aren’t that clear on what it actually means. There are a lot of technologies that are popping up here and there, but fully understanding them, understanding what they do, how we manage the risk and all of that is not that straightforward sometimes. It takes quite some time to manage things like PDPA. For us, it’s particularly difficult because we are a group. So we have to think about what is customer consent what can we use, and what can we not use, right? There are lots of these things. But setting that aside, we are aware of that. We’re working on it. We have great teams who try to find solutions rather than problems. And it’s a big change to the risk awareness and the level of risk that you are able to accept if you’re just a bank. Then what we can actually do because we’re a little bit different?

We also understand why we say it’s important from the top. It’s very important to embrace the change along the way. So we created an AI champion program. We have dedicated people, basically, who we had their supervisors signing up that they can put a certain percentage, so it’s a day a week for us, basically, into understanding the technologies that we use, understanding the use cases, understanding what it actually means. Because similar to what I mentioned very early in my career, you didn’t really know, and there’s not a lot around what you can leverage. It’s kind of like the same for AI. It’s not like, oh, let’s open the book to step one, two, three, four, five, and you’re done.

These books are either not written or they exist in some podcasts or some other ideas. So you have to trial and error for that, you need to create an environment where people are okay to try and narrow both from the capacity, but also doing that while we cannot break the system overall. So that’s another important part. And then we look at AI literacy as a core KPI as well. So we need to equip everyone because again, we can have millions of data scientists. We obviously have not enough but A data scientist who doesn’t understand the business is not going to help you. So we actually need to make people in the business understand what AI can do and cannot do for them and start experimenting around. So we have to bring that up. And then obviously we have a number of partners as well that we work with, right?

And that’s the way we’re trying to orchestrate. But we had to dial it just quite a bit along the way and we’re still learning. And I wouldn’t say we threw it yet. I don’t think we have yet the breakthrough and everything, but we’re trying to get there.

If you want to hear more from this episode, make sure to hit the play button below.