Adrian Weckler (AW): Aren’t banks like AIB getting eaten alive by newcomers such as Revolut? Do you find that there is a generational issue with the under-25s regarding traditional banks as something their parents and grandparents use?
Tim Hynes (TH): Coming from a Microsoft background, this is less concerning to me because there’s opportunity in it, as well as challenge. Revolut has, I think, around 200,000 customers in Ireland. We would see people who are current account holders who transfer money there.
But we also look at the metadata. And one of the things we see is that people transfer the money in and then they go dormant.
Obviously, some are heavy users. But I can’t tell you out of those 200,000 how many it is going to sustain as users.
At the same time, the work we’ve done on our own mobile app has, I would argue, seen us significantly step up.
We now have 950,000 people using the mobile app very, very frequently, multiple times a week.
And we’ve 1.6 million people using our digital channels multiple times a week. So we’re well-embedded into how people use financial services and how they want to interact. Some 95pc of our interaction with customers now is digital.
AW: But that’s the least you would expect, right? I mean, people have largely switched over now to paperless, branchless banking, haven’t they?
TH: We still have over 200 branches. But there’s a kind of social licence as well for keeping the branches open.
Even there, we digitise the branches. So when customers come in, it’s a digital experience.
AW: Other than a social licence, what’s the logic to having a bank branch?
TH: There is still a lot of cash in use in the country. Where do small businesses go with their cash?
AW: Do branches wash their own face financially?
TH: Yes, absolutely.
AW: So it’s not that they’re just being maintained as a branding thing?
TH: Some are more profitable than others. But if you go back 10 years, there was a lot more cost in branches.
And, as a result of everything that happened, there was a need to get that right.
But digitising things has been a major step. So if you walk into a branch now, you’ll get a lot of people out on the floor talking to customers with an iPad in their hands. They can open accounts, close accounts or do loans.
AW: So you will continue to have branches?
TH: Yes. I mean, we’ve no plan at the moment to take branches out of the mix. We’ve got the front-end piece, where we’re actually talking to the customer, a digital channel and, as part of that, a fulfilment component. So it could be that some of the things we would have traditionally done in back offices on behalf of customers move out to the branches.
There are different ways to think about it. But I do think we’ll be a while in Ireland before we get past cash.
AW: Why are we so addicted to cash? Is it a tax thing?
TH: It’s a habit thing for a lot of people. And I think it would be unfair for us to think that most of the cash flows around the country as a way of avoiding paying tax. I don’t think that’s right.
AW: What about cybersecurity? AIB must be one of the country’s prime targets. How often are you hit?
TH: I don’t want to be deliberately evasive. We don’t like to say this because we don’t want the bad guys to know. But there are events. So far, we have been able to manage those events. It moves very quickly. And it’s industrialised on the back-end.
I mean, you can go on the dark web and buy thousands of authenticated emails for a tenner. And then they can be used for a phishing scam. And the software behind your phishing scam is something you bought for a couple of grand, so you don’t have to be technical, you can just buy it.
AW: Are we any closer to replacing Pin numbers and passwords with better alternative technology?
TH: We’re doing some work on customer authentication. You’re going to be asked two or three things. We’re working to get rid of the dreaded Pin card reader. You’ll see more of this in September.
The idea is that instead, you have a token on your device, so that we know it’s your device, whether it’s your PC or phone, or whatever. So the idea would be that we know the devices associated with you.
AW: What about biometrics?
TH: I think biometrics are already here. When you pick up your phone and look at it for your camera, put on your thumbprint, that’s part of the authentication.
AW: What is a possible use case for facial recognition in a bank?
TH: Well, if I walked into a branch and it knew who I was, and I was greeted by name, and the person immediately could have access to all my information…
AW: A friendly Minority Report?
TH: Yes. All that stuff is doable. Absolutely. There’s no technology we can’t introduce with the team we’ve got. It’s just a matter of what’s the balance from what a customer wants and how we stream things. We have a focus room in our tech building in Leopardstown.
So we can bring customers in, they can talk about the product, and then we can show them what we’re doing.
AW: So what’s the response to facial recognition? Is it a runner?
TH: It’s very mixed. People talk about China and its so-called social score. So this is the challenge with something like facial recognition. It could streamline our experience. I mean, it would be cool to walk in and have them know who I am as a customer. But how and where does it stop? So I think it’s going to take a little while. It’s a bit like AI and robotics. People need to live with these things to see how they like them.
AW: Could it be introduced as a voluntary, optional thing?
TH: Yes, like you could walk into a Tesco or Dunnes Stores and have them know who you are and perhaps send something to an app that you have in your phone to give you suggestions about deals on products. This is all doable.
AW: Where are the ethical decisions in how far to use all of the data that you collect? From a commercial product perspective, is it tempting to want to drill down into it?
TH: It’s a huge opportunity. So in our organisation, I’m sitting on nearly 10 petabytes of data. And it’s all sorts, including phone recordings. They present you with a massive opportunity.
The first thing to think about is the data. There’s obviously the legislation we have around controlling the user data.
And there’s a big ethical piece around it, because you don’t want any unintended consequences. Because you could have a model where you make a judgement on something from that data. And you might do it wrong. And we all know, with AI, and with some of the sources that were used, that they weren’t diverse.
AW: Finally, what do you make about the pushback some big companies are getting over what are now called corporate social responsibility activities? The charge is there that big firms use it cynically for their own branding.
TH: It’s not really for branding. People are volunteering. And it’s actually a way of us getting together. If you think about what it was like for people in banking over the past few years, it seemed everyone had a downer on ‘the bank’.
But for the average person working in the bank, they didn’t cause the problem. And they were very proud to stay in a bank like AIB. Then within days, if they were on the Dart line, they’d be literally spat at if they forgot to take their badge off. So it was traumatic for them.
So when I came in, they were still very low. And one of the things I said as a target was to try to put heart back in the organisation. And nothing does that like feeling you’re actually making a difference and doing good. And so we got involved in a lot of different things. So for me, it’s not about CSR for the branding, it’s actually a way of getting all the people in the organisation doing something together that’s not about work.
AW: So it’s not the case that, for example, there might be a board meeting where somebody suggests that they’ve come up with a good way of moving the needle commercially, if there’s an adoption of three or four different causes? That this will improve the brand image?
TH: Honestly, in the four years I’ve been in the bank, I’ve never once heard anything that even sounded like that.
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