CTO & Chief Data Officer, Bank Leumi
DLD 2019 Hall A -Ilan Buganim - Bank Leumi
Ilan Buganim - Bank Leumi Opening Panel.
About Ilan Buganim
Ilan Buganim, Chief Technology Officer and Chief Data Officer at Bank Leumi, spoke at the DLD 2019 conference about the use of data in banking. He stated that 73% of Millennials in the United States would consider consuming banking services from non-bank companies such as Amazon, Google, and Facebook, viewing them as trusted providers. Buganim also discussed the Cambridge Analytica incident, saying that Facebook exposed open APIs and that data was subsequently sold and used to manipulate elections in America, which he described as an example of the power and misuse of data. In a 2017 interview at Money 20/20, Buganim said that Bank Leumi aimed to be "the Google and the Facebook of the financial industry" with the launch of its mobile-only bank, Pepper. He described the bank's digital transformation as moving from branch-based services to mobile and internet platforms, emphasizing the need for proactive, real-time banking with less friction. Buganim noted that "data is king" and that organizations believe data will help solve problems and reduce customer friction.
Transcript (18 segments)
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Ilan Buganim0:00
Hello everybody, my name is Ilan Buganim. As written here, I'm leading the data division in Bank Leumi. The data division is in charge of a few areas inside our division. We have Pepper as a bank that is a personalized bank, the marketing and sales, and also the data arm of the bank that is in charge of promoting the bank in order to make it much more personalized.
So what we will talk about today is Netflix, Facebook, banking, and a few things that connect them. In a few seconds, you will see and understand why we are speaking about Netflix and Facebook while also speaking about banks, and how we see them as something that is doing a few things right and a few things wrong. We want to learn what's good and what's wrong in order to do it properly.
So let's speak, before we start, about three very important numbers in banking. What we can see here is that 73% of the population in the United States, which are considered Millennials, agree to take or consume banking from non-banks like Amazon, Google, Facebook, you name it. This means that they see these giants as trusted enough in order to provide them banking. 36% of this population, or the banking population, already consumes banking services from any other institution which is not their primary bank. And 49% say that they are not satisfied with their bank, that their bank does not meet their needs.
So these three numbers are a red alert to the banking industry because this is saying that our customers are not satisfied with the product that we are providing to them, and we need to do something if we want to still stay relevant, let's say, five years from now, ten years from now, or more.
So why are they not satisfied? What is the main problem? Before starting, we need to understand that banks today face a huge challenge. We need to provide banking for all people that do not consume digital, and we need to provide banking to very new Millennials and the Z generation that consume banking in a totally different way compared to what it used to be. And this new population, that so far were centered up to 38, will be very soon the main workforce and are not satisfied because they are used to consuming much better applications. They are used to consuming their applications, their data, or their experiences from Facebook, from Amazon, from Netflix, which are doing a very good job. So they are comparing the old banks with that and they are saying, you know what, it's not good enough.
So before I understand what is not good enough, let's try to understand a few aspects in Netflix and in Facebook to understand how they actually harnessed the data to promote and provide a very good experience, and also what are the bad things and the trust problem that you have when you are owning the data of the customer. So we'll start with Netflix, which has definitely given a very good experience to the customers. You can just see here, Netflix is a market leader in a very, very, very competitive market of content. And if you see the blue graph there, this is the Millennials. Among the Millennials, you see that Netflix is much more dominant. This means that the new people, the young, prefer what Netflix provides to them, and we need to understand why it happens, why they like it.
So let's see. I'll try to summarize only four aspects. It's probably more than that, but only four aspects that customers like in Netflix more than in any other place. First of all, if Netflix has 150 million users, it's actually 150 million applications. And you know, probably many of you know Mary Meeker, which is one of the best analysts in the data area, and she's saying that data is actually the new application. And Netflix actually performs it. If you open a banking application, all of us, and you will open the same banking application, let's assume that each one of us is in Bank A, everybody will open their application, we will see exactly the same application, exactly the same features. The only difference will be the numbers, we'll have a different balance. This is not really to create personalization, to create different numbers. Netflix is a totally different application. You enter the application, it's totally different content, you are in a totally separate area compared to two other customers.
And in order to do so, Netflix has 2,000 clusters behind the scenes. They try to match you to one of these clusters. Each cluster will have a totally different experience. In the morning you can belong to one cluster, in the evening you can belong to a totally different cluster. And as such, when they promote your movies or their content, it might be that the same content will be with different pictures. Why? Because if you like comedy, they will present you Good Will Hunting with this picture, and if you like romance, they will present the second picture. So they are very sophisticated to have different trailers depending on your preference.
And furthermore, maybe the highest level of personalization is actually not just to take your content and the customers and do a match between them, but to create the content that the customers like. And that's what they have done with House of Cards. They took six years of data, they analyzed this data, and they saw exactly where people pushed the forward button when they watched, when they didn't. And according to that, they understood the preferences of the customer and they created a new movie that was a great success. Everybody was surprised how someone out of Hollywood is actually introducing such a successful movie, but for them it wasn't definitely a surprise because of this analysis that they have done.
So let's go fast to Facebook because we need to hurry up a bit. So let's speak about Facebook, definitely one of the best users of data, but also someone that did a few mistakes. Facebook is definitely another market leader. If you will take together Facebook, WhatsApp, Messenger, Instagram, together it's actually a monopoly, a monopoly in its area. But sometimes it's dangerous to be Facebook. What happened with Cambridge Analytics? Actually, Facebook exposed a few APIs, an open API, which is what we call in banking the trends where things are going. Someone which is very smart, the professor from Cambridge, actually developed a model, a very sophisticated model, that using 70 likes that you are making, you will know about you better than your friends. With 150 likes, you will know about you better than your parents. And with 300 likes, you will know about your preferences better than your spouse. Amazing.
Unfortunately, these are information, with the information of customers, which were sold afterwards to Russians and others that used this data in order to manipulate the elections in America. Which is actually the power of data and the misuse of data that you can make when you are not keeping the data of your customers.
So in order to summarize what Facebook and Netflix are doing, definitely first of all you will say they are sitting in the leisure and culture. It's something that we like to consume, we like to love it, rather than banking that is actually sitting on your needs. We don't like things that are on our own needs, we like things on our pleasure, leisure. But they are constantly changing all the time. They're changing things in order that you don't feel that you get tired of them. And they provide truly personal experience which is totally individual. Every customer is totally different application comparing to his friends. And the big question here is whether banking can be a personalized and interesting platform as Netflix and Facebook. And this is actually the biggest fair question, and not sure that we have the answer to that, but definitely we need to try to take it to this direction and not give in before starting.
So let me say that it may be there. Let's see what are the areas that our bank can take and do much better in order to do it more closer to the spirit of the new applications that use the data properly. So I'll skip about all these bullets. Personal banking definitely has to adapt to your customer. And I'll go to a few examples. Let's take sales. We're selling many products. How do we sell them? We usually advertise on the TV. We have a few products, we tell everybody this is our products, please consume them. We don't even try to adapt, to change the product, not to speak in the right language. We just say use our product. This is not the right way to sell.
The right way to sell is to understand the journey of the customer, to give him value through this journey, and then to act on the right moment in order to sell him something. Because you bring him value, then you build trust, and you can sell to him also. For example, if I'll take the journey of travel, I know that someone is about to travel very early in the journey. If I'll bring you value by connecting you to the right insurance, to the right currency, to the right things, I can walk with you two weeks and through these two weeks to give you more value, our products. This is the right way to do sales, to do it very personalized, not to sell everybody the same, but to target the population that needs something, to provide the needs, to provide them the product that they need. Like, by the way, Netflix, 70% of the content that you consume in Netflix is actually content that Netflix suggests you and not content that you actually consume by yourself.
Call center, very, very boring place. But let's assume that you are calling the call center and someone knows who you are and plays you the music that you like and knows why you called. Because definitely there we know why you are calling. If you forgot your ATM or you lost your card in the ATM, we need to know that. Why exhaust you in eight minutes, six minutes, and just ask you so many questions in order to provide you the service? We can do much more if we know you. We know that at that time we use it much, much better to give you a much better personalized experience.
Let's speak about the application. We saw Pepper on stage. I think this is much progress than the other. Pepper is our digital bank, and Pepper is a very nice platform. It has a feed like Instagram and like Facebook. And through this feed, we'll bring you only the feed items that belong to you, that are personalized to you. Things that you have done, you swiped your card, we'll give you information on what you swiped, what others like yourself did. If there is banking content, we'll send according to your needs. We see that you are traveling abroad, we'll send you content that will describe how to manage yourselves better when you are doing so. So Pepper is already personalized, but needs to be much more, much more accurate. And this is the journey that we're going at the moment.
And goodies, goodies in the end, like a small Netflix store, just give you benefits. But when you enter to get your goodies, you will see the same benefits to everybody. Why not to learn you? Why not to understand who you are and to give you the goodies as probably you need, that probably you want to consume? And this is actually, I think, the new banking that should follow these amazing applications that we saw before.
So definitely my answer to what I have seen is that banking must run much faster to the direction that was marked by these big giants, because in the end this will be the competition. The competition of today does not exist anymore. It's a totally new market. Thank you very much.