Tagit was founded in 2004; like any other startup, the company went through a few years of self-discovery — it raised some money and focused on mobile application development platforms. In 2007, the iPhone came out, and Tagit got Citibank as its first customer. The focus was narrowed to mobile applications and banking from then on. Sandeep Bagaria joined in 2012 as the CEO, when the board decided to focus on growth and several new executives were brought in to drive the growth.
In 2016, Tagit raised raised US$8.75 million from Japan’s SRA Group — a strategic investment for growth capital for sales, distribution and product development. “So while our genesis was as a generic mobile application development platform, we went from being a mobile application development platform to being digital banking platform; today we help our customers across mobile, across web and we’re increasingly getting into conversational banking with chat, messaging and voice as a channel,” explains Bagaria.
On the sidelines of the AWS Summit last month in Singapore, Bagaria spoke to Frontier Enterprise about how Tagit built its platform (including its AI engine), the massive changes the banking industry is undergoing, and how the next decade will belong to voice and messaging applications.
When it comes to the conversation of banking – what sort of technologies are you leveraging for that? Are you using AI, machine learning among other automation?
As far as the conversational banking is concerned, let me break it up into two parts. The first part is the engagement with the customer, whether it is through natural language processing or other messaging systems and how does one derive that intent? The second part is once you know what the intent is (for instance if the person is actually asking you for a funds transfer or a bill payment) how do you execute that? The second part is something that we have being doing forever, through our mobile and internet channels.
So we asked ourselves the question: what do we need to do on the conversational side of it, from the client engagement point of view?
We do need AI technologies, but we also believe that AI technologies will be best provided by AWS and others in the world as opposed to a fintech trying to build its own NLP engines.
Which AI technologies are you using?
We have gone with the whole AWS stack so we are using Lex, Lambda among others.
Our team did a review a year ago of different AI technologies and we settled on the Amazon stack. There were a couple of reasons for that. One was the technology performance itself, the other was that Amazon was really engaging as a partner trying to work with us to build a solution. So if I were to describe my solution as a car, the engine is really the AWS technology stack.
When it comes to the banks, most banks have giant IT teams and they start off with the intent of developing almost all their apps in-house. What is the value add that you guys offer?
There are couple of things that we do in this area. There are large banks with large IT teams who want to own every piece of technology, build their application servers and their own stack. Their approach is to build everything from the ground up. But there are other large regional banks, whose core business is banking; these banks want to go digital fast and they need a partner who can help with that. In the build-versus-buy model, there are many banks interested in buying the technology. What we are selling to them is not just the technology piece. Today every CEO, CIO, head of retail is under pressure to map out their digital strategy, suitable for their environment — with our ten-plus years of experience, we help in building that strategy.
Let me tell you about Axis Bank, one of our larger customers in India. When we started our journey with them in 2012, they were about 200,000 users doing about US$ 200 million worth of transactions at that time. Today, there are about 10 million users doing US $ 40 billion worth of transactions. In the last six years we have worked with them actively, in terms of ideas on what is relevant to them and their customers. Something like mobile top up which is very important in India — how does one make it so easy that it becomes habit-forming, and customers using the bank’s app and stick with it?
This is why our customers stick with us because we are not providing them technology but working with them on their roadmaps. Mobile and digital is always changing because there are new devices and capabilities coming out so they see us being able to work with them on their long term digital strategy.
Banks are quite conservative about putting stuff on the cloud, especially core banking. Have you encountered any resistance towards the cloud?
Depends on the kind of application. Banks are often constrained by regulatory compliance. There are regulations that don’t allow you to have customer data on the cloud. Or in some countries, it has to be on shore — the data cannot leave the country.
There are some applications like lifestyle applications which are geared towards customer acquisition. We did a project for a bank in Malaysia for their mortgage application — one could go around Malaysia, use their phone, scan for different properties, see what’s available to buy, make a decision and see whether they were suitable for a loan. It really helped the bank grow their leads database for their mortgage application. So these kinds of lifestyle applications or card applications for customer acquisition, banks are okay to put on the cloud.
In terms of core mobile and web applications, it’s a bit of a 50-50. While some banks are okay to put them on the cloud, some prefer them on-premise, so we work with them in a combination of both.
In core banking, there are SaaS providers like Mambu who are offering core on a hosted model — progressively banks will be open to it going forward.
The Monetary Authority of Singapore has loosened its stance. Earlier they would say there “are only dark clouds no good clouds.” In the conversational piece, when we use the AWS stack, we have architected it in such a way that if regulation prevents the bank from sending customer data to the cloud, we can take those conversation sound bites, send them to cloud, interpret them, derive the intent and send them back to our system without necessarily having customer data going on the cloud. This way the bank is in compliance and can use the cloud at the same time.
A lot of the push towards simplification of the user experience has been done in the arena of consumer banking. Could you talk a little bit about how that is modernising?
The journey for most banks started on the retail side and payments. In the last few years, small and medium enterprises (SMEs) have become a big focus for banks. Say for instance a bank has a large number of customers and various solutions – payroll, bulk payment, trade financing, etc. However, as an SME customer you have to log into 11 different systems and be able to assess 11 different sets of services. We work with the bank to form an integrated digital platform for their SMEs, so that they get the right access control, give them visibility of the entire portfolio, then help them with liquidity management. We launched this a year ago and the customers are happy so that stickiness increases.
With other banks offering current accounts through web and mobile, we are helping them simplify the narrative with regard to how they engage with customers. In Singapore, there is a big push being given to automation, inventory systems etc. Many banks are offering non-banking services such as inventory management, ERP, HR among others to increase stickiness.
How do you see the future of banking and banking customer service evolve?
In the 1990s, the internet came up and all of the 2000s were about internet banking and web. Then in 2007, the iPhone was launched and the 2010s have been about mobile tech and mobile apps. The last couple of years, conversational and voice have come out.
We believe that voice and messaging will be the channels of engagement going forward. Kids these days don’t talk, they message. Why wouldn’t they want to message the bank then?
The manner of customer engagement will change in the 2020s. Voice and chat will dominate the industry. Banks have been experimenting with chatbots, but they are rule-based. As technology evolves, those conversations will become meaningful. Virtual agents will have meaningful conversations with customers — banks are aware of this and betting on it. They are also thinking of a lot more than banking products.
We are working in the Philippines with a bank and an airline on tackling the remittance market. Many Filipinos go overseas to study, it is a strong money corridor and with 30 per cent of the population going overseas, how does one make it meaningful to use their remittance services and create a digital ecosystem where banks partner with another industry player, offer a new set of services and combine loyalty and stickiness?
Core banking has become commoditised. What will the bank become in the future? Will they be big technology companies or will they be extensions of the commoditised system?
If you look at banking, there are no products with IP. While they can become technology companies, I believe technology will belong to everyone and level the playing field. Smaller banks are disrupting the larger banks, just like with telcos. So that is the risk they run. If one is not able to deliver a customer experience that is satisfying to the end user, the bank can become commoditised.
I don’t think fintechs will eat the banks up. Banks bring a lot of value to the system and banking is a lot more than payments.
However, banks will be forced to focus on the customer because you are just one swipe away from someone else’s app.
