Banks must play central role in fintech’s coming of age

Bill Winters, CBE Group Chief Executive

29 Nov 2023

When it comes to financial technology, it used to be that banks were seen as ‘fast-followers’ at best. Now, at what feels like a pivotal moment for the industry, we need to be leaders.

There’s nothing like a fintech event to get you energised about the future of banking, and fortunately recently I’ve been able to attend two. In both Hong Kong and Singapore, I saw big stages, big crowds and big ideas – it was a pleasure to be there to contribute to the conversation.

I came away with a couple of key takeaways from these events. First, the distinction between banks and fintech providers is getting smaller and smaller. Standard Chartered itself has investments in over 40 fintechs, and partnerships with over 300. In many instances across our markets, we have become a fully-fledged fintech provider to our clients.

Second, excitement around fintech has been building for many years, but now it feels like changes that have spent so long in concept are finally being put into practice. How we navigate that change, both as individuals, individual firms, and as an industry, will define our success for years to come.

Ambitious, but cautious

The term ‘fintech’ encompasses a vast array of different tech and product types. Technologies like blockchain, tokenisation and digital assets have grabbed the most headlines to date. They have the potential to bring transformational change – faster, cheaper, more transparent markets with far fewer barriers to entry. But they need to mature quickly. We’ve already seen examples in this space of what happens when innovation is unleashed without proper safeguards.  

We want our clients to benefit from safe, secure participation in the fintech ecosystem. Responsible innovation doesn’t have to be slow, but it does need to be considered. I believe banks are also the best organisations to lead this change. We are uniquely placed to balance risk, innovation and customer security.

Standard Chartered is already offering cutting-edge solutions to clients. Our Zodia Custody platform, developed via SCVentures, offers institutional-grade token custodial services. With Zodia, customers don’t have to compromise on safety when using digital assets. They can trust in its bank-grade compliance and governance systems, which mean that assets are unlosable, unhackable, fully insured and available 24/7.

Elsewhere, we’re already exploring ways to use the blockchain to bring better financial services to customers. In particular, we’re working with the Hong Kong Monetary Authority to offer digital trade tokens that can be used by micro, small and medium-sized forms to secure trade financing up and down supply chains, something that can be extremely challenging with traditional financing methods.

It’ll be a few more years before we see the real impact of these radical technologies. But there are plenty of fintech products that are already making a difference in the here and now. At Standard Chartered, we’re applying new solutions across all our business lines and functions. We’re introducing improved algorithms and big data analytics for risk management and customer credit decisions, saving time and money for us and our clients. We’re gaining meaningful market share at record pace through our digital-only banks, Trust Bank in Singapore and Mox in Hong Kong. We’re pioneering new digital partnerships that provide scale in new markets, like our provision of banking services through Indonesian e-commerce giant Bukalapak.

Building an innovation culture

The idea that fintechs, or large conglomerates operating fintech tools, are consistently eating banks’ lunch is inaccurate. Many of the most successful fintech providers have carved out a great niche offering services to financial institutions, rather than going head-to-head with them. And most corporates don’t want to become banks because of the high regulatory hurdles that banking providers must rightly clear.

But we can’t afford complacency. If we don’t innovate as fast as fintechs do, we will lose out in the long run – disintermediated by more nimble competitors. That’s why we’re building a culture of innovation that spans the full length and breadth of our bank, from product design teams to human resources to risk management. Every employee in every business line, function and region must feel empowered to try new things, respond to customer needs, and deliver new ways of banking. We’re making good progress on this, with hundreds of colleagues taking part in innovation bootcamps across our footprint in recent months.   

It used to be assumed that banks would, at best, be a ‘fast-follower’ of fintech trends. Not setting them directly, but following just behind to provide scale to the best ideas. I don’t think that’s good enough any more. Banks must be in the vanguard of this transformation, leveraging their scale and expertise to provide more value for clients while manging new risks. That’s what I’m focused on delivering at Standard Chartered.