Banks need 'a sense of paranoia’ about tech giants

Tech giants already have established customer bases and trust in their brands, says StanChart regional head

A customer uses a QR code on a mobile phone to pay for purchases. Bloomberg

Banks “have to have a sense of paranoia” about financial technology, as the threat of some of the world’s technology giants moving into the market looms large, according to Standard Chartered’s regional head.

“We are hanging our hat on regulations protecting banks, trust and fintechs not really making that much money,” Sunil Kaushal, Africa and Middle East chief executive said at the Milken Institute’s Middle East and Africa summit on Wednesday.

“However, if the big techs - and what do I mean by that? I’m looking at the Googles, the Amazons, the Ubers -  if they get into financial services in a significant way … and become deposit takers, then they have the customer base. They’re not a fintech trying to get a customer by losing money,” he added.

“They also have the customer experience already established and they also have the trust of the brand. That’s a very, very potent combination.”

Elissar Farah Antonios, UAE chief executive for Citi, said traditional banks still have to cater to all age ranges, and that many of its most profitable customers are the older ‘baby boomer’ generation. Banks need to weigh up the needs of both when taking decisions about the levels of branch networks that need to be maintained.

"It does take time for behaviours to change and for innovation to be accepted,” she argued.

However, Steve Jacobs, chief executive of Brazilian banking group BTG Pactual, said service levels customers received from traditional retail banks “has been awful for 30, 40, 50 years” because banks in many major economies were oligopolies.

“The national branch networks and the big balance sheets had been these barriers of entry and technology meant they became millstones around their necks,.

His bank had been an established investment bank in Brazil which had no presence in retail banking and no branch network, but saw digital as a method to tap into a large retail customer base.

The future of banking will see financial services “move to a platform where customers are going to demand efficiency, great customer experience and great pricing” where a wider range of services will be demanded, Mr Kaushal said, arguing banks will need to collaborate with FinTech firms to provide this.

“The fight is going to be around who becomes the epicentre in terms of interaction with the customer,” he said.