Banking on Fintech

Banking on Fintech: Lucy Demery, Global Head of Fintech Banking at Standard Chartered, on taking bank-fintech partnerships to the next level.

Finance was ripe for disruption following the global financial crisis, when consumers and policymakers began to re-evaluate their relationship with banks. In the meantime, tech-savvy millennials began to demand fast, transparent and personalised user experience. All this combined with a new wave of venture capital to support new technology and business models built from scratch. Banking incumbents are slowly waking up to the reality of this new competition. Financial services innovation is rapidly evolving – across faster payments, open banking, distributed ledger technology, artificial intelligence, robotics, digital assets and cloud computing, to name a few themes. These are converging in the space traditionally served by banks.

Fintechs have been successful not only by building this new technology, but by bringing a new approach to customer focus and execution.

They have found success by engaging with previously underserved customers and high-friction areas, such as cross-border payments and lending. Many fintechs take a hyper-segmented approach to the value chain, concentrating on specific issues that traditional banks – with complex legacy systems and competing investment priorities – have been slower to address. Fintechs have also achieved incredible growth where they are able to launch quickly, pivot when required, focus on scalability and obsess over user experience. Even within the fintech ecosystem, we see constant change and progression. Peer-topeer payments companies are expanding into business-to-business products. Challenger banks initially focused on current accounts, deposits and payments are expanding into credit, investments and trading. New entrants in consumer card issuance are starting to capture the lucrative corporate expense card market, particularly among SMEs. And of course, there’s the race for geographic expansion, heading both east and west. Fintech is buoyed by unprecedented growth in global e-commerce, with retail e-commerce sales growing over 20% from $2.9 trillion in 2018 to $3.5 trillion in 2019, according to eMarketer. This growth is led by Asia, where we at Standard Chartered have built the bulk of our business over the past 160 years. In emerging markets in particular, fintech and e-commerce players have converged, leapfrogging traditional infrastructure to build new “super-apps” that are truly mobile-first and ubiquitous. As an incumbent bank, we have been pushed to re-think our strategy. For starters, we launched SC Ventures to enhance our innovation culture, test new ventures and learn from fintechs through select, early-stage investments. Some of these ventures compete directly with our existing business. For example, we have launched digital retail banks across Africa and in Hong Kong, separate from our traditional branchbased Retail Banking franchise in those markets. We are also rapidly digitising our Corporate, Commercial & Institutional Banking franchise, with new, market-leading API capabilities and data analytics. We see new fintech players as important partners on this journey. For example, we teamed up with Ctrip and Hong Kong Telecom for our virtual banking license, recognising their superior online customer engagement. On the institutional side, we have scores of fintech partnerships powering our Transaction Banking and Financial Markets businesses. We have also launched a Fintech Banking segment, to offer our network, products and services to fintechs as they scale. Those fintechs are not only “clients” of Standard Chartered; they are co-creators and collaborators. We work together to build new digital payments and FX solutions; we partner to provide access to new markets; and we selectively provide financing to accelerate growth and monetisation. Our vision at Standard Chartered is to be the leading bank for the new economy. We want to drive commerce and prosperity across our network, leveraging fintech innovation. This year’s FinTech50 list is an inspiration. We look forward to partnering with you on the next phase of growth in financial services and digital life. “Our vision is to be the leading bank for the new economy.”