Big banks and fintech firms urged to work together

Mukhtar: Big banks and fintech start-ups have a great deal to offer each other

Mukhtar: Big banks and fintech start-ups have a great deal to offer each other

PETALING JAYA: Big banks and fintech startups can be far more successful at improving financial services and customer experience by working together, instead of competing against one another.

HSBC Bank Malaysia CEO Mukhtar Hussain said the new wave of financial technology known as fintech was often portrayed as a disruptive force that threatened banks with new, agile and savvy competitors.

However, he noted that fintech complemented, rather than threatened banking institutions.

“Banking has always been about technology, so today’s financial-technology innovation boom represents evolution rather than revolution for traditional banking.

“It is supplementing and diversifying the existing financial system – not replacing or disrupting it,” he said in a statement.

Fintech innovators use the internet, mobile technologies and big data to offer a range of tools and services – from tech-enabled payments and crowd funding, to currency exchange, online lending and wealth management services – with the end goal of making financial services more efficient.

In the first seven months of 2016, investment into fintech players in the Asia-Pacific region hit US$9.6bil, doubling 2015’s figure.

He said fintech would have a key role in spurring this growth, and Asean financial institutions must embrace the fintech wave or risk losing competitive edge.

“However, to say that the fintech boom is cannibalising traditional banking would be an exaggeration,” he said.

He added that fintech was currently only focused on a fraction of the financial-services spectrum.“We have seen major technological innovations in the past – credit cards, automated banking machines and online banking, to name just a few.

“Those changes provided huge advances in convenience for consumers, but they did not revolutionise the financial landscape: financial institutions remained the dominant players and adapted to these changes,” he said.

He added that unlike fintech start-ups, banks have had decades to build extensive infrastructures, develop solutions for compliance and regulatory requirements and earn consumer trust.

“Big banks and fintech start-ups have a great deal to offer each other. Banks have a large customer base, stable infrastructure, assets and regulatory know-how.

“Start-ups provide out-of-the-box thinking, technical expertise, and agility to adapt quickly to change,” he said.