Money, scouts and speed dating: banks fight for technology edge
By Steve Slater
LONDON (Reuters) - Hoping to link with tech entrepreneurs and get ahead of a wave of digital innovation, Europe's top banks are setting up multi-million dollar investment funds, hiring scouts in Silicon Valley and hosting "speed dating" sessions.
Financial technology, or fintech, is shaking up the sector, allowing savers and borrowers to bypass traditional banks with smartphone apps and websites for loans, payments and all areas of financial services.
The changes will be profound. Consultancy McKinsey said the shift to digital could see more than 30 percent of European banks' revenues up for grabs as customers shop around for online deals, while banks could cut a quarter of their costs.
Getting digital right was a "do or die challenge", McKinsey said, while banks also see technology as a way to reconnect with customers and improve their image after years of scandals.
"For the last five years the industry has tended to communicate strategy through the rear-view mirror," said Kevin Hanley, responsible for strategy, architecture and data within operations and IT at Royal Bank of Scotland (RBS.L: Quote).
"We are now starting to lift our heads up, look out of the windscreen and talk about where we want to go," Hanley said. "It's a much more forward-looking story that is centered on the customer and enabled by technology."
To meet and feed off the fintech challenge, banks are buying into or partnering with start-ups as well as developing ideas in-house.
"All of them are now doing many things to build a wider ecosystem to help them reinvent their business models," said Richard Lumb, head of the financial services group at consultancy Accenture. Continued...