Allica, Huawei: Banks should avoid “theoretical moonshots”

Financial institutions “need to learn” to re-engineer themselves to be able to compete

by | May 19, 2021

Banks are not effectively utilising trends in consumer behaviour, according to Siri Børsum, global vice president of finance vertical at Huawei.

“We live in a mobile first world and are connected 24/7,” she said at this year’s Money Next’s Banking x Summit. “It leaves behind so much data and so much insight that is still not used by the industry at all. Maybe by the fintechs more than the traditional players but there is still a huge opportunity there.”

Consumers know what’s possible, she added. “They compare this industry to the best industry. They compare us to Facebook, to Google and to Amazon.”

Banks are at risk of losing $280bn in consumer payments revenue by 2025, with the growth of non-banks that specialise in digital payments adding competition, according to a report from Accenture.

Conrad Ford, chief product and strategy officer at Allica Bank said banks should adopt a similar culture to the big techs in order to compete in the evolving marketplace.

“The culture of a big tech business at Google or Netflix or Uber is fundamentally different of that at the bank,” he said. “How they approach, how they prioritize things, the decisions they make, how they manage themselves are fundamentally different culture. And only if the big financial institutions begin to adopt that can they really respond to the threat from digital.”

Alongside that, the financial institutions “need to learn” to re-engineer themselves during their digitalisation journey, according to Ford.

Banks have taken an “incremental” approach and their innovation units –which are looking at new technologies such as AI– are “completely detached” from the main institution, he said.

“The banks have not really grasped, or are only just beginning to grasp, that what you need to do is go for stuff that’s not theoretical moonshots but is genuinely transformational. To do that, you need to re-organise yourself in the way that the big tech companies are organised which is to have cross functional teams to be truly agile.”

However, regulation remains a barrier to innovation, according to Pat Thelen, vice president of global account management at Ripple.

“Probably the biggest hurdle that we have right now is lack of clarity. In the regulatory space, some countries that are truly leaning in and providing leadership are in Singapore, the UK, Japan and Sweden. I look at the US where there’s been a lack of clarity, or in certain instances, some confusion around it. What it does is prevent what might be a quicker adoption and more innovation.”

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