Société Générale (SocGen) appointed Anthony Woolley as head of innovation for the UK in October 2017. Bobsguide caught up with Woolley to discuss tech innovation in wholesale banking and choosing fintech partnerships.
How did you arrive at your current position?
Originally, I was a computer science graduate, so I’ve always had a technology background and spent much of my career in capital markets building electronic trading systems – areas of the bank that were leveraging technology significantly. I always enjoyed that from an engineering perspective. At SocGen in my former role I was the chief information officer, I managed the IT teams in London and that was orientated around wholesale banking, a lot of the work was in capital markets.
I think I’ve always been interested in change in financial services and I could see what was happening with transformation over the past five years – the emergence of this big fintech sector, ways new entrants and different people are thinking about financial services and their transformation. That part of my role became a little bit addictive.
At the end of 2017 we were really driving innovation for the group as one of our four core values. At that time, we launched an innovation hub, and so my move was really synchronized with that. We created a group innovation network, so I moved out of IT to take up an innovation role to work with all the business functions on their transformation program.
I think that step out of IT was a big one for me, but it was an important one because innovation is about business change first and foremost, technology can often be the catalyst for that, but how do you drive the conversation between the two because otherwise things can get lost in translation.
What areas of wholesale banking do you see as being particularly ripe for technology adoption?
Capital markets was always the area of big spend when it came to IT in financial institutions. Many of the other areas of wholesale banking did not have a big technology footprint and were working by fairly traditional methods. I think what has happened more recently is almost an inversion. The areas that are going to change rapidly are the ones that have had the very small technology footprint. We are seeing it in securities services and custody, project finance, trade finance we are seeing it in primary issuance and there are some really interesting things going on there and down into the secondary markets.
People often don’t think of capital markets as one bit of the larger wholesale banking ecosystem, because the technology environment of the financial markets feels quite separate from a lot of other things that are going on. It is important nowadays to think of technology and emerging technology, not in the context of capital markets, but in the context of wholesale banking. I think you are going to see a lot of transformation in the whole ecosystem.
Large institutions have very high cost bases in areas such as capital markets, there has been a falling return on equity and the two don’t reconcile in the markets. That, I think, is driving a change across the industry in terms of how financial markets will be organized and do business in the future. There are lots of efforts to simplify that within the context of existing financial markets but also people are thinking about how you transform it all the way from source, which is from the point of product creation, the point of issuance through primary/secondary markets and onwards.
How do you go about looking for potential fintech partners?
For sure there are a lot [of fintechs] out there. We do have a quite a few resources internally that help manage this. For instance, as a starting point we have a fintech database. We are aware of thousands of fintechs that are out there, which is fine as it goes but really it is about looking at it thematically, understanding what are the areas of transformation, what are the areas that we are interested in and narrowing that down.
We tend to be more interested in scaleups than earlier stage fintechs. We think that there are a lot of interesting ideas that come out of early stage fintechs that may be appropriate for investment but we are interested in series A onwards because they have gone through their initial process, a baptism by fire when these companies start and they are starting to prove their worth and they have a fast trajectory.
Is there scope for more fintech partnerships in the future?
We have traditionally had relationships with big third party companies usually on large scale projects. We’ve explicitly in the last few years started to drive an open innovation strategy for the organization, we’ve invested heavily in opening up our platforms. For example, on the wholesale banking side we have our SG Markets cross products electronic platform that now has over 4,000 APIs that a third party can go to our website and start learning about them and working out how they would integrate with SocGen. A lot of that opening up is making the platform more flexible for third parties to work with us in a simpler and lower cost way.
What are the biggest challenges for fintech partnerships?
One of the biggest challenges in collaboration between banks and fintechs is the sharing of data. Large institutions have vast amounts of data and often fintechs wants access to that data. We have a significant responsibility to our clients and regulators around that. One of the biggest challenges in these relationships is understanding how you manage data between those institutions and do that securely and safely. I think that has been a massive hurdle. Initiatives such as the Financial Conduct Authority (FCA) sandbox these things kind of help provide a safe environment around this, but I think that will continue to be a challenge.