Originally published in the New Zealand Herald
Adapt or die: financial organisations will have to alter their business models to keep up with the changing landscape, writes Tim McCready.
The mobile phone revolutionised the way people engage with their bank, and in the years since, the emergence of more technologies are further shaking up the banking sector — including blockchain, artificial intelligence and big data.
A report from the US Treasury says between 2010 and 2017, more than 3330 new US technology-based firms serving the financial services industry were founded.
Consulting firm EY says half of US consumers now use fintech firms to transfer money rather than traditional methods. This rapid growth is said to be unsettling officials, particularly as young players are perceived to favour rapid growth over risk-management and regulatory compliance.
“There is a perception that conventional banking has been left behind, and fintech is considered a different stream,” says Diana Cesar, group general manager and chief executive, Hong Kong at HSBC.
Cesar disagrees that upcoming fintech companies will displace traditional banking, and says HSBC has been adopting technology for years. But she acknowledges a shift in terms of how technology is applied — the customer is now centre stage when decisions are made by the bank.
“The shift has gone from operations — things like strategic modelling and credit scoring — to how we can enhance the customer experience and journey.
” There is an increasing focus on using data to better understand the customer and offer a service more tailored to their needs.
Cesar explained that when HSBC embarked on this journey, it was used to a servicing model: