James Mawson, editor-in-chief of Global Corporate Venturing, closed out the second day of the GCV Symposium by moderating a discussion on the impact financial technology developers are having on incumbent banks.
The participants were Dominic Maffei, financial markets and UK lead of SC Ventures, the open innovation arm of financial services firm Standard Chartered, and Erica Young, director of venture capital and advisory firm Anthemis Group.
Young and Maffei agreed that there was not yet significant disruption of existing financial institutions, and the focus is on collaboration with fintech developers, which had previously came to Maffei attempting to disintermediate banks, whereas now they are coming to him offering their data.
Young said disruption is hard, in part due to the size of banks’ balance sheets and existing regulations, but that she is excited about embedded finance, where financial instruments move from a vertical to a horizontal structure, and compared it to computing.
Mawson asked Maffei why Standard Chartered set up the venture studio now, given that it seems relatively comfortable. His response was that there is still competition. He pointed to the 2008 crash, saying that people forget that the banks had been innovative, something that stagnated with the structures that were placed on them after the recession.
Comparing big institutions to elephants – large traditional actors – and fintech developers to mice which are smaller but nimble, Mawson asked about the pain points and impacts that Maffei and Young’s groups face.
For Standard Chartered, fintech has sped up the culture change, though Maffei does place that responsibility at the media’s feet, rather than internal excitement about fintech startups. Young’s point is that the ‘elephant’ is actually rather well optimised for its outcome: stability and longevity.
Mawson pointed out that new people are entering the fintech and insurtech spaces, and wondered if there were any new areas of opportunity for the actors like Young and Maffei.
Young is interested in longevity, that as the general population is living longer existing financial instruments are breaking down. Traditional assumptions surrounding life insurance and retirement no longer apply, particularly as the baby boomer generation is transferring assets to younger generations.
Maffei’s area of interest is in the client journey, but he is personally most excited by new securitisation technology and the potential market for it in China. He spoke about the need to build off ramps and on ramps for digital assets, and creating the ecosystem around them.
Lastly, a question from the floor challenged fintech’s place as the recipient of a quarter of all UK venture investment. Young said that it may be down to the current definition of fintech, which may be too broad, whereas Maffei admitted that he did not know, saying that valuations are very “frothy” right now, making it hard to tell.
