These days if you are within the financial services industry ecosystem, the biggest challenge of your day is to have an entire day go by without hearing the term
“Fintech is going to eat banks for lunch” – Everybody
(Though it’s highly recommended that you do not eat banks for lunch as it is neither nutritious nor delicious)
While I agree that fintech is really reshaping the financial landscape and will bring forth wonderful innovations in the years to come, I am curious if banks (or dinosaurs, as the industry so fondly refers to them as) will be pushed to the brink of extinction, like actual dinosaurs. It’s true, a large chunk of the bank’s profits are at risk but are banks taking a nice long afternoon nap while fintech slowly munches on their lunch?
Let’s explore some examples of Malaysian banks actively working with Fintech
CIMB bank is Malaysia’s second largest bank with 7.5 million customers in Malaysia alone. The group employs over 40,000 employees across the ASEAN region.In May 2015, CIMB launched their incubation programme known as Innochallenge. It is aimed at the ideation and creation of new fintech solutions. In this programme both CIMB and the Multimedia Development Corporation (MDeC) actively mentored the fintech startups.
They have picked 4 winners from that pool of fintech startups and they are developing the bank’s digital and mobile banking solutions. Logically, CIMB will also be hosting the 2016 session and it will focus on the following areas
- Loyalty & Rewards
- Identity, Security & Document Management using blockchain
- Mobile Payments
- Digital Wallets
“One of the main reasons why we are tying up with Startupbootcamp FinTech is because CIMB has always been focused on technology.”
-CIMB group chief executive officer Zafrul Aziz.
On top of their Innochallenge, CIMB bank worked with Startupbootcamp in 2015 to mentor the fintech startups in Singapore. The main purpose of this partnership is to scout for, and evaluate, new technology and ideas for the future. It’s curious as to why CIMB chose Singapore instead of its home base- Malaysia, but upon further inspection you’ll find that it is likely because Startupbootcamp announced an exclusive partnership with RHB Bank (which we’ll talk more about shortly)
RHB Bank is the 4th largest bank in Malaysia with a network of 210 branches in Malaysia and 19 across 9 asian countries. As mentioned in the earlier part of the article, RHB is the exclusive partner for Startupbootcamp within Malaysia’s fintech space. Their announcement of partnership came one month earlier than CIMB
RHB aims to bring digital innovations to the banking market in Malaysia through this partnership. In this partnership RHB will evaluate, fund, mentor and also organise hackathons in Kuala Lumpur. The group will also be spending 20% of their capex this year to execute new digital strategies.
“Our customers can expect to see the integration of seamless and innovative digital solutions from some of the best global and regional fintech companies.”
-Khairussaleh Ramli, RHB group Managing Director
Last but not least, Maybank is the largest bank in Malaysia servicing over 22 million customers.
In 2015 Maybank organised the Maybank Fintech 2015 in partnership with local VC firm L337 Ventures and over 100 technology companies from 10 countries took part in the event. In 2016 Maybank will target at least 200 companies to take part in the initiative.
Maybank sees MaybankFintech as a tremendous opportunity for Maybank to harness the startups ecosystem regionally, to acquire the best innovation ideas in financial technology.
Their focus for this year will be in the area of;
- Mobile Banking
- Distributed Database (Blockchain)
- Asset Management
- Humanising Financial Services (Financial Inclusion)
- Islamic Finance
- Big Data
“Our Maybank Fintech programme is a unique platform for aspiring innovators to showcase their ideas. We want to be a central member of the Fintech community in the region, to help grow and support entrepreneurs, by providing them with an avenue to connect directly with the financial industry.”
– Micheal Foong, Group Chief Strategy Officer, Maybank
Several years back many of us in the industry were debating whether banks will fight these disruptive companies head on with better technology or steer towards collaborating with them. Recent news seem to indicate that banks are leaning towards working with them.
So what do you think fintech is eating the banks for lunch or is the bank buying lunch for fintech?
Let me know in the comments below
Vincent Fong is the General Manager of Knowledge Group and a self-proclaimed pundit of banking technology and fintech