Breaking the bank

On one side of the room, a phalanx of technology-armed thirty-somethings has assembled, dead set on convincing the crowd that banks are a thing of the past. Facing off with them on the other side of the packed conference venue is a row of top bank executives, also keen on innovation but eager to shoot down the fintech fighters’ visions of grandeur.

Not often does the proverbial battle between fintech and banks play out as exquisitely as it did this month at Sibos, a payments conference put on by SWIFT that has become a frontline for the debate on the future of payments, lending and of credit itself.

The two sides gainfully negotiate ideas but at times also trade fire: “I heard a lot of talk about innovation coming from there. I didn’t hear anything innovative,” Alexander Graubner-Mueller, founder of Kreditech, shoots at the banks across the room. The Germany-based fintech outfit says its data-processing prowess allows it to enter markets and within a year become profitable on its small lending business. Who needs a bank?

Smugly taking the pummelling, the handful of chief innovation officers from the likes of Wells Fargo, Standard Chartered and BNY Mellon remind the kids that the bulk of the world’s capital still sits on the banks’ side of the room and that fintech lenders are merely scratching the surface of their business.

The surface of banking – that is, the value-added services such as payments and increasingly credit lending – might be meatier, more valuable and more amenable to innovation than some bankers would like to admit. Fintech has grabbed a 2 per cent market share in the global banking industry, according to a report from the Economist Intelligence Unit published last week.

With the application of new technologies such as distributive ledger and application programme interfaces (APIs), the value that fintech is unlocking in the traditional credit and payments universe has taken some banks by storm.