Banks must collaborate with startups and be open to disrupting themselves if they want to survive, according to a panel at the Future of Payments conference today in Sydney.
“We have to really open our thinking,” said HSBC's global head of e-commerce strategy and innovation, Andrew Davis. “We have to look at different approaches. We have to adopt this very collaborative stance…”
The panelists agreed that innovation can come from businesses of all sizes.
“There’s a real groundswell coming through now of wanting to do things differently and challenge the status quo,” said Ben Pfisterer, CEO of Kinetik Innovation, a mobile payments startup. “It’s coming from within big organisations and small.”
Banks and startups can better drive payments innovation together than either group can alone, Pfisterer said. “It’s where those two collaborate that you get the best results.”
Financial institutions are generally more averse to risk than startups, but they can gain momentum more quickly because of their large existing customer base, said Sarah Maloof, senior manager strategy and planning for Cuscal, a financial services company.
“Fear is driving a lot of the appetite” for innovation at the banks, said Patrick Crooks, CEO of Fusion Co-innovation Labs, a startup incubator. Banks have the disadvantage of having much more to lose than a startup if an innovative idea fails, he said.
Increasingly, banks do want to work with startups, said HSBC’s Davis. The attitude has changed from “a small-y ‘yes’ to a capital-Y ‘Yes’,” he said.
“Banks realise there’s a lot they can learn from startups,” he said. “There’s a lot of ways they can engage them. It doesn’t have to be all tension and conflict.”
Most startups will want to work with the banks, said Pfisterer.
“Some of them want to be really disruptive and change everything and not co-operate with anyone, but most of them actually are aware that payments and banking are really, really difficult to do.”
Banks must be willing to disrupt themselves if they want to continue doing business, said Maloof. “It takes a collection of visionary people within an organization to achieve that.”
Some banks are “adopting lean methodology and behaving a little bit more like a startup”, she noted.
Pfisterer agreed: “If you challenge your own thinking, you can get amazing results.”
In an earlier session, a consultant for companies interested in the disruptive digital currency BitCoin said banks will continue to have a role even if virtual currency becomes the norm.
Banks are not needed to exchange BitCoin currency, and some BitCoin advocates have spoken out against banks.
However, BitPiggy founder Mat Holroyd said “banks clearly have a useful role”. For example, banks will still be necessary for loans and other financial services. They also will remain useful for keeping money secure, he said.
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