How long will they keep buying access to fintechs?
Australia’s banks are putting tens of millions of dollars behind fintechs but have long-term ambitions to disrupt the current breed of disruptors, a banking expert has said.
Capgemini Australia’s industry practice leader for banking and capital markets Philip Gomm told Information Age he believed the Big 4 harboured ambitions to create internal innovation capabilities to rival that which they currently bought in from fintech start-ups.
Banks in Australia have put considerable funds behind start-ups in order to understand their business models, such as Westpac through Reinventure and the many institutions that back Stone & Chalk.
Capgemini estimates that around $2 billion flowed into Australian fintechs between 2009 and 2015.
“The incumbents know that the fintechs are changing the industry landscape,” Gomm said.
“They’re looking at investment in fintech, they’re looking to partner, they’re looking to collaborate, they’re looking to understand the culture and mindset of the fintech disruptor.
“But in a way, they’re wanting to get access to the same technology so they can disrupt the disruptor.”
However, if banks harbour an ambition to replicate the innovation that they currently source from start-ups, it appears the process of building that internal capability will take some time.
“[The banks are] struggling to successfully develop innovation capabilities themselves and achieve the desired results, and that’s still holding them back,” Gomm said.
“They’re prepared to partner and collaborate [for now] but their ultimate game is to transform.
“They know that the status quo is not going to remain the same, and the status quo is not adequate.
“They need to go through their own transformation program, and they’re not naïve to the scope and scale of the transformation that needs to take place as they move towards digital.”
Fintech is one of the key battlegrounds for how much control the banking sector is willing to relinquish in the race to modernize.
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