The FinTech industry continues to grow at a rapid pace. Startups can rise quickly, appearing on the market with new technologies, platforms, and services that could improve our experience in financial operations. But how do these startups interact with banks? More importantly, how do banks consider FinTech innovation and work with the new players?
During the MoneyConf 2017, which took place in Madrid on June 6 and 7, we had the opportunity to meet Josh Bottomley, Global Head of Digital, for Retail Banking and Wealth Management, at HSBC.
In this article, we share the excerpts of our discussion with Mr. Bottomley about how HSBC considers innovation.
LTP: What is your role and responsibility in HSBC?
Josh Bottomley: I am Global Head of Digital for Retail Banking and Wealth Management customers at HSBC. In short, I’m accountable for the digital experience of 40 million retail banking customers in 38 countries all over the world. Leading teams to reimagine customer relationships in an increasingly digital world and the accelerating the delivery of our strategy through acquisitions and partnerships are critical dimensions to my remit.
LTP: I’ve talked to many banks in Europe, the US, and Asia-Pacific, and there are usually three different paths that you can follow for innovation:
- You can launch your own accelerator which can be mono-branded or co-branded with the leading one, e.g., Plug and Play.
- You can launch a corporate venture fund.
- You can run an innovation program and become an early adopter for startups.
Which one do you think is a good way to work with startups?
JB: In truth, there is no single correct answer. At HSBC, we do all three.
We have several internal labs dedicated to technology innovation in areas such as big data & artificial intelligence and are exploring partnerships in areas such as smarter lending, wealth, and insurance. We have venture funding and have allocated $200m to invest in FinTech and enterprise startups and in some cases, acquisition can be a good way of providing digital services in a country where we don’t yet operate at scale.
LTP: How do you make sure that the innovation ideas translate to execution?
JB: That is a great question; turning ideas into action can be very challenging. We’re focusing on implementing new policies and practices which help people and the wider organization make different decisions. If you don’t do this it is very hard to innovate.
LTP: For internal innovation, if you want to innovate, you have to make sure that the people in the company welcome the innovation as well; otherwise, you cannot execute it. What are you doing in that space?
JB: We are doing a couple of things.
Within the digital team, I ask teams to challenge each other’s thoughts and ideas and consider how their proposal is really innovative. If the new product or feature is simply an existing service made available on mobile, then it isn’t really innovation.
Another thing we are doing is changing the mindset of our leaders. We have a digital leader’s immersion program up and running. By meeting truly innovative companies and understanding how these organizations work, recognition of true innovation in HSBC becomes possible.
LTP: PSD2 – Do you see it as an opportunity or as a threat?
JB: PSD2 is a real opportunity.
If we make it easier to get more data from other banks or from other financial institutions, we can give better advice to our customers. Better advice means we can help customers make better financial decisions. This is good for us and our customers.
The one area that needs more work is how we manage information security at a customer level. We must ensure it is clear who is responsible for data privacy and we don’t want any mistakes in terms of data loss. The basis of our customer relationship is trust, and we would never compromise this.