Wall Street Hearts Fintech10.23.2015 By Rob Daly Editor-at-Large
Financial technology is seen as a competitive threat to Wall Street and its established business models and processes, some of which are comparatively antiquated.
But in the spirit of the age-old saying ‘if you can’t beat ’em, join ’em’, large global banks are increasingly sinking money into financial technology ventures to bring the next generation of innovators under their own roofs.
Credit Suisse formed Credit Suisse Next Investors in 2013, and Santander and HSBC are among banks that have set up fintech venture funds. More recently, Deutsche Bank placed a EUR 1 billion-bet on innovation.
As part of its Strategy 2020 initiative, the bank has partnered with IBM, HCL and Microsoft to create Deutsche Bank Labs in Silicon Valley, London and Berlin respectively, officials announced in June.
“These labs will act as a bridge between start-ups and different parts of the bank, enabling it to apply innovative technology to enhance service to clients and internal processes,” said Henry Ritchotte, COO and Chief Digital Officer at Deutsche Bank at the time of the announcement.
The bank has tasked Nancy Selph, director, strategic operations & innovation at Deutsche Bank and who oversees the labs, and her organization to evaluate more than 500 start-up ideas annually.
The immediate challenge, however, is to work on transforming the bank culturally and make sure that it is ready for the possible disruptions that the startups might bring, she said during the recent TabbForum MarketTech conference in Midtown Manhattan.
Her team engages a number of levels within the bank, from sponsoring executives down to everyone else in the organization, both in IT and business to spur adoption, but it is not something that can be mandated, she advised. “It’s not about top-down leadership. The business has to want it and it needs to be driven by the business.”
One necessary transformation her team needs to make is how the bank deals with its vendors, according to Selph who stated that sometimes getting new vendors through the door can take months, months and months.
“If I just want to build a three-month proof of value in one of our labs, it might take me six months to get them in there,” she explained. “It’s funny. We’re the ones who are trying to transform the bank, but we are the first ones who have to change how things are done in the bank in order to be successful.”
Yet Selph believes she and her team will be successful in the long run since they are witnessing a growing groundswell to accept innovation.
“The bank is changing because the people are changing,” she noted. “People are coming to work wanting to use the technology that is impacting them outside of work.”
Featured image by M
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