Before we get into the macro picture, we’d like to understand how technology is reshaping Standard Chartered and the bank’s way of existence.
It is the core as you would have imagined. And in many ways, I expect other bank CEOs to see themselves as leaders of tech companies as much as leaders of financial companies. Our whole business legacy needs to be digitized – the way we interact with our customers, the way we process transactions, needs to be automated and digitized because that’s what our customers expect. Then there’s all this new stuff — whether it’s neo-banking or new ways to extend credit to customers, perhaps with partnerships with tech companies. It is therefore a technological proposal or a technological offer. But basically, it’s a banking product. It’s important to make sure we have the skills and understanding to deliver technology in a humane way. Some customers use the latest technology, but still deal with Standard Chartered Bank. So, technology is at the heart of everything we do.
Would you say that Covid and the two years of confinement actually accelerated this process? How has your bank performed during this period?
I was extremely impressed with how my colleagues were able to deliver and 20,000 of them are in India. The good news is that we have behaved very well during the pandemic. We were able to maintain our transaction flows without any interruptions. We have also seen a sea change from our customers in our channels for obvious reasons. And it tested those components and the bandwidth of everyone in the financial services industry. The trend is very clear anyway – we were on track to process 70/80/90% – 99% in some of our businesses – already digitally, but the pandemic has definitely accelerated that. This was a real test of the underlying robustness and resilience of our infrastructure. I’m happy to say we passed it.
Big tech is making a big foray into financial services. We’ve seen Amazon get into payments, we’ve seen Google first test payment products in India and now take them around the world. How do you see this big onslaught of big tech in banking and the broader financial services game?
That’s an excellent question. We know what customers want is convenience. And they want it in the platform that they already use very actively – media platform, messaging platform, payment platform, insofar as they want to acquire additional financial services. Someone will make it easy for them. The customer’s desire for convenience is best met on some existing platforms. It would be our job to ensure that the products they acquire through these platforms are best in class. We are looking to partner with some of the big tech companies. These partnerships take different forms depending on the market. We also have other missions, which is to create our own platforms. We are extremely proud of something that we have put in place in India – a technology platform that allows SMEs to interact with each other, with their suppliers, with financial service providers. We now have over 100,000 customers and are growing very rapidly. We have also rolled out this platform in other markets. However, it is essential to ensure that our customers receive all the convenience through digital and automated tools, without losing the human interaction – the guidance that comes with human relationships.
So the lines really blur between a tech or retail company and a financial services company… Everyone seems to do it all.
The lines are blurred, but there are lines that have not been crossed. For example, technology companies don’t want to be in capital-intensive businesses. Tech companies are trading in phenomenal multiples. The last thing they want to do is bog down their balance sheets with capital-intensive activities like lending. Second, very few tech companies like to be regulated like a bank. I can tell you that operating as a bank is a very heavy burden. It is a price we pay to have access to deposits, to central bank liquidity in times of crisis. We have privileges as banks and in stock exchanges we have regulations.
Would you be open to partnering with any of these fintech companies, or are you perhaps considering acquisitions?
We have hundreds of fintech partners. We have either invested in fintech companies or we have deep-rooted partnerships in the markets; so that we can provide banking services based on credit origination capabilities. Every partnership is different, every capital investment we make is different. We love that we can help establish a fintech player through our partnership or equity investments.
Do you think the first level of disruption will actually take place in retail banking? This seems to be the first thing many fintech or neobanks seek to disrupt.
Absoutely. Specifically, the initial disruptions occurred in the payment space. It is expensive to make small value payments domestically, and very expensive in some cases to make cross-border payments. Fintech companies stole the march from the banks, stole the march from the credit card companies by providing convenience and offering services at a more reasonable price. It was a wake-up call for the banks. We have to wake up every morning thinking about how you can provide a better product or better service, or someone can do it for you.
As soon as we talk about customers, the big question of privacy, the question of data comes into play. This is a big concern for regulators, even for sovereigns. How do you see the regulatory landscape evolving in terms of monitoring and controlling data flows?
We are extremely aware of the valuable data we possess that comes from our customers and we take all reasonable steps to protect it. Banks have been very good guardians of clients’ wealth. When we don’t act in the best interests of our clients by helping them manage their savings, wealth and data, the consequences are quite serious. In many cases, data is as valuable as its wealth. There is contractual pressure from regulators and, more importantly, pressure from us to meet very high data protection standards.
How do you plan to leverage digital solutions in your retail strategy? Is there a particular theme that stands out?
We have made statements to our shareholders to deliver a substantial increase in the number of customers – doubling the number of customers in three years. This can only happen when we deliver our products and services digitally, with very direct processing. No human intervention on these 95% of transactions that go through digital. It can also be cheaper in the long run. In the short term, it is expensive because we have to invest in technology to generate our capabilities. The main driver of retail is to digitize everything end-to-end so that customers get the best quality of service.
Most bankers like you scoffed at the idea of digital currency. Where are you ?
I never scoffed at the idea of digital currency. I think there can be a lot of opportunities if we circulate digital currency effectively. There are several types. The most attractive at this point is central bank digital currency. There will be Chinese digital currencies and others are in various stages. We need to understand what customers need. I don’t think central banks have adequately answered this question. Time will tell how the combination of the digital economy, cryptocurrencies, stablecoins, central bank digital currencies, and the full range of other tokenized assets will take shape.