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Blog 2018



As editor of one of the most prestigious banking publications in the world, you sit at the forefront of many of the trends affecting the industry. That said, how do you see the issue of innovation affecting banks in the next couple of years? Is the issue of banking transformation at the forefront of consideration for the banking industry?
Banking is undergoing the biggest transformation in its history. The rise of digital banking and the demand from customers for 24/7 instant on-the-move access to banks means that the traditional banking model has to be redesigned. The established banks have historically been conservative when it comes to change and also they have to ensure anything they do complies with the regulations. But that said most banks now are embracing innovation. Many have set up innovation centres and appointed heads of innovation. They are also reaching out to fintech companies to work together in partnership.

If so, in what ways?
There are many pressures on banks — the demands from customers in the internet age, tougher regulations, the need to cut costs, the difficulties of making profits in a low-interest rate environment. Transformation involves reengineering the banking model to take account of all these pressures to improve both service quality and profits.

In your view, what is driving innovation in banking? Is it customers? Non-bank competitors?
Definitely the fear of losing business to non-bank competitors is a wake up call for the banks. But mostly they see an opportunity in working together with the fintechs. The fintechs can provide  customer friendly platforms and new ways of doing finance but the banks have the customer base, the funds for investment and the know-how to get regulatory approval. The best outcome is that the two sides work in partnership.

What do you think regulators need to do to address these changes in the industry?
Regulators need to be pro-active in embracing change. They need to work together with banks and fintechs so that the new models meet the needs of the regulators but at the same time the regulations do not crush innovation. The UK’s Financial Conduct Authority recently opened the world’s first “safe space” for testing new technology and business models.