I went along to the Sydney FinTech Startup Meetup for the first time tonight.
It was an interesting meeting as the speakers were all from the Westpac Group, one of the biggest, oldest companies in Australia, which hardly seems appropriate to the Startup scene. However, the guys had a lot to say about how they see the current banking markets and what the bank’s take on innovation and interaction with small companies looks like. From my point of view (as an employee of a financial startup that’s recently hit profitability and is now entering a scaling stage) it was interesting to listen to the challenges that these big companies face and to think about how we might try to avoid the same traps as we grow.
Pete Cooper (@pc0) gave a short announcement about SydStart, which is on at the end of May (2013) and he called “an excuse to get everyone together”. (The real tagline is “Australia’s Largest Professional Startup Conference”.) If you’re in tech in Sydney and haven’t been before, I encourage you to go along if only so you can see how big the interest in startups in Sydney really is.
Then three guys from Westpac took the floor – Travis Tyler (Mobile), Mike Baldwin (Innovation & Implementation) and Michael Clarke (Architecture) – to discuss where Westpac sits in the finance innovation space.
Asked about what problems they’re seeing in the payment space, some of the responses were:
- The RBA’s expectation of a real time settlement system.
- Figuring out who the winners will be in the mobile consumer space – they can’t afford to partner with every promising venture.
- Mobile change is consumer-led rather than industry-led and banks are having trouble keeping up.
- There’s no such thing as a $100k project in Westpac – everything is a big deal and needs to be assessed as such.
Discussion moved on to how innovation works within a big bank, which brought up:
- Embracing the challenge of adding value beyond the transaction, e.g. helping home buyers find a home rather than just providing the mortgage for the purchase.
- St George has apparently added the ability to apply for a credit card through their mobile banking app.
- They’re moving away from the belief they can build everything themselves to figuring out the right partners and adopting technologies that others have developed.
- There are people in the bank spending a lot of time looking at startups, and managers asking “how can we get one of those”?
- Westpac’s role in development of the “My Maccas” app (PCI-DSS compliant!) which allows pre-ordering and payment on your phone, with pickup in store from a priority queue.
- The lines are very blurred between business and technology groups in mobile – ideas can come from anywhere.
- Westpac can use their minor brands (e.g. Bank SA, Melbourne, RAMS) to try out projects which have a higher risk profile than they’re willing to tolerate with the Westpac brand.
- The bank is spending a lot of money building SOA systems with APIs that could potentially be exposed at some point to allow 3rd party integration.
Asked to discuss some of the challenges facing Westpac and the industry as they try to innovate, they shared:
- The big infrastructure challenge is integrating all the different systems handling different products and presenting them to customers in a seamless interface.
- One challenge with providing mobile access is “service quality”: commissioned research that showed customers want same or more functionality from mobile as they get on desktop websites.
- Key challenge in mobile is managing the experience and orienting everything around the customer’s core needs
- “Everyone [within the bank] wants an app at the moment” – but figuring out which ones customers need most and where the bang for buck lies is the hard part.
- Infrastructure teams get lots of requests from startups to open up APIs, but very few requests get implemented due to compliance and security constraints.
- The innovation challenge for a big bank is that they need to “fund” any integration with partners – it has to have an obvious payday for the bank to invest in the project.
- There was some suggestion that the banking frontline model (ie having many physical branches) may need to be challenged in time and adjusted in response to changing customer behaviour.
An audience member suggested big banks can’t do disruptive innovation because they’re structured in a way (e.g. top-down command-and-control) that filters out the kind of thinking and experimentation that’s required. He suggested banks should think about funding FinTech startups as a path to innovation.
One of the Westpac guys mentioned TeaLeaf (bought by IBM last year) as a company that’s solved a common big bank problem – analysing customers’ online experience – with a fresh and innovative approach (the solution apparently doesn’t require augmentation to each and every interface that requires monitoring).
Asked what the biggest problems are that startups could help the bank solve, Michael Clarke from BT offered “educating customers about managing their own wealth”. Someone mentioned CommBank’s Signals site as an example of where this is being attempted.
Image credit: Adrian Serghie