ANZ's Shayne Elliott says fintechs might not be replacing banks just yet

VCG/VCG via Getty ImagesA 3D painting on the ground of a parking lot at the Shiyan Lake in Changsha, Hunan Province of China.
  • ANZ Bank chief executive Shayne Elliott can’t see the banks being replaced by fintechs.
  • He says the major banks are already embracing the key technologies, including blockchain and AI.
  • The ANZ is selecting the best ideas and technologies and then partnering with fintechs.

Shayne Elliott, CEO of the ANZ, says the wave of fintech startups is disruptive but can’t see the banks being replaced.

“Fintech is disruptive but we’re ready, we’re engaged,” says Elliott who today is giving the welcome address at the SIBOS financials service conference in Sydney.

“The interesting development we’ve seen over the last 18 months or so is a shift to the view banks will work with fintech — rather than fintech replacing banks.

“We don’t see an Uber of banking or an AirBnB of banking replacing us – rather we see innovative fintech working in partnership with innovative banks.”

He says the ANZ wants to be the best partner for these dynamic start-ups.

“We’re focused on selecting the best ideas and technologies and then partnering with the relevant firms to apply those ideas and technologies in a banking context,” he says.

“Some of those partners may be fintech and some may be from quite a different realm.”

The rise of neobanks, such as Volt and Xinja in Australia, is also challenging the traditional role of banks.

“These startups don’t have fixed assets, property or any of the usual collateral for lending,” says Elliott.

“We really have to think differently about how we bank them because we do want to bank them.

“What are the biggest challenges to a bank’s ability to deliver value-added, differentiated services to customers — geo-political, competitive, technological, cultural –and what can they do to tackle these?

“That’s a cultural challenge, a mindset change. That has its own risks and as part of our cultural transformation we have placed a lot of emphasis on our values and purpose.”

However, the major banks are already embracing key technologies bringing change, including blockchain and AI (artificial intelligence).

“We’re going to hear an enormous amount about blockchain here at SIBOS and everywhere else,” he says.

“We know it will be transformative and we accept we don’t yet know exactly how.”

He says AI, together with blockchain, open banking (where a customer can take their own banking data anywhere), and New Payments Platform (NPP), an open access infrastructure for fast payments, represents a genuine revolution in banking.

“It’s no exaggeration to argue these radical disruptions will bring about the most profound transformation in banking for centuries,” Elliott says.

“Open data removes a key barrier to entry in the industry; blockchain overcomes a need for substantial, expensive infrastructure, NPP vastly speeds up transactions and AI can deliver insights and outcomes beyond the ken of existing systems.”

At ANZ, 30% trade transaction processing is now done by AI.

“AI will change the way we work, live and think. And it will introduce some extraordinarily complex challenges,” Elliott says.

“Think about how we might program a self-driving car — we don’t even have legal consistency around liability across borders. Who is responsible? The car manufacturer? The software designer? The network? The passenger/owner?

“In some cases AI might make decisions and we will never understand why – what was behind its ‘thinking’?

“Yet the potential for improving the lives of people and communities is truly immense.

“Having AI rapidly and accurately perform repetitive tasks or research vast amounts of data frees up medical specialists or lawyers or teachers to concentrate on where they can be most valuable as humans.”

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