The head of British multinational bank Barclays has reportedly said that his organisation is too big to be impacted by fintech startups.
Speaking to business publication Globes on a visit to Israel, Barclays chief executive Jes Staley said that technology is “changing banking dramatically” but small fintechs cannot compete with the size of an established institution.
“I really like the innovation I see at Barclays, but I don’t think that small fintech companies are going to challenge us,” he said.
“Large corporations like Microsoft or Barclays need robustness and stability, which are critical to the economy, and very expensive to maintain, and certainly to build from the ground up. So I’m not concerned that new technologies will harm Barclays.”
Staley said that with 30% of the United Kingdom’s gross domestic product transacting through Barclays’ payment facilities on a daily basis, an outage to its in-house systems would be “dangerous” to international economies, compared to the smaller impact that startups have.
“Take for example a fintech company that has a payments system platform, and for some reason it stops working – a software bug or some other hitch. Not pleasant, but it doesn’t cause huge damage,” he said.
CBInsights chief executive Anand Sanwal said in his venture capital data newsletter that such an attitude is sometimes prevalent in large companies, but there is “no upside” to such comments.
“More often than not, you’ll find yourself on the wrong side of history like so many of these CEOs,” he said, citing Blockbuster chief Jim Keys’ 2008 comments that Netflix is “not even on the radar screen” as a competitor.
FinTech Australia chief Danielle Szetho agreed that there were many examples of incumbents failing to notice a challenge.
“History is littered with examples of behemoths that failed to recognise sources of disruption: names like Kodak, Blockbuster and even more recently in the media industry — where some are close to bankruptcy,” she said.
“In 10 years time I’ve no doubt companies like Barclays will still be there; they certainly won’t be the same Barclays of today — they will be very different beasts.”
Szetho added that comments such as Staley’s creates an unhelpful “us against them” mentality, citing FinTech Australia survey findings that 40% of startups have trouble forming partnerships with established institutions.
“The Australian fintech industry will not grow to its full potential if this remains the case and therefore our entire financial services industry — the largest industry in Australia — will be more ripe (for) overseas disruption.”
Barclays was established in 1690 in London and held £1.2 trillion ($2 trillion) in assets last year. Last year the bank launched a tech accelerator in Tel Aviv for fintechs.
Staley said that, even with the exit of the UK from the European Union, Barclays plays too important a role to disappear from prominence.
“There will be a few adjustments, but since we are such a central player in the country’s payments system, we are exposed to economic information in real time, and can confirm the fact that the British economy continues to be strong even after the Brexit vote.”
FinTech Australia’s Szetho said that bank executives should “embrace” fintech, rather than dismiss it.
“If we are really going to grow our Australian fintech industry… we need to support fintechs that wish to collaborate with banks, as well as those which want to compete with banks.”