Innovation is two-way street between fintechs and traditional banks, say panellists

[ABU DHABI] Innovation in the financial-services space is not just the work of fintech start-ups, but can also arise from the collaboration between these fintech players and traditional banks, said the chief executive of a bank in the United Arab Emirates (UAE) on Tuesday (Nov 15).

Raheel Ahmed of Rakbank, headquartered in the Emirate of Ras Al Khaimah in the UAE, said that the view that traditional banks are large and slow-moving is likely outdated; banks are rapidly innovating today and contributing to the sector’s innovation.

He was speaking at a panel discussion on how big banks drive innovation at the Abu Dhabi Finance Week 2022 on Tuesday (Nov 15). The event is an investment and finance forum held in Abu Dhabi from Nov 14 to 18.

The panel, moderated by Gabrielle Inzirillo, head of ecosystem development at Abu Dhabi Global Market’s Financial Services Regulatory Authority, featured two other speakers. They were Tan Bin Ru, South-east Asia chief executive officer (CEO) of financial services company OneConnect Financial Technology, and Zul Javaid, CEO of trade finance platform UAE Trade Connect.

Ahmed said that banks need to win the trust of their customers, so it matters less how innovative they are, relative to the fintechs. He added that banks should not view fintechs as competition, but rather, as fellow players in the financial-services space.

Tan supported this point, noting an increasing level of collaboration between traditional banks and fintech start-ups. “The trend has always been that collaboration begins from day one – it just depends on who starts it first,” she said.

Banks have a lot to offer in such partnerships, she added. For instance, only the larger banks would have research and development (R&D) teams that can build solutions.

However, Tan added that it is important for banks to understand the full range of innovations available – including products developed by fintechs that can be adopted; this means that banks do not always have to be innovating their own solutions.

“The question is not which part of the bank can do their own R&D,” she said. “Ultimately, there may be some areas that are not worth doing your own R&D for, and banks should always adopt solutions that they can control and understand.”

Javaid noted that banks are increasingly innovative, especially after they received “a bit of a wake-up call” from start-up players in areas such as digitalisation.

He also noted “an excellent opportunity” for banks to take the lead in partnerships for product innovation in coming years, with the banking sector also having incredibly innovative people to drive change.

“I think the word that comes to mind is symbiosis. Because you can’t have one without the other, and the other is enriched because of the former,” he said.