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‘Real threat to the banking sector comes from big tech not fintech’

Shayne Elliott, CEO of Australia New Zealand Banking Group.Premium
Shayne Elliott, CEO of Australia New Zealand Banking Group.

  • Shayne Elliott, the chief executive of Australia New Zealand Banking Group Ltd, said it is not fintech firms, but big technology companies, such as Facebook and Amazon, which pose a threat to the banking space
  • 'Cost of big data, tech is reducing. Deregulation is leading to open data. There will be a new wave of innovation'

Shayne Elliott, the chief executive of Australia New Zealand Banking Group Ltd (ANZ), who was recently in India, said it is not fintech firms, but big technology companies, such as Facebook, Amazon and Apple, which pose a threat to the banking space. Edited excerpts from an interview:

What are your plans for India?

We have been here for a long time. We are a trade-related bank. The way we operate has changed over time. New technology, different commodities, different things gets traded. Actually what is important is that the relationship India has with Australia and the rest of the world, has changed dramatically. We keep modifying our approach, but at the end of the day, we are here because we have two essential customer bases—Indian customers who are engaged with the rest of the world, which is growing dramatically, and large multinational companies from Australia or Japan, the US and Korea, who want to invest in India. Our job is to facilitate that. Our presence here is growing. We are never going to take on the big banks in India. So, in some ways, it is going to be a niche business, but fast-growing. Some of our largest customers in the world are from India.

India is betting big on digital. How do you plan to cash in on that?

We spent time with three fintech startups today who were in the SME (small and medium enterprises) financing space using blockchain, etc. There is no doubt a bit of a revolution is happening around the world. The cost of technology is coming down, the cost of big data is coming down, regulation is helping, deregulation in many places leading to open data and other things. There’s going to be a new wave of innovation, not all of it is going to work out. But I think that’s pretty exciting. Banks like us are threatened by these things because we are 187 years old, or we can find those things (as) exciting opportunities.

The idea that these fintech firms will come and take our business away, I don’t subscribe to this. We have got millions and millions of loyal customers.

The real opportunity rather than competing is working together. So, what banks like us do is to partner with fintechs. They become service providers to us. We may partner with them and, sometimes, we may find some piece of equity, and that’s not really the point. I think the real threat to the banking sector globally doesn’t come from fintech. It comes from big tech. It is the Facebooks, Apples, and the Amazons who are expanding into our business and, again, the competition is healthy, and it will be good for consumers.

What meetings did you have thus far?

We have met some government officials and also spent some time with CII (Confederation of Indian Industry). That was interesting because the topic and the interest was around sustainability, in terms of finance, what is the role of banking and finance in supporting sustainability, which Australia has really become a leader in. There was a lot of interest in energy companies, manufacturing companies in what they could learn. For example, most of us think of sustainability as climate change. Actually, from an investor’s point of view, it is a bit broader sense, which would include diversity. There are a lot of investors who care about how their money gets utilized and making sure it is doing some social good or environmental good, as well as is it generating returns. So, they still want a return. They do not want to accept a lower return, so they want to know what their money is achieving. So, there has been a development in Australia, among other countries, of these social bonds, green bonds, sustainable loans. As banks, we connect investors with those needs or interests to those who need the money. For example, a company may borrow money with the distinct purpose of using that to develop renewable energy. The one we just did for Sydney Airport, which was the first, was interesting because it was a sustainable loan. And, they sign up to a bunch of targets, and investors hold them to account. If they achieve those targets, the rate of interest goes down, if they don’t achieve those targets, the rate of interest goes up–to try and nudge them to do the right thing. Some of them have to meet diversity targets, some of them have to meet emission targets. So, we were just sharing our experience, what some of the key ingredients of our success have been.


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