Noor Menai, CEO, CTBC Bank USA
Please give us a bit of background on yourself, and how your organisation plays a leadership role in the financial technology space.
Over the past 25 years, I have worked in banking business in multiple sectors across the U.S., Europe and Asia. I began my career at a bank where we invented a dial up service called Pronto, the precursor to today’s online banking. This bank later merged with Chase Manhattan and, subsequently, the service became successful under the name Prodigy. I then joined Citi and became the head of the global online portals for Citi.com and then MyCiti.com, then ranked the number one websites for financial services globally. When we entered into a deal with AOL for $100 million we became a top three preferred provider in the world.
Over the course of my career, I have come to understand that banks, while they happen to sell financial products, are actually technology companies that are focused on information and process management as a means to help people do things faster. CTBC is dedicated to providing our commercial and retail customers with this bridge to the next stages of their lives and businesses. We are focusing on advancements in the RegTech space (regulation technology) where many of these processes are currently quite manual and subject to human error. CTBC is constantly searching for new ways to apply machine learning and process automation to streamline these cumbersome processes and, ultimately, better serve our customers.
You spoke at this event last year, and a lot has changed since then, especially the regulatory landscape. Has the new environment affected the way financial services approaches fintech?
As the fintech industry has emerged strongly over the past few years, the relationship between fintech companies and banks has rapidly transformed. Initially, as fintech companies first entered the landscape, banks responded with resistance and competition, often developing their own in-house incubation shops to keep pace with these new fintech companies. However, banks quickly realized that their small incubation shops, serving as add-ons to their primary business, could not compete with fintech companies devoting entire resources to this endeavor. Rather, banks have come to the realization that innovation is more likely to develop in a small setting fully devoted to disruptive innovation by adding to the value chain in a way that identifies and resolves a customer pain point.
As a result, banks have begun to partner with fintech companies, understanding that these fintechs are equipped to develop new, innovative solutions that can advance banking, while banks are armed with the regulatory mechanisms not only support the fintechs, but also the only organizations in most cases equipped enough to take both personal and commercial customers to the “last mile” of the services and transactions. This transition in the fintech-banking relationship has been quite dramatic over the past year as a variety of partnerships have developed and evolved in this space.
What will you be discussing at The Economist's Finance Disrupted Conference?
Given this evolving relationship between banks, fintechs, regtechs, and others, I will provide context by discussing the history of disruptive innovation in banking. Years ago, banking was limited to branches and transactions outside of branches were largely impossible. Then, several platforms, services, and browsers began to emerge, including Prodigy, enabling mobile banking. This led to the overwhelming prediction by financial consultants that branches would begin to become obsolete and close. However, this prediction has been proven wrong and, in 2017, we are seeing that the number of branches has only continued to increase.
It is ultimately quite misguided to think that innovation in one area leads to obsolescence in another. Rather, banks have embraced this innovation, benefitting from the progress it offers while providing these innovative advancements with access to regulatory mechanisms and oversight. This has held true over many years of innovation in banking and speaks to the ways in which future market entrants will navigate the space and interact with the players in the banking industry.
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