Standard Chartered Inaugural Tech Executive Briefing

21 May 2020

SC Ventures Americas facilitated the inaugural Tech Executive Briefing with Michael Gorriz, Group Chief Information Officer at Standard Chartered Bank, centred on “Enterprise Machine Learning” on May 21st.

Nearly 100 members across the T&I Leadership team, CCIB, and other areas of the Bank participated in the interactive presentations led by leaders in the space. Panellists included Jade Lai of the Silicon Valley VC firm Andreessen Horowitz, CEO and Co-Founder Michael Del Blaso of Tecton.ai, and Dr. Jordan Brandt , CEO and Co-Founder of Inpher.io.

StanChart’s ‘banking as a service’ enables ecosystem players to offer financial services seamlessly

5 May 2020

Standard Chartered has unveiled its new banking as a service venture ‘nexus,’ which offers partnership opportunities and allows ecosystem players to enter financial services without having to set up a bank.

  • The banking as a service model opens opportunities for new entrants to provide financial services without having to build it from scratch
  • Standard Chartered’s first partner for nexus is a major e-commerce platform in Indonesia
  • This is the first venture by the bank’s innovation unit SC Ventures that runs innovation labs, fintech investment fund and experiments with new business models

New entrants such as payments, e-commerce, ride hailing and social media companies increasingly seek to expand their offerings in financial services but face several challenges. The banking as a service (BaaS) model empowers such players and integrates banking seamlessly through a white-labelled solution. This business model is what Standard Chartered uses in its recently launched venture called nexus, which brings transformational partnerships between consumer platforms and digital banking.

“Applying for licences, committing capital, building an end-to-end technology solution and bearing the operational costs of running a financial service can be heavy and extremely painful to set up. We offer the ability to move into that space by plugging into our stack, leveraging our balance sheet and liability without having to build it from scratch. This will be far quicker and more efficient to scale,” said Kelvin Tan, venture lead at nexus.

Tan explained that nexus enables ecosystem players to offer financial services, allowing them to design and support their own value proposition while relying on the bank’s balance sheet and licence.

Incubated at its innovation unit

nexus was incubated under the umbrella of SC Ventures, the unit that drives the bank’s innovations and fintech investments.

Sharing the details, SC Ventures head Alex Manson explained, “Firstly, we have innovation labs called eXellerator, which is in the bank, for the bank and by the bank. Here, we run the fintech programs, new proofs of concept and it also has SC Ventures Fintech Bridge, a matching engine between fintech and use cases.

Secondly, we have a $100 million fund set up to invest in relatively early stage companies. We invest only in partners we work with and we help them scale.

Thirdly, we build ventures wherein the idea is to experiment with different business models, aggregating different capabilities and ways of conducting banking. These are startup companies built from the ground up, and then bring in the investment partners to help them scale. nexus is a venture – in fact, our first venture.”

Among other new business models by the bank include a joint venture with Assembly Payments to develop and deliver next-generation payment solutions. In Hong Kong, it is set to launch a standalone digital retail bank, Mox, and the bank has also built a digital open platform, Solv, to help SMEs in India.

How nexus came about

The solution originated with the thought process of understanding how the bank could gain exponential scale and drive the newer order of banking, in which banking gets integrated into the day-to-day lives of consumers and businesses.

“We considered two options: doing this through application programming interface (API) or reinventing the entire technology stack and middleware and ensuring that change management is as seamless as front-end partners like e-commerce or social media players need it to be. This firmed our view of building up nexus as a business model for the bank in terms of gaining exponential scale and also as a technology solution to other banks. We focused on how one can grow banking and balance sheet exponentially without growing proportionate costs accordingly,” Tan expanded.

Manson explained that while building the framework, the bank looked at different possible scenarios.

The first scenario is where banks become the digitised or digital banks themselves, such as those digital banks in Hong Kong or neobanks in the United Kingdom. In the second scenario, banks become platforms with an ecosystem – they have open architecture and could plug in the capabilities but not exclusively, as other people plug in as well. In the third scenario, rather than becoming platforms, banks become an engine for the platform, i.e. they plug into the ecosystem platform.

“We felt this could be a good outcome for banks to leverage the scale of consumer platforms and ecosystems and provide banking services at scale. nexus is this scenario number three,” Manson elaborated.

The venture is set up as a separate legal entity. While it works within the risk appetite of the bank, it also has separate governance, policies and processes. It comprises about 100 people based in three key markets in Asia: Singapore, India and Indonesia.

Future roadmap

Standard Chartered has already acquired its first partner for nexus, a major e-commerce platform in Indonesia. Being a hotbed for e-commerce with one of highest adoption rates in the world, launching nexus in Indonesia will give Standard Chartered the opportunity to reach a significant unbanked population through partners. While the bank refused to share the name of the partner, it expects to co-create and launch products powered by nexus in 2021, subject to regulatory approvals.

The bank is starting nexus with the minimum viable product of retail and CASA products, with plans to add SME and corporate products later on. Future plans include rolling out the service to other promising markets in Asia, Africa and the Middle East.

It will bring a new revenue stream for Standard Chartered, but the bank plans to take a flexible strategic approach in forming partnerships depending on each partner’s needs.

“We are looking at a revenue share model, but we are flexible with regards to how we structure the deal. So, we are open to risk and asset sharing as well. The model will be customised for each partner depending on what they bring to the table. There is no one size that fits all,” explained Manson.

‘Banking as a service’ solutions in the industry

Standard Chartered is among the few early players that have entered in this space in Asia Pacific. In a slightly different approach, Ping An Group’s One Connect offers ‘technology as a service’ to other financial institutions in Asia. Some other players exploring the BaaS model in Europe include solarisBank, Starling Bank and Fidor Bank.

Among the early innovators is Fidor Bank, which provides white-labelled cloud solutions powered by open APIs. They cater mainly to challenger banks and consumer organisations that want to tap the market quickly without regulatory compliance hassles. This provides the organisations with a full set of banking products to be deployed.

In a similar model, German bank and technology company solarisBank offers a completely digital BaaS platform connecting other businesses through APIs to offer financial services.

UK-based mobile-only challenger bank Starling enables banks, fintechs and retailers to develop and scale new, customised products quickly by picking and choosing individual features or components from Starling while taking advantage of its banking licence.

In these end-to-end and shared infrastructure models, customer ownership remains with the ecosystem partners while the bank becomes the provider of banking capabilities at the back end. This provides a win-win relationship for both the partners. It drives new revenue streams for the bank as well as allows them to leverage their banking capabilities with the scale of ecosystem partners who tend to be inherently better and more agile at customer experience. On the other hand, it provides faster products, quicker time to market to ecosystem players and allows them to circumvent regulatory compliance challenges.

Through this venture, Standard Chartered can empower platforms to bring financial services at the fingertips of millions of users. Yet, it is still at an early stage, as the first partner will go live only next year. As the BaaS model gains popularity and matures, there is likely to be greater adoption as well as competition. For long-term success, nexus will need to carve a niche path for itself, stay ahead of the curve and expand its market reach with speed through new partnerships.

WFH Chronicles: SC Ventures’ Alex Manson

21 April 2020

Singapore’s «circuit breaker» – a curb of all non-essential businesses and activities, and heightened social distancing – has dramatically changed the daily routine for professionals in the financial services sector, many of whom are now working from home (WFH). This series takes a look at how they are coping during the city’s lockdown. Singapore’s fight against the Covid-19 pandemic stepped into high gear about two weeks ago, with a partial lockdown and mandatory wearing of masks in public, to curb the spread of the disease. Yet, infection numbers have continued to reach new highs, with 1,426 cases reported on Monday, making it the Southeast Asian country with the highest number of infections. Currently, workplaces have been forced to shut until May 4 in the earliest scenario, and nonessential businesses have had to either cease operations or do what they can to function virtually.

As work-from-home rules are implemented on a wide-scale, the implications of this period are going to be profound, with organizations forced into new ways of working, new tools, and different ways of interacting together, Alex Manson, global head, SC Ventures at Standard Chartered, tells finews.asia in an interview. The business unit within Standard Chartered enables innovation, invests in disruptive financial technology and explores alternative business models. Set up in 2018, it has been a key driver in promoting a culture of innovation within the bank, as well as developing and delivering digital solutions for both the bank and its clients. Alex Manson, Singapore has been at the forefront of Covid-19 prevention. Is the current lockdown a setback of its containment efforts so far?

I don’t see it this way, Singapore did a stellar job of managing the «early outbreak» but could not prevent re-importing the virus as the pandemic became global and other nations were slow to react and manage the situation, while people continued to travel freely with little awareness or precautions.

I find the answer in Singapore has been balanced through the crisis, meaning avoiding extreme pendulum swings and taking measures as a function of the information available at any point in time. This includes the fact that information evolves rapidly in a crisis, and I have in fact seen an element of refreshing humility in leadership with the ability to change your mind once you have new facts.

What are the biggest obstacles you are facing in your work these days?

Some aspects of our work continue almost undisrupted, working from home and using various digital tools, which we were advocating in the first place. Other aspects are really difficult: for example how do 12 people build a prototype around a table and a whiteboard? Well, there are tools for that too but yes it is just a lot more cumbersome.

Personally, I like to walk around, grab somebody for a chat – include another, improvise a quick meeting to solve a problem: that’s a lot harder too. And the most difficult part is to keep a good sense for how everybody is coping, how individuals feel in the current context – I can see anxiety building around the world, our teams are probably no exception and there will be an even more acute need to focus on people’s overall wellness in this environment.

How are you communicate with your clients now?

Remotely! That part is actually almost easy and I expect that in the future people may insist on a lot on face-to-face meetings as all are getting used to working at a distance.

Perhaps a helpful tip is the use of phone or video chat, etc., as opposed to e-mail: e-mail was never a great means of communication (it is good for passing on information, but certainly not for debating things or asking someone for a favor). I used to say when in doubt, pick up the phone. More so today actually.

How long can you ride out such a situation?

As it relates to ways of working, we’ll have to work this way for as long as it takes… I enjoy endurance sports and this situation reminds me of the reflexes of a long-distance effort: find a sustainable pace, don’t waste energy, think of «after» rather than «tomorrow» and importantly, just get used to the fact that it will be uncomfortable!

I am more worried about the long term impact of the crisis for a number of clients in our ecosystem: the longer this goes the more stretched they will be and we can see the first signs of distress with SMEs in particular – they typically represent 60 percent of any nation’s GDP.

Do you think Singapore as a financial center will lose its attractiveness over the Covid-19 crisis?

Quite the contrary actually. Singapore’s crisis management skills have been both effective and noted internationally, especially in comparison to some of the Western markets. I think Singapore may well gain rather than lose on a relative basis.

Alex Manson heads SC Ventures at Standard Chartered, a business unit established in March 2018 to lead innovation across the Group, invest in fintech companies, and promote the testing and implementation of new business models. Alex joined the firm as Group Head, Wholesale Banking Geographies in 2012, and was Global Head of Transaction Banking, between 2014 and 2018. He also spent 12 years at Deutsche Bank, notably as Global Head of Lending and Corporate Banking Coverage, and was at Credit Suisse for 8 years. 

SILENT EIGHT

A startup that specializes in combating money laundering and terrorism financing using Artificial Intelligence

Silent Eight came to us as a fairly small company with a great idea and a first version of their product but there was a long, complex journey on the horizon – the nature of their product (optimizing name screen processes to fight Financial Crime) required working with a lot of confidential data and building out a proof of concept.

Standard Chartered provided consistent support throughout the process – providing visibility within the Bank, a network that was ever willing to help, a proven methodology to test their solution and ultimately, a culture of innovation that is willing to take risks and put money behind ideas to roll them into production across our offices across the globe.

Silent Eight is currently working with Standard Chartered on anti-money laundering screening in the Financial Crime and Compliance area across our global footprint.

“It’s the sum of all the small things that made it possible for us to achieve what we did in a relatively short period of time, helping us reduce all the risks along the way so that we could get to the finish line faster.”
– Martin Markiewicz, CEO

https://fintechbridge.scventures.io/public/our-partner/details/Silent%20Eight

PAXATA

A startup specializing in data preparation using simple interfaces

In 2016, Paxata came to us with a solution to a specific problem around risk and compliance. With their technology and our expertise and network, we turned a successful Proof of Concept (PoC) into an investment and a long-term partnership.

Standard Chartered provided consistent support throughout– providing visibility and clarity around processes within the Bank, an inclusive culture and ultimately, a willingness to take risks and champion startups to deliver solutions across our footprint.

Paxata continues to work with us, making data more accessible for our employees and improving the way we use information for better analysis, reporting and ultimately better decision-making, in areas like Financial Crime Compliance, Retail Banking and Operational Risk.

“During my time with Standard Chartered, they really made me feel like I was one of the team – one of Standard Chartered Bank, and never did I feel like I was a vendor on the outside. It was a very inclusive culture, which was really lovely.”
– Callum Finlayson, Regional Director, Asia

https://fintechbridge.scventures.io/public/our-partner/details/Paxata

MONEYTHOR

A startup specializing in the personalization of Digital Banking services through AI

Moneythor first delivered a PoC before winning a tender with us in 2018. With a strong commitment to digital banking & technology and a truly global footprint, we are glad to be working alongside Moneythor to further advance personalisation and engagement in our digital services. 

We are currently working with Moneythor to improve our transaction data classification and to deliver tailored recommendations, actionable insights as well as personal finance management (PFM) features.

“The strength of Standard Chartered Bank across regions was definitely a huge factor in this partnership. We have global ambitions and ultimately want to roll out our products across markets and working with Standard Chartered certainly offers such visibility and opportunities.”
– Olivier Berthier, Founder & CEO

https://fintechbridge.scventures.io/public/our-partner/details/MONEYTHOR

INSTABASE

A San Francisco-based startup with a suite of operating solutions for adaptability

For what started out as a small team of 3-4, Standard Chartered’s belief in and commitment to Instabase was a key factor in the success of the partnership. 

Bringing Instabase into production from PoC, Standard Chartered acted as the constant bridge between the Instabase team and key stakeholders, facilitating discussions in consolidating and understanding the objects and operations of all involved parties by providing a dedicated team to navigate the Bank. 

The Standard Chartered approach was extremely focused on getting a real world use case, giving active feedback to iterate with them instead of long development plans.  

“Standard Chartered invested a lot of time and money into our small team. The team at Standard Chartered really believed in our product and that drove the project forward.”
– Anant Bhardwaj, CEO of Instabase

DEMYSTDATA

A startup specializing in providing financial institutions with access to external data

For over 2 years, DemystData has supported several digital and data transformation initiatives at  Standard Chartered working specifically on automation and customer verification projects in several geographies. 

Throughout the process, Standard Chartered has been a supportive partner, providing guidance and visibility within the Bank to communicate and liaise across various units to drive projects forward and create ultimate value for SCB customers. 

“Standard Chartered’s appetite for innovation in data strategy has made it a perfect partner for DemystData as we collaboratively explore how to improve the customer experience across diverse markets.”
– Vaibhav Thadakamalla, Director APAC Client Engagement

https://fintechbridge.scventures.io/public/our-partner/details/DemystData

DATAROBOT

A startup specializing in predictive models with machine learning technologies

In 2016, DataRobot won a tender with the Analytics arm of Retail Banking, building models to better target consumers for retail banking products via upselling and cross-selling.

Providing an influential point-of-contact, vested executive sponsorship and the opportunity to work through various use cases across our diverse markets, Standard Chartered empowered DataRobot to carve out a strong value proposition, and deliver a winning solution that we have been using for 3 years now.

“Traditionally with corporations, the points of contact that we’ve worked with have not been someone who’s embedded directly in the business. However, having the support of a champion who knew all the potential stakeholders and ensured they were involved throughout the entire process certainly made it much easier for us to facilitate a lot of the things we wanted to do.”
– Brendan Lim, Managing Director, Sales

https://fintechbridge.scventures.io/public/our-partner/details/DataRobot

SOCASH

SG-headquartered fintech that allows bank customers to perform banking services like cash withdrawal & loan applications at retail shops via a mobile app.

Standard Chartered has integrated soCash into SC Mobile, its mobile banking app in Singapore, since 2017 to increase customer convenience by enabling them to withdraw cash through a network of retail outlets. Continuing this partnership, SC Ventures has recently invested into soCash as they expand their business across South East Asia. 

We spoke to Hari Sivan, Founder & CEO of soCash on how the fintech is improving customers’ access to cash, easily and conveniently.

With every conversation, the engagement and the business keep increasing and that’s the value of the relationship we see working with Standard Chartered.

Standard Chartered has integrated soCash into SC Mobile, its mobile banking app in Singapore, since 2017 to increase customer convenience by enabling them to withdraw cash through a network of retail outlets. Continuing this partnership, SC Ventures has recently invested into soCash as they expand their business across South East Asia. 

We spoke to Hari Sivan, Founder & CEO of soCash on how the fintech is improving customers’ access to cash, easily and conveniently.

With every conversation, the engagement and the business keep increasing and that’s the value of the relationship we see working with Standard Chartered.
– Hari Sivan, Founder & CEO of soCash

https://fintechbridge.scventures.io/public/our-partner/details/SoCash