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There is no 'existential crisis' challenge for banks from fintech, HSBC's digital chief says

  • The digital chief of HSBC has dismissed the idea that big banks are facing an "existential crisis" from financial technology (fintech) challengers
  • Several digital-only "challenger banks" such as Starling, Fidor and Monzo have gained momentum, particularly in the U.K.
  • HSBC's history as a financial institution and the trust of its customers would work in the bank's favor, the bank's head of digital said

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The idea that big banks are facing an "existential crisis" from financial technology (fintech) challengers is "overblown", the digital chief of HSBC told CNBC.

In response to the debate over challenger banks and other fintech players posing a serious threat to established financial services institutions, the bank's head of digital said that the trust of customers meant banks were "sufficiently primed." Some have referred to the debate as "David versus Goliath," referring to the potential for small digital start-ups to undermine the dominance of big banks.

"I think the 'David-Goliath' (debate) or the existential crisis debate is overblown," Raman Bhatia, head of digital for HSBC in the U.K. and Europe, said in a phone interview on Tuesday.

"There are many players that will co-exist and there could be many models that could build on top of the bank's model and co-exist with what banks have to offer."

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Several digital-only "challenger banks" such as Starling, Fidor and Monzo have gained momentum, particularly in the U.K., leading to questions over whether such digital alternatives could weaken the position of traditional banks.

And regulations which would allow third-party companies the ability to provide payment services for and access the data of banking customers - something referred to in the fintech world as "open banking" - are also set to cause headaches for the banks, experts have said.

Last week Daniel Döderlein, the CEO of Norwegian start-up Auka, which helps banks to comply with such regulations, warned that institutions which refuse to change their model to adapt to new developments like open banking would trail behind others in the market.

He said at a fintech conference in London that there would be a difference between the banks that "continue to make incremental technology steps to just make their business more efficient," all the while operating "exactly the same," and banks that "strategically fight towards the force of fintechs."

And last month former Barclays CEO Anthony Jenkins warned that banks could be faced with their own "Kodak moment" by falling into irrelevance if they failed to keep up with the pace of rapidly developing fintech technologies.

But HSBC's Bhatia, who is responsible for developing innovation at HSBC, said that he believed the bank was ready for a challenge from fintechs, and that the bank's history as a financial institution and the trust of customers would work in its favor.

"We have customers, we have the trust of customers for more than a 100 years and we are investing heavily in and learning from fintech, partnering with fintechs and developing our own digital propositions for our customers, and the customers appreciate that," he said.