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| Joydeep Sengupta, senior partner of McKinsey & Company, speaks during an interview at the Plaza Hotel in Seoul, June 26. / Korea Times photo by Choi Won-suk |
By Park Hyong-ki
Traditional banks here will have to do their part such as changing their organizational structures in order to achieve innovation and make their partnerships with fintech startups work, said Joydeep Sengupta, a senior partner and member of Global Client Council at McKinsey & Company.
"Banks have a lot of managerial talent, but I would argue that they need a lot more tech talent. That is what they are short of. But tech talent is not attracted to banks. Such people are attracted to big tech companies," Sengupta said in an interview after a forum on digital innovation hosted by The Korea Times.
"So that is why you have to change the culture, the work environment. Because these are things that are going to attract such tech talent. It is a combination of culture, talent and vision. And it is hard to make a transformation without a cultural change."
So the real question is: Are traditional banks moving fast enough to change given the regulatory support for innovation, and a market that has consumers who are fast adopters?
Sengupta said he does not think they are moving as fast as banks in other regions such as Singapore and Hong Kong.
But he added banks are making "smart" moves by joining hands with fintech companies, which, in turn, can access banks' resources and systems to boost their business.
On the other hand, banks can get access to fintech partners' products and use their technological capability.
"In my view, most fintech companies will find it challenging to scale up their business. Having a bank partner will enable them to do that," he said.
"And banks will have to invest in building a technical architecture such as an open interface system, enabling the partnership to work."
He said banks will not be able to do everything in the near future amid the unbundling of financial services.
Through such partnerships, fintech companies will be able to provide better services than banks can.
"That is why most banks are increasingly working with fintech partners. There is definitely a win-win and more cooperation in that field. This will be one of the models for the future."
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| Joydeep Sengupta, senior partner of McKinsey & Company, introduces cases of business' digital transformation at a forum hosted by The Korea Times in Seoul, June 26. / Korea Times photo by Shim Hyun-chul |
He said banks will have to "test and try" different ways to build innovative business models.
This is because there isn't one single specific model that can help them achieve digital innovation or transformation.
He pointed to Lloyds Bank, ING Group and DBS, stressing, "Their models are not the same."
However, there is a common theme that can help spur innovation.
He reiterated the importance of organizational change, workplace diversity, strong partnerships and investment in technologies.
"Banks will ultimately have to move toward becoming a platform business, and go beyond banking to build an ecosystem," the senior partner said.
He added Korea is well-positioned in many areas.
For instance, its consumers are willing to use digital channels, with 53 percent of the people here using electronic wallets for financial transactions, the highest among Asians, according to McKinsey.
"Adapt to what your customers are doing. You do not have to build everything. Let consumers participate in your digital journey. Partner up. There are a number of ways to transform," Sengupta said.
