Global Finance’s winners are turbocharging investment in new technologies to facilitate existing systems and products while also supporting fintech innovations.
Last year was, in all likelihood, a turning point for financial technology and investment banking. While enthusiasm for blockchain may have abated somewhat, banks continue to move toward a distributed ledger future, only now with an even greater nod toward artificial intelligence (AI) and the Cloud.
For any of these technologies to have maximum impact, however, data is key. And while data is plentiful, it often isn’t easily accessible, clean enough nor sufficiently integrated with legacy systems. Meanwhile, the relationships between banks, fintechs, and “bigtechs” are evolving rapidly. Big banks no longer necessarily see fintechs as competition, and these days are just as comfortable collaborating or buying upstarts with fresh ideas. “With increasing industry convergence, the relationship between the banking industry and bigtech can be characterized as a bit guarded,” a recent Deloitte report concluded. “Banks typically need bigtech, and in some ways bigtechs also need banks, as the banking industry remains a big revenue source for many technology companies.”
Citi takes the top spot both as the Best Investment Bank for Financial Technology in 2019 both worldwide and in North America. In 2017, Citi created a global fintech joint venture between its financial institutions and technology investment banking units. “It’s been very successful servicing financial technology companies globally,” says Rick Diamond, managing director and head of Citi’s Global Fintech Investment banking group.
Since then, Citi’s Institutional Clients Group has launched several important data-capabilities initiatives in business intelligence and data analytics, according to Stuart Riley, head of Operations and Technology. Areas affected include behavioral analytics, pattern dynamics, predictive order books, machine learning (ML) and compliance surveillance using natural language processing.
“We also focused on consolidating data warehouses, analytical tools that can query multiple warehouses, and cross-business collaboration,” Riley explains. “Similar to other areas of the Institutional Clients Group, we are using modern data-science techniques to empower our investment bankers to make differentiated, data-driven judgements in our banking, capital markets and origination businesses. Automating and digitizing banker pitch material is a critical component of the future of banking.”
Globally, Riley says Citi is building tools that will enable its bankers to select templates and customize data analysis for client materials in minutes rather than hours or days, with the goal of optimizing efficiency and delivering a better client experience.
“When people think digital disruption, there is sometimes a view that it is all about retail and our consumer franchise,” says Diamond. “But technology is playing just as much a part in transforming the way we service our institutional relationships on the investment banking side. Just like in our retail business, disrupters are attempting to overcome our scale advantages in certain ways, so we must continue to invest and stay ahead of the curve to maintain our competitive advantage.”
In both Western Europe and the Asia-Pacific region, UBS takes the honor as Best Investment Bank for Financial Technology in 2019. The UBS Centre for Design Thinking & Innovation, established in Singapore in 2015, focuses on creating innovative and user-centric products to meet the needs of its deep-pocketed investor clients in the region and globally. UBS has also built a team and innovation lab in Zurich dedicated to creating innovation options for wealth management, “paving the way to enable transformation of the organization into the digital world,” according to the bank.
BBVA ranks as the Best Investment Bank for Financial Technology in Latin America this year. Data is the cornerstone of the bank’s efforts to widen the circle of opportunity in the region. “Data allows us to create solutions, to make predictions and anticipate problems, and in doing so, to better serve our customers and clients,” CEO Carlos Torres Vila said at a conference last year.
BBVA’s fintech investments are global. Through its San Francisco–based venture-capital vehicle, it recently invested in around 10 mid-level companies. The bank has also backed Propel Venture Partners, a fintech investment fund, with an investment in India-based Groww and Grabango. In Germany, BBVA has invested in solarisBank, a tech company with a banking license that enables fully compliant digital transactions for other businesses. Last year, BBVA launched Open Marketplace, a service for start-ups that matches small businesses that need advice or services with BBVA expertise.
In Africa, Rand Merchant Bank is Global Finance’s Best Investment Bank for Financial Technology of 2019. The bank’s innovation hub, The FOUNDeRY, was created in 2016 to accelerate Rand Merchant’s digital transformation effort. What started as a small team providing space to experiment with new ideas and encourage people to challenge and think differently has turned into a large team of software engineers and creative data scientists. “We realized that a digital future in banking is essential to become more relevant for our clients,” unit head Liesl Bebb-McKay has written. “We are able to do this in the FOUNDeRY, as we understand technology as well as banking and are able to challenge everything we know about how banking is currently conducted without taking the focus off our existing business lines.”
In the Middle East, GIB Capital, a unit of Saudi Arabia’s Gulf Investment Bank, took the title as Best Investment Bank for Financial Technology 2019. GIB Capital launched meem, Bahrain’s first fully digital bank, which is also the first Shariah-compliant digital bank in the region.
Rounding out our list of Best Investment Banks for Financial Technology is the winner for Central and Eastern Europe, Russia’s Sberbank, which last year launched a joint-venture development program for Russian IT start-ups. The joint venture was created with international accelerator 500 Startups. Sberbank additionally has invested a total of about $400,000 into six start-ups created by its own employees, aiming integrate their ideas into its own ecosystem. Among the winners are Payzakat, which secured five million rubles (about $80,000) for its platform for collecting and distributing contributions to the poor from members of the Muslim community, and GetMeBack, which won four million rubles for a digital loyalty program builder.
As the digital evolution becomes more critical to the bottom line, Global Finance continues to evaluate investment banks for their approach to financial technology—and to fintech firms. Many banks continue to rely on a patchwork of legacy systems that can pose significant risk. As they consider adopting newer technologies, such as machine learning and AI, these legacy systems also threaten to slow the pace of growth. The good news is that most banks, mindful of these risks, appear to be taking a slow-and-steady approach to their deployment of—and investment in—new fintech solutions.
BEST INVESTMENT BANK FOR NEW FINANCIAL TECHNOLOGY 2019
|Central & Eastern Europe||Sberbank|
|Middle East||GIB Capital|
|Africa||Rand Merchant Bank|