GIC Says Big Banks Can Beat Fintech Startups (If They Hurry)

(Bloomberg) -- One of the world's biggest sovereign wealth funds says traditional banks can weather the rising tide of fintech rivals if they build similar offerings like mobile banking services before regulators open the flood gates.

Singapore-based GIC Pte won't say exactly how much it manages, but it's a mammoth fund estimated by the Sovereign Wealth Fund Institute to oversee around $390 billion in assets globally. Its investments span old school financial services players such as UBS Group AG, as well as fintech startups like N26.

“You suddenly have a bunch of people from outside of the sector coming in, and you notice that the regulators are also more open minded about that because I guess technology has improved and many of these new fintech players also have very credible business plans,” Chief Executive Officer Lim Chow Kiat said. “Every company needs to embrace technology,” he said, adding that if firms weren't, that's “a warning sign it might not survive.”

His comments come as regulators globally start to adopt licensing programs that could throw the traditionally staid banking industry open to internet companies. Singapore announced last week it was issuing as many as five new digital bank licences while Facebook Inc. announced in June it plans to use a mix of blockchain technologies and partnerships with payments processors to launch a new cryptocurrency called Libra.

However, GIC Group Chief Investment Officer Jeffrey Jaensubhakij said banks had a chance to defeat their fintech competitors if they moved quickly enough and utilized their vast troves of customer data. Newer financial-services startups in many parts of the world are still trying to convince customers to switch providers.

“We're still in the early stages and it's an interesting thing that the industry hasn't been taken over as much by technology startups as you would've thought,” Jaensubhakij said. “If the banks themselves can quickly disrupt and provide convenient mobile services and so on, in a sense, it keeps the fintechs at bay.”

To contact the reporters on this story: David Ramli in Singapore at dramli1@bloomberg.net;Joyce Koh in Singapore at jkoh38@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Stephanie Phang

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