Moscow, September 27 — “Conduct. Economy” partnering with FINTECH start-UPS gives banks the opportunity to experiment without creating a costly internal projects. But they have to act quickly, as tech giants like Facebook and Apple are also beginning to provide financial services, creating competition to traditional banking products.

The big banks know that they must keep pace with time and change. For this, many enter into partnership agreements or buy a small competing start-UPS as an alternative to creating their costly internal technology projects.

That was the message executives of banks at the Sibos conference organised by SWIFT in London. For banks, the logic of partnership is simple: it gives them the opportunity without any special technical knowledge to reveal the technical capabilities of companies like Facebook or Apple.

Since banks are heavily regulated, the prospect of cooperation with technology companies also gives them the opportunity to experiment with new products without resorting to expensive internal restructuring and not exposing themselves to the risks if something goes wrong.

“We certainly cooperate with many FINTECH companies, and to some extent this is done in order to learn,” — said in an interview with CNBC McGregor Duncan, chief development Director of Westpac. “But we also work to create new opportunities for the Bank.”

“If we created similar projects within the Bank, it would take us a lot time and it would be very expensive,” said McGregor. “The reason that it is expensive and takes a lot of time, is that in large organizations there is a policy of zero risk.”

Banks need to move fast, as the tech giants are moving towards the mass of financial services. And it is no secret that large banks know that they have problems.

Earlier this week, General Director of Deutsche Bank’s Christian Living called Google, Amazon, Facebook and Alipay — a subsidiary of payment company Ant Financial Chinese billionaire Jack MA as examples of companies that “have already taken away market share” at banks.

Technology companies in China have a huge influence on how consumers spend their money, while mobile wallets such as Alipay and WeChat Pay from Tencent, continue to gain popularity in the country.

Meanwhile, the giants of Silicon Valley are also doing well: Apple has recently launched its credit card in partnership with Goldman Sachs, as Facebook announced the launch of an ambitious, albeit controversial, project of the digital currency under the name Libra.

“They can afford to lose a hell of a lot of money to attract customers” — said in an interview with CNBC ed Makavetskas, CEO of FINTECH company Bud.

Bud with headquarters in London developing a platform that allows banks to pool their data and applications with FINTECH companies and financial service providers. Banks can also use the Bud technology to analyze costs for our customers and offer them more lucrative products.

In 2016, Bud has released an app that tried to combine financial services from different providers aggregated in a single interface. Since then, the startup has grown to a technology platform that it offers to credit institutions to stay competitive in the era of Open Banking. Technology Bud allows banks to create new services through which their customers can manage their financial products in one app.

Chapter Bud added that Apple is a “big threat” for banks because of the wide reach and huge piles of cash, and this view is shared by Sulabh Agarwal from consulting firm Accenture.

The expert believes that the main threat for banks will come from companies like Apple and Amazon, “because they have deep pockets”, so that cooperation and partnership with a small FINTECH start-UPS is a “clear way forward”.

Even Swift faces challenges in the form of new technologies such as the blockchain. And, like banks, Swift is considering cooperation with high-tech companies as a way to accelerate the pace of innovation.

One of the biggest competitors currently seen as an American company, Ripple, blockchain develops solutions in the field of cross-border payments. Earlier this year, Swift announced that it will cooperate with a competitor Ripple startup R3.

Swift, numbering 10,000 banks in its network, last year, participated in several pilot projects based on blockchain, but until this year on a substantial revision of the architecture of remittances were not discussed.

According to the representative, Ripple, Swift payments in real time can not solve the problem of liquidity in the amount of $10 trillion. The desire for Swift to be updated and progress the representative of the Ripple criticized, noting that the improvements will not change the essence. In order to achieve real progress, as stated by the representative of the Ripple, Swift needs to cease to err, the more paying attention to current realities.

In addition, the Sibos conference, the representative of the Ripple made a presentation xRapid. Ripple xRapid, he said, great is opposed to Swift, because it already solves the problems that Swift can’t even cope with updates.

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