Alex Manson, global head at SC Ventures, a fintech-investment unit of Standard Chartered Bank that officially launched on March 1, says the bank wants to back insiders to set up their own businesses that will directly challenge the bank’s status-quo operations.
“The idea originated from the fact that we have big ideas driven by client activity,” Manson told DigFin. “Some ideas are easier to test outside the banking framework.”
Singapore-based Manson, previously StanChart’s head of transaction banking, says the bank set up SC Ventures to find internal people who understand client pain points, and who are eager to set up their own fintech companies – with SC as a minority shareholder.
“It’s not about the tech,” Manson said. “It’s about the processes.” Banks run large-scale businesses geared around efficiency, which usually requires standardized processes – an environment that does not foster innovation.
Back your competitor
The bank’s corporate venture arm already invests in third-party fintech firms and backs accelerators such as Hong Kong-based SuperCharger. But corporate VC typically does not actually set up independent businesses.
Manson reports to Michael Gorriz, chief information officer. He says SC Ventures will provide seed capital and a sandbox environment to internal people willing to make the jump and become entrepreneurs, although at some point these people will have to seek third-party funding. The hope is to combine the inside knowledge with the external, fintech attitude of disruption. The challenge isn’t finding people with ideas, but finding people that Manson’s team is confident can execute and scale their idea.
“We want to see people set up to change the way we do things,” Manson said. “You need to accept you’re creating a new competitor. You need a willingness to cannibalize your own lines of business.”
Hunger game
But just how “entrepreneurial” will these SC-backed fintechs prove to be? The bank can mitigate rent and let these incubated companies share in its I.T infrastructure, as well as access sanitized data – a lot of cost and risk removed for startups.
This is a far cry from most fintech entrepreneurs, who have no such cushions on their P&L and who have little prospect of being able to ask for their old job back. Will they end up hungry enough to really challenge the bank’s process-dictated ways?
“At some point they [the entrepreneurs] are on their own,” Manson said.
