Ex-Goldman executive: US banks need a new take on tech
The banking industry needs to take a different approach to developing new technology if it is to keep up with innovation in fintech companies, according to former Goldman Sachs Asset Management director Sheila Patel.
Growing competition from start-ups has helped spur spending on major U.S. banks, but they could be better served by buying or partnering with tech companies rather than focusing on building in-house, said Patel to the Financial Times.
“Sometimes think tanks and incubators work, but sometimes the best ideas come from outside your community,” she said. “Financial institutions of all sizes, but particularly large financial institutions, need to find ways to engage in innovation outside their walls, as it is moving in that direction anyway. “
Patel, 52, announced in December that she was retiring from her post as president of the $ 2 billion asset management arm of Goldman Sachs after 30 years in the banking industry. After working at the company in various management positions in Europe and Asia, Patel made a name for herself taking long-term bets in emerging markets that others deemed too risky and was appointed one of Fortune’s Most Powerful Women in Banking.
This month, she will join venture capital firm B Capital, backed by the Boston Consulting Group, which funds tech companies aiming to modernize traditionally manual and bureaucratic industries such as banking, known for its cumbersome legacy technology systems.
“We spend a lot of time talking about our physical infrastructure, and anyone who walks into any airport in the United States or drives on any road thinks we have work to do, but our digital infrastructure for businesses also needs investment, ”she said. .
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Most of the innovations in the financial sector were happening outside the United States, said Raj Ganguly, one of the co-founders of B Capital. Typically, the company allocates its $ 3.5 billion in capital equally between the United States and overseas, but in finance, around 80 percent of investments are made outside the country, mostly in Asia.
“A fintech entrepreneur in the United States is basically building things on very good existing rails,” Ganguly said. “Fintech entrepreneurs in India or Indonesia, they build everything. “
Patel said the challenges of innovation in finance were mirrored in healthcare, another area of interest for B Capital – and for Patel personally, who was completing cancer treatment when the coronavirus pandemic hit. Last year.
“If it weren’t for some of the telemedicine technology, how would I have talked to my doctors? How would I have known what to do about my treatment? ” she said. “There are so many things that can be made more effective. “