Standard Charters SC Venture's is focused on operating in the metaverse with meaning. Investing sustainably is at the heart of the disruption SC Ventures is trying to acheive. Alex Manson Global Head from SC Ventures explains the infrastucture they are building to make this dream a reality - as digital assets are here to stay.
Walter Jennings: Welcome to Waves in the Finoverse. I'm Walter Jennings, the host of a podcast brought to you by Finoverse. We're talking with the wavemakers creating ripples, waves and tsunamis across finance, crypto, FinTech, Web3 and beyond. Listen weekly to hear the changemakers talk firsthand about their experiences in this dynamic industry.
Welcome back to the Waves in the Finoverse. I'm joined by Alex Manson with SC Ventures, that's part of Standard Chartered, but it's a somewhat new business unit. Can you introduce us to SC Ventures?
Alex Manson: Sure, thanks Walter. SC Ventures is a business unit of Standard Chartered, backed by Standard Chartered. We built ventures outside of the bank, we experiment with new business models, we do things slightly differently. We also serve as a platform for the bank to transform itself. And we work together in partnership with a number of FinTechs. Be it in the context of the Ventures we build or in the context of the bank, and at times we invest in these partners.
Walter Jennings: So earlier, someone might have called this an incubator or a co-development space.
Alex Manson: Sure what people what you want to call it, we certainly incubate ventures that is correct, we operate them to some extent as well. We also behave like investors in the sense that everything has to have commercial viability and make financial sense. And we also, that's very important, serve as a platform for the bank to transform itself and also engage with these foreigners, engage with FinTechs, engage with other players that will help us transform the industry and rewire the game banking.
Walter Jennings: Yeah, I was just going to ask you that question. Because you had said you're looking to rewire banking DNA. What do you mean by that?
Alex Manson: So first is banking. So we obviously focusing on our bank in the first instance, but we think if we do a good job, we'll take banking with us, including the whole ecosystem, its stakeholders, policymakers and the likes. There's a lot to do there.
Second, there's an element of it's about technology. Technology is a very critical enabler. So rewiring has an element of digital, and that's important. But most importantly, it's about business models, meaning people business, the way they do business, culture, mindset, DNA. So DNA is here, some ways to say it's not so much about the technology, it is about culture and mindset the way of doing things.
Walter Jennings: Okay, so you're coming from the world of CeFi or a centralised finance, that everyone talks about DeFi. How is the bank adjusting to the future of finance?
Alex Manson: The bank has been adjusting for a number of years already, right? The bank is eminently aware of the fact that society is evolving. And society has expectations from financial services and banks in particular, that banks better fulfill. And so we're very intent on ensuring that we fulfill society's expectations of finance.
That means we have to serve clients the way they want to be served, the way they need to be served. And that's across a number of different spaces, be it consumers wanting to integrate lifestyle and digital banking, be it SMEs, world trade supply chains, which are so critical to the growth of the markets where we operate and GDP pretty much everywhere. And in the context of digital assets. And specifically, you know, we're talking about DeFi and we think digital assets are here to stay. I'm not saying Bitcoins going up or down. I'm saying digital assets are here to stay. I'm saying the metaverse is going to become an integral part of our lives and we better accept that fact first, but also embrace it.
Walter Jennings: Yeah, I think once an industry starts to digitise it's very hard to go back. I'll probably never buy music in a traditional format again.
Alex Manson: That's an interesting point. It's hard to reverse things so we say sometimes you cannot uninvent fire, you can learn to deal with it, make it not dangerous, but they - humans invented fires. They, you know, it's there. And this is true of pretty much every major innovation we've seen over the course of history, digitization is one of them and the way we live our lives today is has evolved and will continue. It's huge.
Walter Jennings: We've all certainly since COVID, the way we work, the way we bank, the way we operate is changed.
Alex Manson: Considerably major accelerator, right?
Walter Jennings: Yeah, definitely. So much of technology has been adopted in the last three years. It's fantastic.
Alex Manson: COVID has been obviously tragic for so many people, and in many families and in a number of different ways. One silver lining is it was an acceleration for lots of innovation. A chief innovation officer, you know, couldn't have done it better in some ways, sort of in terms of digital adoption, digital acceptance, the way ecommerce has grown and that is inexorable. You know, serving the online economy obviously, is one of our themes and that has accelerated and...
Walter Jennings: Alex, the toothpaste is out of the tube, it's not going back. So it's really keep moving. Since SC ventures fund opened in 2018, you've got more than 30 Ventures, 22 portfolio companies, more than 2700 FinTechs in your community and I may have the numbers wrong, but it's clearly grown. What's criteria do you deploy when deciding to work with or invest in particular technologies and companies?
Alex Manson: So in the element of relevance, so what we define as relevance. By the way, your numbers aren't that wrong, it's it yes, you're separate from nothing four years ago, it has grown it has become meaningful, which we are humbled by congratulate. And it's a privilege to be at that juncture, but the point is relevance, we want to reward the dean in banking means being relevant to societal needs and clients needs serving clients the way they want to be served. The themes I've outlined via digital assets, SME supply chains, digital banking, sustainability, have received financial inclusion, our themes, and we build ecosystems. Along these themes of ventures, which we've created. Partners we work with, FinTechs we engage with, these are very powerful in their own right. But as an ecosystem that plugs into each other a capability to venture into a bank and bank with a partner. They become infinitely more powerful. And I would say transformationally powerful for industry. That's how we deploy capital.
Walter Jennings: Okay, Alex, there are some 60,000 attendees here at Singapore FinTech Festival. We've got six halls, it will take you quite a while to make the march from one end to the other. What are the technologies that excite you? What are you looking for today?
Alex Manson: I go back to our themes and in going, less about what I'm excited about and more what clients need and are excited about. And so it's the space for a start. We've talked about metaverse, and Web3, the infrastructure around this is being built. And I think this is very important. We predict that this is going to become an integral part of our lives. But for this to happen for mass adoption to adopt and for institutional adoption to happen. We need to build a robust infrastructure, and we need trusted people to operate that infrastructure in a safe, robust, compliant way. That's very important. That is attractive to us. And we're investing in that space.
Walter Jennings: Yeah, definitely. Alex, we understand that FinTechs is an ecosystem. And there are providers offering different tranches, or slices of the solution. And it requires someone to knit it all together.
Alex Manson: And then live in of that. And you know, what the power of that is pretty much as you articulated, there little nimble actors, sometimes a very small startups, sometimes a large established corporations or banks. But the point is, they're all different actors of an ecosystem. Today, technology enables us to plug things into each other very seamlessly, very quickly. And this is a lot more expedient than say, buying something, buying a company, which has a whole host of cultural and integration issues. So building these ecosystems or actively orchestrating it, to some extent, very importantly, putting it all together is exactly what we set out to do.
Walter Jennings: Now, on one of my business, many business trips, I came home with a fake legos for my son, and he was horrified. All of the pieces fit together, but they don't quite snap in. How do you make sure the ecosystem is seamless across all of these different elements and plugs?
Alex Manson: What did you control in as a bankruptcy compliance, which sounds a little pedestrian, but it's very important. The fact that we have standards that are being worked on. And to me, this is part of infrastructure in a broader sense, regulatory framework standards, people agreeing on doing things in a certain way, the way we're going to use an API and call an API or plug a capability into an open-ended, open architecture platform. They're part of the infrastructure that we use to make things work. So we don't have that legal problem and things really fit together.
Walter Jennings: And I certainly know at institutional level, it's so important that things are regulated and looked after, but it seems a little bit contrarian to the spirit of blockchain, which was supposed to be getting us away from centralised finance and providing us decentralised tools.
Alex Manson: I get it. It's not inconsistent at all. It's not inconsistent. We can operate in a decentralised way, we can always...
Walter Jennings: to several standards?
Alex Manson: it's just certain standards.
Walter Jennings: Exactly.
Alex Manson: And there's an element of understanding that these things are not only not incompatible, but actually think they're good together. And so a lot of what we do what we'll say "Well, you know, part of our DNA is that we know what it takes to operate in a hyper regulated environment". That's not a bad thing. It's part of our DNA. And so we bring that to the table, there may be a cost associated with it, we might slow down a venture of hours here, and here and there. But the positive differentiation associated with providing something an institutional grade, bang grade is worth it. If you weren't worth it, then we shouldn't be doing it. But this is part of what we do. Absolutely.
Walter Jennings: Now, we're at a juncture where the FinTech isn't necessarily environmentally friendly, because we have crypto accounts for more carbon emissions in the whole of the Philippines. How can banking increase sustainability in the FinTech sector?
Alex Manson: Obviously, we've talked a lot about the environmental impact of cryptocurrencies. A lot of this is being worked on and being addressed by the industry itself. I won't get into that, you know, Gen Z. I would say that first sustainability is one of the overarching themes, I would argue that 100% of The Ventures we incubate, have something to do with ESG one way or another. Being financial inclusion, being sustainability, the environment, essentially doing well by doing good is a very important things and you know. A bunch of purpose minded people will want to know that they get out of bed in the morning to do something that is worthwhile worth doing for the world and society. That's the way you operate number of FinTechs will also have sustainability at the core right? Can we match deposits from digital banks with a green loan book? Can we provide ESG forensics on a supply chain? If I can provide ESG forensics on a supply chain? Can I help manage it? Can I make it more financeable? Can I trade these things etc, there are a number of our ventures will actually have sustainability at the core of their business model, which is another way to think about it.
Walter Jennings: It's nice to see the rise of purpose and the importance that companies are placing on it.
Alex Manson: And it's super important. And remember financial services, as a very important member of society have a role to play.
Walter Jennings: Now, Alex, I really regret that we're here in a podcast booth at Singapore FinTech Festival when we really should be meeting in the metaverse. So tell me how do you see the potential for the metaverse and what does that mean within SC Ventures and some of the companies you're looking at?
Alex Manson: Well, first, that sounds like a date. Right. So we will meet in the metaverse. So that's a pledge right here. Metaverse is obviously going to play a role in our lives. It's so a bit of an analogy with web to where we started developing an infrastructure a long time ago, which over time was leveraged across many things. And we don't even question what happens when we hit "send" to send an email and the whole infrastructure behind it. I would argue that today we are building infrastructure, which will be leveraged across many use cases. Do we know exactly what the use cases are? No, not at the moment. Lots of gaming in the metaverse, do we know what it'll be useful for? Well, I guess healthcare, I guess education. Certainly financial education is one of the things. What I do know, is our clients care. I do know that are the consumers will be its corporates, they care. Because things will happen in the metaverse as a result of which we as an industry need to care. And we need to be prepared to operate in that space. And that's exactly what we're doing. That's what we bought a bit of land in the metaverse in the Hong Kong sandbox. That's what we building that space, in fact, in cooperation with hundreds of apps, not just to put a logo or an avatar, which is interesting for five minutes. But you know, at some point you want something to do. At some point, we may spend more money on our avatars than we spend on ourselves. And they will have financial needs. And that is driving a whole bunch of new needs, but also new businesses for every industry I can think of.
Walter Jennings: Yeah, no, I heard a great story of being able to create, say, an island in the metaverse that everyone wants to come to. And if it proves to be very successful, you could lease out a portal where people who have less popular islands would provide entry way so you could monetize your successful island in the metaverse and where better to bank then with Standard Chartered in the metaverse.
Alex Manson: Absolutely. And for the time being I think people are learning. It was versus monetizing a lot of these use cases, the use cases will emerge. And in that learning is absolutely important.
Walter Jennings: Okay, and what are some of the hot areas that you're getting into or looking at investing in? What are some of the technologies that intrigued you?
Alex Manson: So back to the themes, the technologies would be derived from that, right? So we believe in integrating people's lifestyles, and ecommerce and transactions and financial services. People don't want to go to a bank just for the sake of going to a bank, they live their lives, they do things that transact they need financial services embedded in this. The online economy has grown, you know, as we said earlier, on the back of the pandemic, but for a variety of other reasons, we need to do a good job serving these industries.
So a whole array of ventures and capabilities in that space. We believe digital assets are here to stay and we're building this infrastructure to make it happen in terms of institutional and then broad scale adoption. And then SMEs, world trade supply chains. Trade is good, trade is important, trade is a factor of welfare and GDP growth, which the world still needs. And and so building building an ecosystem for SMEs and serving the forgotten middle well, so technologies that are applicable in that context, plenty, obviously, very little, doesn't have to do with data science, right? Data science is on the presence, there's an element of ingesting the data, there's an element of keeping it safe. There's also an element of putting it to good use and data science, which people talk about AI, ML, etc. are is absolutely at the heart of pretty much everything we do in terms of the ventures, infrastructure, I've talked about it in detail, we can't say it enough, if we hold cryptocurrencies, someone has to keep them safe. If we if we trade them, it has to be done in a certain way. So the whole infrastructure for digital assets is very important to us.
And then, you know, I will say we've talked a lot about blockchain and which is essentially the next generation of Ledger's, we've talked a lot about cloud computing, which is the way forward. I would broadly include these technologies as part of the broader concept of infrastructure for the future, which we banks, financial services, generally speaking, the economy has to learn to deal with and evolve, and all of these technologies and capabilities are relevant to us today.
Walter Jennings: Now, Alex, I can only imagine that if you were to bring a portfolio of FinTechs and DeFi companies and blockchain companies into a traditional bank, you might see looks of incredulity, and how Standard Chartered, being a large conservative global organisation has its own style, how are you helping make the change from within?
Alex Manson: Sure. So Standard Chartered.. By the way, we're bank, therefore, we conservative, but we also pioneering and have a history of operating in really difficult markets, which is.. So there's no one of culture even in banks people take risks and they want to move forward as opposed to live in the past that you know that everything's an important point to make. I think it applies to most corporate clients, corporates we deal with as well. The answer to your question, though, is it's very difficult to change an established business model from within, when you think the change requires a different business model. And so the challenge is not so much that people don't want to change or conservative. The challenge is that set up in a certain way to, they operate in a certain way and that setup doesn't lend itself to operating in a different way. And that is why we built SC Ventures, is the combination of working outside the bank and working inside the bank.
And we think the combination of these things is transformation. The powerful things is a flow of information as a flow of people, some extent is the flow of capital between both, but the point is outside the bank is the place to operate different business models that can down the line be emulated replicated, perhaps simply taken into account by the existing business model. And the bank is a source of inspiration, ideas, clients. People in the bank sort of bring us ideas, things that they want, want to do, and that virtuous cycle of information flow is very powerful. But the point goes back to you have to operate both inside and outside if you're going to operate a successful corporate transformation.
Walter Jennings: Alex with our millions of listeners or perhaps thousands of listeners, there are many founders and companies,scale ups, etc. What is the kind of organisation that should be reaching out to you and you should be hearing from as potential partners with SC Ventures?
Alex Manson: So, it's a broad question, it depends a little bit on the activities of these companies and so forth. But you know, I think generally speaking, we're absolutely looking for partners in everything we do. They can be partners to help us scale a venture, they can be partners that can help us add capabilities to the bank, or we're building capabilities that we don't have, we don't really want to build anything to the extent it exists already. And so to the extent these capabilities are out there. Then we'll engage will ever try and replicate them, they exist will incorporate them and work together with these partners. All the portfolio companies that we have, where we invested minority stakes are companies we work with one way or another and capabilities that are relevant for the ventures we're building for the bank itself for the themes we want to invest it on.
Walter Jennings: Well, fantastic, Alex, it's really been eye opening to understand more about SC Ventures and how you're revolutionising and bringing in these new technologies and giving them a home within a very progressive bank. That's bravo to you.
Alex Manson: I like the concept of a home. That sounds nice. Maybe virtual, but it's a home still.
Walter Jennings: Home is where the Wi Fi auto connects.
Alex Manson: Great. Exactly. And I hope as many people as possible will feel comfortable there.
Walter Jennings: Now Alex, we try to end our programme with a segment we call tracks in the Finoverse. So when you think of the metaverse and the future and money, and technology, is there any music that's playing in the background? What song would you like to take with you into the Finoverse?
Alex Manson: You know, it's going to be care intuitive, but you know, I would start saying no, it's classical music. This is what I listen to all the time whether I work out or you know, otherwise it's you know, classical music and then you think of the metaverses, it's very exciting. It's vibrant. There's a lot of things going on. It's a little confusing, so we'll slow down a bit and I would say is the first prelude of Bach Well Tempered.
Walter Jennings: Okay, well, that is phenomenal track to take into the Finoverse. Alex Manson, heading SC Ventures part of Standard Chartered. Great to have you on Waves in the Finoverse. Thank you so much for your time.
Alex Manson: Thank you.
