May 13, 2019
As an innovation advisory and research firm, we wanted to provide our take on this in a very data-driven approach. We think that bank-FinTech partnerships have emerged as a beneficial path of growth for both sides. For traditional financial institutions (banks), working with FinTech startups enables them to integrate technologies for customers without having to build solutions from scratch. For FinTechs, the collaborations mean access to a broader range of customers through well-established industry names and deep pockets – this is where banks’ innovation programs and accelerators come in.
Banks and financial institutions have started acceleration programs, incubators, and innovation programs to partner with FinTechs and in some cases, to provide guidance and funding to FinTech startups.
For instance, consider BBVA’s innovation program in Spain. Carlos Torres Vila, CEO at BBVA, explains the reason behind the bank’s innovation programs, said, We are seeing now that even after so many years, all the new companies are doing the stuff that we do in a better way with a superior value proposition and lower cost because you are leveraging new technology. He also talked about newer channels. Customers are speaking with their feet; they are moving to new channels. They are clearly unsatisfied, he added, admitting that our model (brick-and-mortar) is under disruption.
Accelerator programs aim to facilitate the development of projects and provide startups with the tools to establish strong value propositions. Accelerators enable startups to have the best chance of achieving external funding and business growth in a span of 12–18 months.
Innovation labs are strategic and goal-focused and are used as tools to address very specific and individual innovation requirements. It is a fast, flexible, and creative concept that adapts to the needs of the host organization.
The purpose of this article is to understand the collaboration between banks and FinTech startups in major financial hubs across the world. Here is a chart that illustrates accelerators and innovation centers launched by banks themselves.
The United States is home to 17 accelerators and innovation programs, which are being run by major banks such as BNY Mellon, US Bank, JP Morgan Chase, and Morgan Stanley. Banks, such as Bank of America, have started multiple accelerators while Wells Fargo has launched an accelerator and an innovation program.
Singapore, being the financial hub of Southeast Asia, has 16 accelerators and innovation programs started by global banks such as Wells Fargo, UOB, HSBC, BNY Mellon, and OCBC. DBS Bank has launched an accelerator as well as an innovation program.
The United Kingdom is close behind with 12 accelerators and innovation programs by Barclays Bank, Bank of England, HSBC, Banco Santander, and Deutsche Bank.
One notable bank is RBL Bank, one of the oldest private-sector banks in India (started in 1943), which is engaging with FinTech startups through various programs and partnerships such as the Big Pitch Series, InFinIT 20 and Startup India, a government initiative. Amity Innovation Incubator has partnered with RBL Bank for startup incubation and funding contests. An exclusive branch for startups has also been set up by the bank in Bangalore to provide banking services such as foreign exchange services, remittances, cash management, and also helps with tax filing and legal compliances.
It is evident that banks and financial institutions around the world are increasingly realizing the value of collaborating with FinTechs to take advantage of their areas of expertise as well as their agility. Consequently, we have witnessed banks developing accelerator programs along with innovation labs to foster talent in the FinTech space. It is clear that banks and FinTechs are eager to leverage each other’s strengths to enhance customer relationships. Ultimately, such collaborations will only serve to provide consumers with a great experience overall in banking and related areas of service.