We’re excited to be participating in FinTech Week in New York with two marquee events, the FinXTech Annual Summit and Empire Startups' FinTech Conference. A major theme in FinTech and at the conferences is partnership between incumbent financial institutions and FinTech companies. In the spirit of this partnership, we wanted to turn things around a bit and have a FinTech company ask the question.
EquityZen’s founder, Shriram Bhashyam, asked a simple, direct question that I think can help give insight on partnerships.
“What are the biggest items large banks screen for when vetting FinTech startups for partnerships?”
We took this question to those attending FinTech Week and we found our answer with, Thomas Jankovich, a Principal at Deloitte Digital, and Financial Services Innovation Leader. Thomas said:
“I would say these are the two biggest items (other than the typical venture capital metrics): first, banks want to understand the ability of the startup to scale and the cost/infrastructure implications thereof. There is a lot of proof of concept fatigue and everyone is looking to move out of the lab and into industrial scale.
Second, they truly want to understand the complexity and cost of using the startup within any specific domain. Here is it less about the features and functionality of the startups offering, and more about the ability to extricate an old, inefficient process and integrate the new offering. One cannot underestimate the fear/risk of unintended consequences of tinkering with something very old and very fragile”
Thomas’ answer highlights work still to be done on identifying the best working relationship between FinTechs and large banks. The industry continues to experiment, searching for the ideal pathways to engage with the active FinTech ecosystem of startups, innovation programs, and new technology (and it’s why we built MEDICI).
“What are the biggest items community and regional banks screen for when vetting FinTech startups for partnerships?”
“First and foremost, who is the management team? What are their qualifications? What is their experience? With whom do they surround themselves (Board, Advisory Board)? Can I trust them? A lot of the times, banks will just cut to the chase and ask, 'What other banks are using the solution?'
"How do they communicate? Are they responsive? I think you will get this as an early-stage company. They will be consciously and subconsciously gathering data about you to figure out the answers to these questions. For example, if you say you are going to contact them on Tuesday about setting up a demo and you fail to do that, it’s probably going to count against you. Obviously, doing what you say you will do and meeting or exceeding expectations on the front-end will help you establish trust.
"And finally, are you listening and trying to solve my problem or just trying to sell me something?”
Matt’s emphasis on the relationship too often overlooked by startups and incumbents. There is a lot of focus on the technology, products and services, and “disruption” but perhaps not enough people are asking ‘can, and should we work together?’ Banks are protective of their customers, rightfully so! It’s a good reminder that the foundation of business relationships are with the people adding value, not the enabling technology.
So it’s only fitting we’re going to meet industry professionals at FinTech week to foster FinTech collaboration and partnership. It’s the ongoing discussion and engagement that propels the FinTech ecosystem to mature, evolve, and find the path forward in financial services.
We hope to see you next week!