Time to Embrace Fintech

By Kathleen Craig

As investors across the country clamor to get in on the hottest fintech companies, why are the majority of banks sitting on the sidelines while their competition is created? There is no doubt that fintech is hot right now.

Fintech companies received $7 billion in funding in January 2016 alone.

However in a booming ecosystem of high valued, well-capitalized startups, the majority of U.S. banks have chosen to sit on the sidelines and not engage.

At a recent bankers’ conference, 99% of attendees did not know a single one of the hottest fintech startups. Banks of all sizes have got to invest in this fast paced growing ecosystem or they will be left behind.

The most innovative banks have already figured this out. BBVA, USAA, JPMorgan, Citibank, WellsFargo and Barclays are just a few that have come to the table.

Are these innovative banks using these investments as a revenue generator? Not really. While they may make a return on the investment, the real return is becoming a part of the ecosystem.

There are several great reasons for banks of all sizes to be involved:

  • You get a first look at what is coming, whether it be a cost savings tool, process automation or an edge on customer experience.
  • You can help guide and mentor the companies you are most interested in.
  • You get the opportunity to learn from the mistakes and successes of the startups. Startups are much more flexible and can experiment and iterate much more quickly at lower cost.

These do not need to be large funds with a large portfolio, but by having some skin in the game, banks will be able to see what is out there before others do.

Google created Google Ventures so that they are aware of what people are creating—so they can be a part of the startup ecosystem. Now many of the world’s most innovative and talented entrepreneurs are coming to them. Contrast that approach with Yahoo, which has not had an investment arm.

The auto industry is another example where this could have and should have happened sooner.   As a Michigander, I have a lot of support and love for the auto industry. But for an industry founded on innovation, where were they? It took Tesla to come in from the outside and disrupt the industry. GM has now become an active investor and made a few headlining acquisitions, but where is Ford?

Bankers, by investing in fintech you will also help more startups work with you, instead of going around you.

Today, the majority of fintech startups are going straight to the consumers. Why are they using that model?

That is the model the venture capitalists investing in fintech know and understand.

 When you are a boot-strapped fintech startup in need of funding to grow your great idea, your options are:

  • Partner with highly regulated, risk averse banks with long sales cycles that take an average 12 months to buy.


  • Pitch fast growth, business to consumer (B2C), user adoption models to risk tolerant VC groups.

Which would you pick?

If we want to change the landscape and be at the table, we need to actively participate and not watch from the sidelines.

Here are 8 ways to jump your bank into fintech:

  1. Support fintech start up accelerators
  2. Create innovation labs within the bank
  3. Create separate mobile or tech charters
  4. Start a seed fund and start making investments
  5. Acquire fintech companies
  6. Beta and buy fintech solutions
  7. Join forces to support the most promising fintech companies
  8. Join forces with other banks to create network effects on key solutions

If you are in banking, you are in fintech. It doesn’t matter what your role is. We all need to actively participate in this industry shift.

Actively use technology, attend industry conferences and learn from experts. Play with new services—take an Uber, order a rapid pick-up, sign up for a mobile-only bank, order your food delivered from an app, get a loan online and open an online-only account.

We cannot afford to sit and watch, we need to actively engage and team up to be a part of the way forward.

Kathleen Craig is the President of HT Mobile Apps. Kathleen has been in banking since 2008, most recently as the consumer eServices leader at a community bank in Michigan. Kathleen’s specific focus in digital channel strategy gives her insight into the latest mobile banking trends. She founded HT Mobile Apps to push beyond traditional mobile banking platforms to find fun, innovative ways for community banks to tap into the app experience. Email: [email protected]. Twitter. LinkedIn.

Hear more from Kathleen when she presents at the ABA Bank Marketing Conference, September 25-27, 2016.  We look forward to seeing you in Nashville!  

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