During a recent event hosted by fintech venture capital firm Canapi Ventures in New York City, financial services professionals discussed ways for banks and fintech firms to innovate faster by changing the traditional ways they approach forming partnerships.
Banks can’t expect early-stage financial technology companies to behave like established vendors, panelists said, adding that banks should rethink their onboarding and procurement processes with that in mind. On the flipside, fintech companies should recognize that banks are not like other customers and that regulatory and cultural factors may force banks to move slower and require additional levels and types of engagement. As such, fintech companies should adjust go-to-market strategies and projections accordingly.
Early-stage fintech firms should view banks as design partners, and banks should view fintech partnerships as external research-and-development investments. While a fintech partner may not have every answer at the beginning of a relationship—and banks may not know exactly what they want at every turn—the partnership model has unique benefits for both parties if approached collaboratively. Panelists also noted that a “quick no” is better than a “slow maybe,” adding that banks should remember that most startups are working against a ticking clock. Bank-fintech projects would benefit from more discipline about goal setting, defining proof-of-concept objectives and moving quickly to yes-or-no decisions.
Fintech firms also should make partnering with banks as easy as possible. Panelists noted that putting “easy wins” in place—such as strong documentation, easily accessible audit logs, regular infosec certification, updated financials and due diligence questionnaire responses—can help expedite the partnership process and make fintech firms stand out in their field.
Editor’s note: ABA is an investor in Canapi’s two venture funds and member of the Canapi Alliance. Learn more.