Digital Finance, Cryptofinance Daily News | Innovation, Transformation
Financial Year Financial Year
Digital Finance, Cryptofinance Daily News | Innovation, Transformation
 
 


              



Bankers Are From Mars... Fintech are from Venus


It is not news here, or anywhere else, but bankers and fintech entrepreneurs are from different planets.



JP Nicols
JP Nicols
They are just wired differently.

Just a few years ago, all of the fintech companies wanted to put traditional financial institutions out of business. Disrupt the industry!, they said.

Despite the fact that we still have over 6,000 banks in the U.S. alone, plus a similar number of credit unions, the industry has been disrupted. But acquiring new customers at scale is hard for fintechs, and now the talk is about the value of fintechs partnering with financial institutions, instead of trying to put them out of business.

That’s not necessarily any easier, it’s just a different kind of hard.

Many have focused on technology integration, getting new apps and systems to work with banks’ aging technology infrastructure. The technology-driven nature of many new innovations makes this necessary, but it is not sufficient.

Successful partnerships between fintech companies and financial institutions need go beyond technology integration to address these three elements:

The Three C’s of Bank/Fintech Partnerships Cost

Building out an internal innovation team is not cheap. That’s why so few FIs have them, and why an increasing number are adding what I call “And-I’s“– employees with “and Innovation” tacked on as an additional responsibility to their existing job titles.

Banks and credit unions are recognizing the increasingly urgent need to update their products and processes to stay relevant with their customers and members, but searching for, evaluating, and vetting potential partners takes a lot of time and money too.

Often overlooked though is the cost of an inefficient innovation process carried out part-time by inexperienced people. Common traps include devoting too much time to planning and defining user requirements, and not enough time actually testing new ideas; and pursuing a random collection of “interesting” projects that do not tie into the organization’s strategic priorities.

Culture

Most senior executives at financial institutions have spent at least part of their career in a lending role, where they needed to make the right decision just about 99% of the time over the long run.

Entrepreneurs experiment with new ideas with an aim to fail fast and fail cheaply, because each iteration and pivot gets them closer to the right answer in the market. The venture capitalists investing in these companies know that close to half (or more) of them will fail.

Most banks and credit unions are not going to be leaders in product innovation, so partnering with more nimble fintech companies makes sense.

But partnering takes more than simple introductions between two different parties with vastly different approaches.

Successful partnership requires FIs to address their own culture to create space inside their own organizations that embraces change. Fintech companies need to understand the conservative nature of their potential FI customers and adjust their sales and development processes accordingly.

Compliance

Fintech companies also need to understand that the ‘move fast and break things‘ ethos of Silicon Valley does not work inside a highly regulated environment.

Every new solution, no matter how cool the technology, has to be compliant if it is going to be used by a traditional financial institution. There is simply no other option.

At the same time, FIs need to recognize that regulation is always going to lag innovation, and they must take a more proactive approach in trying new ideas. The most innovative banks, credit unions, and fintech companies all have proactive relationships with regulators to try new ideas that will still be compliant.

Choosing to sit on the sidelines out of fear is not an effective risk management strategy.

Improving Interplanetary Relations

Yes, bankers and fintech entrpreneurs are from different planets, and I’ll leave it up to you to decide which ones have more inhabitants on Uranus.

It’s time to improve interplanetary relations. Bankers learn about the 5 C’s of credit in their first days of training, maybe it’s time they learned the 3 C’s of Fintech Partnerships.

JP Nicols, CFP®

Internationally recognized as a leading voice for innovation, strategy and leadership for the future of financial services, JP combines 20+ years of experience with a fresh perspective on combining high-tech with hightouch. His work has been featured in some of the industry’s top publications, including American Banker, BAI Banking Strategies and Investment News.

He is the founder and CEO of Clientific, and the co-founder of the Bank Innovators Council.

www.clientific.net
www.bankinnovatorscouncil.org/



Les médias du groupe Finyear

Lisez gratuitement :

FINYEAR

Le quotidien Finyear :
- Finyear Quotidien

Sa newsletter quotidienne :
- Finyear Newsletter
Recevez chaque matin par mail la newsletter Finyear, une sélection quotidienne des meilleures infos et expertises en Finance innovation & Digital transformation.

Ses 5 lettres mensuelles digitales :
- Le Directeur Financier
- Le Trésorier
- Le Credit Manager
- The Chief FinTech Officer
- The Chief Digital Officer

Finyear magazine trimestriel digital :
- Finyear Magazine

Un seul formulaire d'abonnement pour choisir de recevoir un ou plusieurs médias Finyear

BLOCKCHAIN DAILY NEWS

Le quotidien Blockchain Daily News :
- Blockchain Daily News

Sa newsletter quotidienne :
- Blockchain Daily News Newsletter
Recevez chaque matin par mail la newsletter Blockchain daily News, une sélection quotidienne des meilleures infos et expertises en Blockchain révolution.

Sa lettre mensuelle digitale :
- The Chief Blockchain Officer

Vendredi 23 Septembre 2016
Notez


Nouveau commentaire :
Twitter

Your email address will not be published. Required fields are marked *
Votre adresse de messagerie ne sera pas publiée. Les champs obligatoires sont indiqués avec *


Recevez notre newsletter quotidienne comme plus de 40.000 professionnels de la gestion et de l'innovation financières

Livres Blancs




Blockchain Daily News