Written by Jessica Galang
Over the past year, banks have shown an eagerness to confront the disruption they face from startups by joining them instead; banks like CIBC and financial institutions like Visa are regularly announcing partnerships. This trend towards partnerships over direct competition definitely shone throughout the day with several panels dedicated to the ways bank could partner with startups, and startups’ opportunity to take advantage of this eagerness.
“As an incumbent, there’s so many barriers to innovation — first is the cultural barrier, and the information flow in incumbent business is so structured,” said Paul Desmarais III, executive chairman of Portag3 Ventures, and Vice President of Power Corp. “You need to go up the chain to get permission to do something, and the feedback comes down, and when it finally comes down, things have changed.”
He said that more nimble startups like Wealthsimple (of which Desmarais is board chairman) have an advantage in this sense, because they can make decisions in real-time and as a smaller company, put more of an emphasis on customer experience. “Too many people are focused on returns and not focused on counselling, and actually that’s really important for people,” he said.
“If we want to compete against or partner with banks, we want to be at that same level when it comes to regulatory compliance and all the rest.”
However, banks are learning their lesson. “One concept we have stolen from the entrepreneurial community is the concept of pivoting: trying something out, and seeing whether it works and understanding how it impacts business model,” said Dubie Cunningham, VP of innovation at Scotiabank. “I like to position things as ‘this is an experiment, we may not continue on with the experiment. And that helps us to be able to digest the risk. Because if we can increment our way into something, it helps.”
For their part, startups are starting to become more interested in working with banks as early as possible to position themselves for future partnerships. “We partnered with TD, and that was prior to having a full product. We knew we wanted to sell into financial institutions, but we didn’t want to build in isolation or in a vacuum and then show up and tell them we want to partner,” said Brent Ho-Young, CEO of Dream Payments. The company worked with TD to find its biggest pain points, and “ultimately, we could deliver something that not only the innovation team loved, but the sales team loves it because it will help their bottom line.”
But Financeit COO Casper Wong warned that startups should anticipate long timelines when it comes to working with banks. “Sales cycles can be many years, so working with banks requires a lot of patience, and it makes sense to talk to more than less to give yourselves more than one option if the time comes,” said Wong. “If you’re talking to a bank for many years, banks don’t make quick decisions, but if you’re that person speaking to them and providing value you can be well-positioned to be the company they choose to work with.”
— Overbond (@overbond) November 22, 2016
Borrowell co-founder and COO Eva Wong said that, because FinTech as an industry requires working with sensitive customer data, the classic startup stereotype of two guys building out of their garage doesn’t really apply to the modern-day FinTech. “If you are a FinTech startup, you have to take regulation and data security risk super seriously. All of us came into FinTech startup with a ton of experience, and we thought that if we want to do this, if we want to compete against or partner with banks, we want to be at that same level when it comes to regulatory compliance and all the rest.”
— Jen Couldrey (@jencouldrey) November 21, 2016
Wong also took the opportunity to point out the reason why Borrowell CEO Andrew Graham, while present, wasn’t sitting in the panelist chair instead. “We have a policy where, if possible, he doesn’t appear on all-male panels.”
The issue of representation is one that plagues many tech industry events, including CIX, which has faced criticism in the past. Last year, CIX’s main showcase featured only three women on stage out of 27 male speakers throughout the day, and only one was a panelist.
During this FinTech event, out of 27 male panelists that took the main stage, seven were women. If we’re including host Amber Mac and moderators, there were a total of 10 women. Including moderators, there were a total of 31 men on the main stage. As the morning’s opening panel including two women with appearances from moderators like Real Ventures partner Janet Bannister and Mac as host, with appearances from women in a majority of the panels throughout the day, it does seem like CIX is making an effort to address these concerns.
Photo via @AcmBarclay
StartUp HERE Toronto is a publishing partner of Betakit and this article was originally published on their site.