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September 29, 2020
Last week the Fintech Innovation Lab held an online event in celebration of its ten-year anniversary. As an alumnus of both the London and New York labs, Cutover CEO Ky Nichol was honored to be asked to mediate the panel discussion with the lab founders and mentors.
During the event, they discussed the evolution of the lab itself, the differences and similarities between the Fintech scenes in London and New York, and some predictions about the future of Fintech and Financial Services in response to COVID-19. As President and CEO of the Partnership Fund for New York City Maria Gotsch pointed out during the discussion, the lab itself was born out of the financial crisis in 2009 and Fintech will continue to adapt to current challenges.
Five insights from the “Tale of Two Cities” panel
1. There are differences between the New York and London Fintech ecosystems, but similarities as well
The founders and mentors of the Fintech Innovation Lab have worked across London and New York, two major financial hubs with slightly different cultures and approaches.
Cris Conde, Executive in Residence at Accel Partners, felt that in London, financial services firms were more willing to do business with small companies, but doing business in the US offers a lot more scale, which can be both an opportunity and a challenge. He noted that they were very different ecosystems but both provided great opportunities.
Scott Condron, former MD of Aladdin Wealth Tech and CTO of Blackrock, instead focused on the similarities between the two, particularly when it came to the culture of the Lab which he saw as unique and focused on collectively offering the best and most engaging advice.
Andy Brown, CEO of Sandhill East and Board Executive, also noted that both ecosystems have strengths and weaknesses. Although Calfornia has been a hub for B2C technical innovation for a long time, over the past 10 years a whole ecosystem has built up in New York and the Lab has invested in growing this area. Brown sees even more work to do over the next 10 years to get to the level of California.
For Maria, one of the main purposes of the Lab was developing the economic system around Fintech in both areas.
2. Fintech has evolved over the past 10 years, and will continue to adapt to new circumstances
As Maria pointed out, the Fintech Innovation Lab was launched in 2009 during a financial crisis. At the time, there was a lot of innovation happening on the west coast of the United States but not a lot in New York, where they tended to get their technology from California, Boston, or London. New York has since become the second-largest technology center in the world and Fintech has grown up in New York to become a robust sector, particularly with B2B products and services. New York now excels in the enterprise area, which is where they decided to focus when starting the lab. Because enterprise sales are all about relationships, a major advantage of the lab is introducing founders to key decision-makers.
Tom Graham, MD of Accenture’s Banking Practice and Program Director of the Fintech Innovation Lab London, noted that the Lab itself has evolved to recognize new themes and trends, such as expanding into Regtech and Insurtech as other industries have become more engaged. Changes in culture and outlook, such as “open banking for good” has created opportunities in open data and financial problem solving, such as adapting to a financial crisis, moving to the cloud, and tackling new security challenges. Increasing diversity has also become a major concern, with the Lab implementing measures to ensure they are supporting gender and racial diversity in the ecosystem.
3. “Tech for good” is an area that will see increased growth in the near future
One theme that recurred during the panel was the idea of “tech for good”, with a couple of the panel members mentioning exciting new startups addressing everything from women’s financial health to providing renewable energy sources. Cris noted that Fintech does not exist in a vacuum, and changes in society will be reflected in what is focused on and invested in Fintech, so tech for good is very different from what it was 10 years ago and will continue to evolve.
4. Stop selling and start listening to turn clients into advocates
Maria emphasized that the Lab should not be viewed as an opportunity to sell and that companies that applied to send in a sales representative would not be accepted. It’s about getting key questions answered, ensuring that your proposition resonates, that you’ve got the right use case, and identifying who has the budget and need for your product. Most companies on the Lab are between seed and Series A, a key time for growth, and the Lab connects them directly with potential customers to ensure their offering resonates.
Stop selling and start listening and asking questions. It’s a lot better to make these kinds of decisions with help from customers rather than in a vacuum. This moves a potential customer over to your side of the table, where they become invested and could be a vital contact for the rest of your company’s life. Maria commented that despite its population size New York is a small town, and getting into the network is vital to a young company’s success. After the three months of the program, alumni are left with an unbelievable network of people that they have developed relationships with, turning them into advocates rather than just seeing your company as a vendor.
Scott underlined the importance of knowing the customer and understanding how your product materially changes their day job. He said that founders often become too focused on the supply side of the equation but need to understand where the demand for their product comes from - and they do this by communicating and collaborating with potential clients.
5. Fintech will survive COVID, and some of the changes brought on by the pandemic are here to stay
Maria said that she saw COVID as a catalyst that would force financial services firms to rethink their businesses. She saw community development as an area that would need investment, as the recovery of small businesses that will have suffered the most from the pandemic will be critical for the recovery of the economy as a whole. Small businesses are lagging from a technology perspective, and need to be able to compete in a digital world.
Tom hoped that the crisis would give people the opportunity to think of new ideas and interesting ways to solve current problems. He noted that when the lockdown was first introduced in the UK a lot of work was paused. However, since then banks have either taken this as a sign to change and invest in automation so they can continue to innovate, or stopped spending entirely.
Andy said that banks would have to radically rethink their role going forward, for example, whether branches would become obsolete. He predicted that the next 24 months would be fascinating, seeing the directions different organizations go in and how they choose to cope.
Scott’s advice was simply: strap in, it’s going to be a bumpy ride!