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April 28, 2017
For Fintech startups, it can be very difficult to initiate a bilateral relationship with banks when approaching them cold. Accelerators and innovation functions play an important role in connecting fintechs with banks and provide a solid route to market for new companies trying to break into this area. Accelerators sponsored by banks are a great opportunity for Fintechs to engage with banks and bring many benefits:
1. A great innovation partner can become an early champion
The innovation function of each bank will appoint a chaperone or mentor who acts as a single point of contact for the startup within their respective organization. Their job is to find areas of the bank where the startup’s solution would be suitable and help them to establish contacts within it, with a view to initiating proof of concept and proof of value activities. This immediately gives you an early champion which accelerates the path to evaluation.
2. Stakeholder engagement
Innovation functions have great internal sponsorship with a direct line to senior innovation sponsors and stakeholders who are keen to ensure that the bank is being supportive of the program. The innovation partners’ sphere of influence and ability to get people around a table enables a startup to put our solution in front of as many of the right people as possible.
3. Global reach
Most major banks are global organizations and the innovation function has global reach itself. Being able to connect with areas of a bank in various global locations is a rare opportunity for startups without an introduction from someone like an innovation chaperone.
4. Guidance in navigating processes and obstacles
An innovation partners’ guidance on navigating internal processes around sourcing, information security and compliance is incredibly useful for a small startup learning to navigate a large corporation. Working with the innovation function can also help to clear some obstacles around early engagement, as there is an appreciation that startup companies won’t necessarily exhibit all the characteristics of a mature supplier.
At the end of the innovation introduction phase, you will have formed connections to potential real user champions within various businesses. This is where the sales process really begins. However, the innovation function continues to play an important role in the startup’s development and keeping traction and visibility within these companies.
5. Continued support throughout the sales process
While the startup is engaging the banks in the sales process, the innovation function continues to connect them with more people and set up events related to Proofs of Concept. The innovation team also continues to offer support in terms of communication and marketing to a wider internal audience including making team videos and blog posts.
6. Clarity on status
The innovation team also remains a productive point of contact for gaining clarity on status throughout the procurement process. Establishing a commercial relationship with a bank can take 6-12 months and the innovation team will maintain their own visualization on where you are in this process. This reduces the number of interactions you need to have with the actual business and technical leads acquiring the product.
7. Visibility and promotion
The innovation team promote the startups they engage with and give them visibility in multiple areas of the bank. They understand the importance of the agenda to adopt new technology and their ability to understand the value proposition of a new tech company. They will work to expose startups to a wider audience within the bank by giving them opportunities to present at senior management meetings and strategy events.
8. Expert advice
The innovation team are experts in the adoption of technology and give some great advice throughout the process. They are also able to connect startups with wider experts on new technologies, applications or services, or with people within the organization to get data for a specific business case. For example, being connected with a CTO who can provide senior technical expertise from inside a financial services organization is a great opportunity for a startup.
Without the interaction with an innovation function, a sale to a large bank could take 10-15 months to close. In our experience this can be dramatically reduced through the innovation function, possibly taking this down to a 6-9 month process.
The existence of accelerators and innovation functions is critical to accelerating the traction of early startups. We would like to thank all the accelerators and innovation functions we have worked with for their support to date.