Cruxy & Company partnered with Baker McKenzie on Thursday evening to dig into what it takes to navigate the FinTech/Incumbent partnership.
Carrie Osman chaired the discussion, & the evening was full of punch, rigour and opinion from Cathy Lyall of Seismic Foundary. Greg Michel of Tech Nation, Sue McLean of Baker McKenzie & Brad Van Leeuwen of RailsBank.
From navigating the ‘partnership valley of death,’ a term coined by Leeuwen for the procurement phase, to Michael assembling the ‘FinTech Avengers’, here are the key takeaways:
Innovation in B2B technology will die without immediate action from both sides
VC’s are in pursuit of the unicorn dream, and as a result 93% of funding lands with B2C firms. Firms are forced to navigate expensive & lengthy sales cycles within the VC-B2B chasm with a lack of funding & advice. The only true B2B specialists are Seismic & Illuminate Financial.
Until the chasm is closed, fintechs must begin planning and action from the outset to prepare. As McClean incisively mentioned – Legal due-diligence must be self-inflicted from the start, and POCs must have a ground-up approach to fully prepare for incumbent integration.
Until banks in London here begin to shift the status-quo, Lyall encourages a focus on dominating & ironing out the challenges in smaller, Eastern-European banks to drive maximum preparation before trying to win in London.
Change needs to happen at the top
Reliance on the start-up to navigate these changes is a danger to UK innovation. Change must happen at the top. Changes at C level are clearly a necessity as Leeuwen noted a board he faced had never heard of PayPal.
Furthermore, McClean’s observation that banks are being held back to be the driving force of innovation as the in-house disruptors leave to set up fintechs themselves. If not even they can break into the UK’s banks, is Tier 1 innovation too good to be true?
The future is shifting
What fintechs are navigating now may be vastly different in 10 years. Michel proved the excellence of 5 major retail banks getting in a room to define the standards that must be set. The appetite is recognised, the hunger noticed & a need for innovation is beginning to be forced into action.
Furthermore, Lyall proved what we know today as Financial Services has changed. Facebook own the most global payment licences. As banks fall behind, the procurement valley of death will shift to something different all together.
So, whilst the future may be shifting, there is a need to act now both from Fintech & incumbent to ensure we dispel the mediocre & fuel innovation.