The Fintech Files: The collaboration curse
Welcome to The Fintech Files, your weekly roundup from FN’s fintech correspondent Yolanda Bobeldijk, keeping you up-to-date with the latest developments in financial tech and innovation. Closing the gap? Remember when all the banks set up innovation labs, with the bean bags and hipster coffee machines? They were going to be agile and cool and startups were definitely going to work with them. We now know, of course, that banks and fintechs are no match made in heaven. Navigating legal, compliance and procurement takes so long that the average cycle to sell into a bank is still about 12 to 18 months; enough to drive a fintech founder crazy or, worse, see them run out of money.
So you’d expect entrepreneurs to be happy that the Fintech Delivery Panel (that industry discussion group that has a regular dialogue with the Treasury) has published guidelines on how banks and fintechs can improve their collaboration, right? Actually, startup founders are rather unhappy with this document, the Fintech Files can reveal.
An insult to intelligence It's not hard to see why. Having looked through the guidelines, I have to admit the advice seems quite obvious. The document reminds startups, for instance, that they need to consider their IT resilience and to take legal advice before signing any agreement. Hardly the 'groundbreaking' stuff the Panel promises. Andrew White, co-founder of FundApps, said: “Unless you are 22 and just out of school, you already know this when you launch a company. It is insulting people’s intelligence.” Matt Smith, founder of regulatory technology firm SteelEye, added: “If you are that naive, if that’s helpful to you [then] you might be in the wrong business. I would read one line and spend no more time on it.”
But Francois Blanc, head of customer experience and innovation at Santander, who helped write the guidelines, argued the document would be helpful for early-stage fintechs. He said: “I met with a fintech recently who did not have an anti-bribery policy. Some are experienced, some are not.”
Fintech Files’ View At the end of the day, banks are regulated institutions that look after our money. They need to be careful and can’t just team up with any old startup. We should all want them to be cautious. But it’s also in their benefit to work more closely with those at the forefront of emerging technologies. It seems obvious that the Fintech Delivery Panel guidelines are not going to move the needle in terms of bringing banks and startups closer together. So how can the startups deal with lengthy sales cycles? I’d say get together with a few peers and share tips on how to crack the banks that way. If anything, moaning about it over a pint might make you feel better.