Open bankers need to start talking about money

I work at what you would call a “fintech”. Though that’s not how we would describe ourselves. To quote Leda Glyptis, “Fintech isn’t a thing — it’s a moment in time”. In our own eyes, we’re simply another product development company.

Recently I was at a conference with the theme “Bank/Fintech Partnerships”. Several large, international banks spoke. And it struck me that this is another area where our choice of vocabulary differs, and reveals a fundamental difference in perspective.

You see, Bank/Fintech partnerships just isn’t a thing for us. What we are looking for is a commercial relationship. Some of us want to be your customer, others want to be your vendor. And while any business arrangement is by definition a partnership, without the commercial part it is little more than a hobby.

In the case of my company, we are seeking banking-as-a-service partners. Our priorities are:

1) Clarity of business model

What are your products? The pricing structure? The discount strategy?

In short, what do you offer and how much does it cost?

2) Quality of systems and processes behind the APIs

Does account creation require manual steps or is it fully digital? What metadata follow the transactions? Is it structured or free-form? Do you provide real time notifications of card transactions?

Two seemingly identical APIs may enable wildly different user experiences.

The APIs are the easy part. It’s what you do in the middle- and back-office that make the difference.

3) Predictability

What are your goals and objectives? Will you continue to invest in your products? Do you come recommended by other “fintechs” as a trusted partner over time?

Ironically, there is an inverse correlation between the size of a bank and the score in these areas. The smaller players see nothing but opportunity. A chance to increase market share or establish a new area of business. The large banks have way more resources, but likely due to competing internal incentives many of their “fintech” initiatives appear to be born out of an unspoken desire to avoid making commercial decisions. A disproportional amount of time and money is allocated to efforts like:

• Connect and collaborate (aka talk)
• Hackathons (doing for two days with you what we do every day in the office)
• Beauty pageants (or start-up pitching contests as you might call them)
• Support functions to help navigate the organization (where no one person has the mandate or incentive to make commercial commitments)

What “fintechs” really seek is a bank who looks at us and sees a business opportunity. We represent a small market today, but one that is likely to explode in size. So rather than introducing us to your CEO, just provide us with an account manager, with a clearly defined product portfolio and a transparent price list. Someone who sees us as an opportunity to max out her bonus this quarter.

If you are a small or medium sized bank, this moment in time could be a game changer. The market is nascent and most of the big boys will take years to decide their approach. The more business one has today, the more reasons one will find not to rock the boat. Never mind that the boat is already rocking because of an incoming storm and the worst thing one can do is stay put.

On our end, we will do our very best to be a valued commercial partner. We will make you money. We will provide constructive feedback on your services and invest our time and skill to help you improve them. Working with us will channel data and insights that enable you to develop competitive products for the future.

Whether big or small, we are looking forward to working with you, and growing the bottom line of both our companies.