By Emily Nicolle on Monday 20 November 2017
A new report suggests stronger partnerships are the way to go for innovation.
Seven models are proposed as ideas for collaboration, based on case studies from major financial institutions such as Barclays and RBS, as well as smaller fintechs like Atom Bank. These include sandboxes, holding hackathons and fintech product sourcing or joint ventures.
Published today by TheCityUK, Santander UK and Shearman & Sterling, it sets out how stronger collaboration could lead to a smoother and faster path of developing innovative new digital products and services. These partnerships, it says, will be vital in helping to cement the UK’s status as a leading fintech centre.
“Fintech is already transforming the industry, and giving customers easier access to a greater choice of financial services, but more can be done”, said Marcus Scott, COO of TheCityUK.
“Fintech start-ups and incumbents need to share expertise more effectively and work together more collaboratively to create new, innovative products and services. The key to success is choosing the right collaboration model and being clear and upfront.”
Entitled “Transformation and innovation: a guide to partnerships between financial services institutions and fintechs”, the seven models and their case studies each address a common issue and pitfall associated with these kinds of partnerships.
Frequent key legal hurdles faced by fintechs and banks range from risk allocation and costs control, to appropriate exit mechanisms. Significantly in the aftermath of Brexit, these partnerships will also need to more accurately address data protection and IP ownership, as GDPR is rolled out.
Santander’s partnership with US-based online lender Kabbage is used an example of the issues faced in corporate venture capital collaboration. The bank has now partnered with a number of fintechs through its corporate VC fund, InnoVentures, also including Tradeshift, Ripple and Curve.
Nathan Bostock, CEO of Santander spoke about its experience, saying: “By focusing on how to navigate the pain points that fintechs and established players may experience when working together and identifying a number of collaboration models, this new report should help fuel the next generation of financial services that don’t just meet but anticipate customer needs, delivering better experiences.”