FinTech has never been more strategically important. People nowadays grow up feeling they have the right to digital access to financial services – but many still use branch banking, cheques and other non-digital avenues.
In just a few months, the Covid-19 pandemic has accelerated the need to adopt digital within financial services and digital has become firmly mainstream.
We began our Shaping FinTech series with a webinar on investment. Chaired by White & Case Partner Guy Potel, the panellists included Roisin Levine, Head of Banks at Flux; Marin Cauvas, Principal at Anthemis Group; James Ankers, CIO at Barclays Ventures; and Ash Bhatia, Client Partner at Motive Partners.
You can take a look at the full webinar below, but here are some key takeaways.
A changing investment landscape – from disruptors to enablers
The landscape of FinTech has changed and this has hugely impacted the way organisations invest, as well as the challenges and opportunities FInTechs face when seeking investment.
10 years ago the market was being ‘disrupted’ by tech-savvy challengers, but now it is recognised that partnership is the way forward. Banks need to invest in new technology, and startups need backing to scale. On top of this, big non-bank corporates are also looking to scale up their FinTech offerings so the sector is ripe for growth.
Banks lack speed, but not desire, to innovate
Larger financial institutions, while talking the enthusiastic talk about innovation, could be said to lack the speed of decision making needed to be a useful investor in a FinTech startup. They also struggle to adapt to the mindset which enables them to fit in with FinTechs and truly innovate.
However, it’s important for FinTechs to understand banks don’t move slowly on purpose, and be sympathetic toward the barriers in place. The sheer scale of a high street bank, for example, means the impact of strategic decisions is huge across a wide customer base.
Having a specific investment arm could be the way forward
Putting resource into a specific ventures arm, for example, could fix some of the pain points banks are encountering when they look to invest in innovative FinTech solutions.
Barclays Ventures was introduced as a specific department of the bank that thinks and acts like a startup within a large organisation. Such a department allows for swifter decision making where the bank as a whole might face governance restraints. It’s also an opportunity to gather a team with different backgrounds and skillsets that might not be traditionally found in banking.
The tide is beginning to turn
We think of FinTech as it has disrupted the landscape over the past 10 years, but even three or four years ago the investment side looked very different. Corporate venture arms laid out terms that only really made sense for the financial institution involved and didn’t necessarily benefit the FinTech on its journey to grow.
Banks are, of course, still trying to extract as much strategic value as possible from investments – but the mindset has shifted. The rise of innovation departments and venture arms, as well as bringing innovation to the fore with the introduction of a Chief Innovation Officer to the executive table, serves to reflect this changing mentality.