In our last FinTech Forum – which took place on the eve of International Women’s Day – we hosted an all-female panel on how global and local banks approach the concept of “Fintegration” (how banks team up with FinTech companies).
If you’re a FinTech entrepreneur, you may find the insights from the panel discussion about FinTech innovation valuable, so I have collected some of the main takeaways for you below.
The Panel (left to right): Yael Waisbourd-Sucary, Head of Innovation and Fintech at Discount Bank, Ornit Shinar, Head of Venture Investments Israel at Citi, Lilach Bar-David, Founder & Former CEO at Pepper, and Amrita Jain, Head of Mobile Product at SundaySky, and Dubie Cunningham, Vice President Enterprise Innovation, Digital Banking at Scotiabank.
[04:10 minutes in]
Q: What makes a good match between the innovation unit and the business units? How do you engage the business units into the innovation process?
The key success factor is the management’s commitment. When the CEO makes innovation a priority and this message is conveyed throughout the organization, it makes it easier for Innovation teams to approach the other business units.
To convince them, try to maximize the benefits of the innovation and minimize the effort that’s required to implement innovative solutions.
[06:20 minutes in]
Q: What is the most effective way in approaching banks? Can you describe some best practices for working with financial institutions?
AMRITA: Banks are large, complex organizations. Challenges range from complexities of legacy systems to legal burdens and regulatory issues. This is very valuable knowledge for tech startups to be aware of when building relationships with banking customers. Don’t expect to come in and make changes from Day 1. Bringing change in small companies is relatively easy, but galvanizing multiple people across a complex organization is very difficult.
My advice is to start small. Start with the POC, and if you can prove value and convert that into an expansion opportunity, that’s great headway.
[07:45 minutes in]
Q: When looking for investments, is the strength of the solution the main criteria? Or do you look at other qualitative aspects such as team culture and fit?
ORNIT: Obviously as a typical VC we’re looking for an interesting technology and a strategic fit (depending on what the startup does), but when we invest we’re in it for the long run, so we also look for a strong team and people we would enjoy working with, trustworthy, reliable and transparent. We’d rather partner with them and know about their hurdles from the beginning so that we are best prepared to help them, rather than only find out about them in retrospect. We’re also looking for teams that have a global vision. It’s hard for us to work with a team if they are only working locally here in Israel. They have to be able to think on a bigger scale.
[09:50 minutes in]
Q (to Lilach from Pepper): You have a unique perspective because you started company from within the bank. Can you speak about why the Bank made this choice and what were some of the challenges?
LILACH: The goal was to disrupt the industry and “to build a bank that people would love”. From our perspective it wasn’t just about building a new brand, it was about building the products and procedures from scratch, including the pricing, value proposition, marketing etc. So we gathered people from the industry who have a lot of experience in consumer mobile and encouraged to bring their vision of “the bank of the future” to life: How would it fit into millennial expectations? What would the design look like and what was the desired reaction from customers?
People generally don’t like banking because they don’t really understand many of its traditional aspects, so we figured that by gathering people from consumer mobile but not necessarily banking, it would inspire a product that people would genuinely enjoy using, as opposed to the current industry standard which is not well liked. We weren’t sure at first if we could attract the type of innovative minds we were after because traditional banking is sort of off-putting, so we created a work environment and culture that would inspire people to ‘join the revolution’.
Also, most of the technology developed in Israel is geared towards audiences outside of Israel, so one of the unique things about Pepper is that it allows local FinTech teams to build something that can make a real difference in the local community.
[12:10 minutes in]
Q: Looking about 5 years ahead, where will the main global FinTech hubs be? Is the future of FinTech in Tel Aviv, New York and London?
ORNIT: Objectively speaking, Israel has a lot to offer in terms of FinTech. The skills and know-how in Israel has expanded even in areas where expectations were low, like online marketing, in which Israel is now excelling. It’s no longer just about technology developed by military alumni, but also a much broader range of technologies, and as a result we’re seeing many interesting startups developing here in Israel. From what I see in Silicon Valley, they are still ahead, but in 5 years’ time, I think there’s a good chance we can get there.
[13:40 minutes in]
Q: Where is FinTech headed? Where do you think innovation will settle in the next few years?
AMRITA: One way to predict where we’re headed is to consider where we were 5 years ago. Back then, much of our banking still involved physical interaction, like going to a branch to perform many of our activities. As we move more towards low-touch channels, the level of personalization we receive at these physical touch points is decreasing. But as digital adoption increases, there is a parallel rise in the amount of personalization and human appeal that digital channels need to offer across the board. To bridge the emotional communication, we at SundaySky feel that video, for example, will become an increasingly important channel to do just that.
[16:00 minutes in]
Q: What areas of innovations will Discount Bank be looking at over the next 12-18 months?
YAEL: The first of the 3 main areas that are important for us to look at in 2018 (and possibly beyond) is anything related to open banking and preparation of APIs. We recently became the first bank to launch an API web platform in Israel and we already have a collaboration in place with a startup called iCount which is working very well, and we are actively looking to work with more partners.
The second area of focus is Data and AI. We have already done some work in 2017 and are looking to enhance our capabilities in this area moving forward as well. The third area we’re interested in is Blockchain, and we’re working on finding the right fit for us in this area. Finally, we are interested in developing creative credit models, whether it’s for small business or private consumers.
[23:00 minutes in]
Q: What have been some of your greatest learnings from either success or failure in the roles you’ve held in the world of “Fintegration”?
ORNIT: Since starting our Citi Accelerator in 2013 we’ve tried a variety of models over the years where we’ve worked with companies at a variety of stages of growth. Today we try to work mainly with companies that already have a product because if we work with companies that are still at a very early stage, we end up frustrating them, because by the time we think they’re ready (or the company is mature enough) to talk to us, sometimes it can take years.
YAEL: POCs could be quite tricky and should be handled very carefully. Sometimes when working on POCs, it’s easy to get carried away with premature confidence and optimism, and sometimes at the end of the process you realize that you’re actually “back to square one”. So it’s better not to rush the POC and be very thorough even if it takes more time and the process with the bank feels tiring at times.
LILACH: One of the biggest frustrations for us at the beginning was around attracting the best talent to our new bank, but we persisted and aimed high, and in the end it worked out. So if you dream big enough, and for long enough, then it is actually possible to create a company (even in Israel) that can change the world.
AMRITA: Scoping the POC correctly with the right intent and planning for the future has been one of our biggest success stories at SundaySky. Our experience with Citi is a good example, because we started with a small POC around a small touch-point in the consumer journey (during onboarding) and today, as a result of that one POC being done well, we now have 10 touch points across multiple use cases at Citi.
DUBIE: Despite having a detailed list of requirements of what the bank is looking for as well as preferred areas of focus and goals, keeping an open mind at Scotiabank has made it possible for us to see some of the most fascinating and successful POCs, some of which were not what we were actively looking for.
The second part of the meetup (following the panel) was a “fireside chat” between Viola Ventures General Partner Avi Zeevi and Scotiabank Group Head, International Banking & Digital Transformation, Ignacio (Nacho) Deschamps. You can watch the video below:
FireSide Chat (left to right): Avi Zeevi, General Partner at Viola Ventures and Ignacio (Nacho) Deschamps, Group Head, International Banking & Digital Transformation at Scotiabank.