Perhaps this philosophy did work in the early years of fintech evolution. Indeed, making it easy to understand your core product and associated value was crucial to winning over the early adopters in the market. However, we cannot assume that what was done successfully to get us to this point is what we must continue doing going forward.
Bundling several solutions into a one-stop-shop for a bank overlooks the fact that different banks have different problems to solve so creating a generic line of capabilities lacks the focus to be truly transformative in this space. It also assumes that the one-stop-shop has the subject matter expertise across an incredibly broad spectrum of products that can all knit together seamlessly. In reality, banks need a degree of customisation and a single provider that does everything brilliantly all the time arguably does not exist.
Unbundled, on the other hand, is on the opposite side of the spectrum; it sees fintechs selling individual pieces of tech independently of each other, requiring the buyer to source, assemble and maintain the different pieces forming a workable solution. Whilst this provides flexibility, it increases the complexity tax in the buying process and in the assembly. Consequently, it impacts the overall speed to market and, inevitably, reduces the likelihood of success when implementing the new functionality within a bank.
Those two extremes - bundled vs unbundled - leave a lot of real estate in between. I think we are seeing how understanding the nuance of this middle ground is becoming increasingly more important. This is especially true when considering how financial technology is sold into big, gnarly organisations.
This is not a build vs buy vs rent blog
I hope we’ve all come to the collective realisation that there aren’t significant new avenues of discussion on build vs buy vs rent. However, what I am proposing for fintechs is a change in mindset required by the component parts in the industry. This is specifically aimed at those looking to work their way up the value chain and sell to larger organisations.
You can’t just sell your ‘bit’ anymore and let the client figure out the rest. Unless you have a compartmentalised piece of functionality that effectively touches no other area of the bank, that’s just not an approach that’s going to have any sort of success. However, on the other end of the spectrum, to say you must know all the intimate parts of a financial institution to successfully sell your product is like doing a report on Homer’s Odyssey and thinking you have to memorise every single word.
Now, I may be biased in saying that partnerships are the key, but it’s more than finding the right partners to work with.
This is especially true when there are potentially several vendors, all with their own contracting styles and processes, while the bank has quite likely assembled all of these fintechs under one project roof.
Case in point is Currencycloud’s partnership with Mambu. We don’t, nor will we ever, fully understand all the complexities of providing a core banking system. Similarly, Mambu doesn’t want to take their eye off their primary focus by becoming experts in cross-border payments. However, working together to create a joint value proposition where one solution fits seamlessly with the other, for example Mambu and Currrencycloud’s Cross-Border Payments Connector, reinforces an aligned sales pitch and go-live process. This results in a more joined up buying experience for banks. This close collaboration also ensures banks don’t get stuck in project hell trying to work with many individual providers who don’t know how to talk to one another
This is not all on fintechs. Banks also need to change how they buy. For example, imagine a process, clearly devised by someone in procurement, where they:
Hire a consultant to run the process while the identity of the bank remains a mystery to those pitching for the business until the contract is signed.
A consultant creates a tick box exercise to check whether potential suitors have the right accreditations but, as a consequence, those who could provide a solution are kept at arms’ length, unsure what the underlying pain-points are for a bank and therefore cannot tailor responses to a bespoke need.
The consultant gets RFP participants to manually plug answers into a long-winded form where there’s a set deadline for would-be vendors to collate and ask upfront questions.
A vendor may know other partners that are part of a deal beforehand, but in reality, they all get introduced to one another after everyone’s been selected via steps one, two and three.
This process completely overlooks the importance of finding the right technical partner(s) who have a complementary solution together with a compatible culture. It also assumes that the partners that are being cobbled together will naturally just gel because you, the bank, selected them the same way.
Balancing entrepreneurship with intrapreneurship
It’s imperative that partnerships understand enterprise when selling to enterprise organisations. In that respect, there’s a need to balance the subtle difference between entrepreneurship and intrapreneurship. The former is creating something big and bold that’s - and I use this phrase with a certain amount of hesitation - going to be a ‘game changer for your end customers’. I can’t think of many who are comfortable with that approach. On the other hand, the latter requires an understanding of the existing tech stack and what the quickest path to revenue is with the assets at your disposal. There also needs to be clarity about how your tech solution could apply to an immediate problem or something you might not have considered.
Fundamentally, for fintechs to succeed in this segment, they need to find the common ground between the unbundled and bundled approaches. This requires keeping the best of breed component parts, but having them pre-assembled in a way that enables a simplified buying process. The result then creates speed to revenue and a long-term harmonious working relationship with all stakeholders involved. Shall I say…a game changer?