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3 tips on how to convince Fintechs banks of their solution

The goal of many Fintechs is the cooperation with a bank. And more and more financial institutions are open to such cooperation in order to increase their innovative strength. For a successful start, the financial startups should prepare their pitch meticulously, but also consider other, complementary partnerships, says guest author Martin Haring.

The new generation of innovative finance companies has often been seen as a threat by traditional institutions in the past. But the picture has changed in recent months: A study by PwC shows that there are already more than 850 cooperation agreements between German banks, insurance companies and fintechs. Such collaboration is attractive to many of the financial startups because it opens a broad user base.

To successfully address potential partners, they should prepare the presentation of their business model in a way that provides financial institutions with a solid basis for decision making on a partnership. These three tips help with a successful presentation:

Tip 1: Crop the pitch to the audience

Which problem is the solution addressing? How does it support the end customer or the bank? Is it about changing or supplementing existing processes? What are the main benefits? The answers to these questions should explain Fintechs clear and understandable, at best based on concrete use cases. Also, they should be prepared for questions about the potential risks and design strategies to contain them.

Finally, if there is a pitch, the presentation should be tailor-made for the professionals present, depending on whether there are technology experts, representatives of a particular department, or a mixed audience. Until a cooperation is in the bag, usually a multiplicity of such meetings takes place. The fintechs should therefore be prepared to present their solution to very different target groups with the appropriate arguments. And because partnering with a bank is more of a long-term project, financial startups should communicate transparently about what their product can do today and what the planned roadmap looks like.

Sooner or later, the question of integration possibilities between the fintech solution and the bank IT will be discussed. Because the software landscape of financial institutions has often grown historically, new programs can usually only be integrated at great expense. Financial startups should therefore rely on open and standardized interfaces that simplify and accelerate this process.

Tip 2: Demonstrate market understanding

Banks have recognized that innovative products help them better meet the expectations and needs of their customers. They are willing to cooperate with fintechs, if they also have a deep understanding of the customers’ demands. In addition, they should offer a suitable solution in order to increase their satisfaction or to improve internal processes.

On the one hand, it is vitally important to be able to know exactly the target markets of the envisaged institute and, on the other hand, to be able to assess which of them could address its own solution. In terms of markets and potential customers, young entrepreneurs should be as accurate and specific as possible in order to demonstrate know-how and build trust. Many take their target groups too far and at the same time do not go deep enough technically.

Tip 3: Demonstrate knowledge of the competitive landscape

Even if the approach of a fintech is completely new, there are often already products that address the same problem in a different way. In this case, financial startups should know exactly who their competitors are and what their own solution can do better.

They should highlight all aspects that are unique – from the approach to usability to data security. After all, if the added value of a product is not immediately apparent, banks are often tempted to continue working with their existing offerings or to develop their own solutions.

Collaboration in all directions

The willingness to cooperate with the new financial technology companies has grown strongly on the part of traditional institutions. Not only are they committed to this by the PSD2 Directive, they also recognize the potential of the open banking paradigm for their own business.

Nevertheless, the young entrepreneurs should not be too light on the topic of collaboration and prepare their pitch well. Nor should the fintechs limit themselves to partnerships with banks. Technology partners often offer attractive customer portfolios and easier access to financial institutions.


Also published on Medium.

Published inFintech

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