Are Collabs the Way Forward for Killer Products?
The relationship between banks and fintechs has changed over time and new kinds of collaborations and partnerships are emerging as the banking industry is transforming. We asked Roland Booijen, Director of Apps and Digital Innovations at Dutch bank ABN AMRO, to share his view on the opportunities and challenges behind these collabs, and to give his advice on how to secure successful partnerships.
Partnerships and collabs between banks and fintechs are becoming more and more common. How does this affect the banking industry, and what can we expect to see in 2018?
I believe collaborations between fintechs and banks have a positive influence on both parties’ capacity for innovation. We used to see a trend of ‘bank bashing’ by fintechs, while banks tended to underestimate the power of fintechs. Today, both parties recognize the power of collaboration. Banks realize they can harness the innovative power of the fintechs. Meanwhile, fintechs recognize that working with a bank gives them the opportunity to bring their technology to a large number of users via a trusted brand.
With PSD2 being introduced, we will see more successful partnerships between banks and fintechs in 2018. Especially in the lending area, which of course is an important area of interest of banks. We invested for instance in Cloud Lending Solutions, who have impressed us with the ease of configuration and customization of their lending platform.
What would you say are the major opportunities with these kinds of partnerships?
A major opportunity for banks is the ability to bring new products and services to the market in a relatively short time period. For fintechs, equity investments from banks are a big upside, allowing them to rapidly scale their business and customer base through the bank. For example, through ABN AMRO’s Digital Impact Fund, we invest in startups that we believe have strategic value for innovation..
The processes and controls in place at a bank can often seem unfamiliar and cumbersome for fintechs to adhere to. Different views on interpreting legislation is another interesting challenge. While banks tend to be a bit more risk-averse, this usually isn’t the case with your typical fintech.
Also, within banks, I’ve seen a tendency to change roles quite frequently; within a scaling fintech roles can change even faster. To minimise these challenges, I believe it is important to work on the product or service with a stable team, both from the bank and fintech.
ABN AMRO and Tink are partners since 2016, what would you say are the key factors behind a successful working partnership?
It’s important that everyone involved has a shared mission to create the best product out there. There’s no use in pointing out one another’s perceived shortcomings - for example, the stereotypical view that banks are slow, or fintechs are cowboys. Instead, it’s vital to align strategy, expectations and deliverables from the outset. It’s also important to have a spokesperson for the partnership or product within the bank, who can vouch for the collab. This is something we have done successfully with ABN AMRO and Tink. We’ve found that if everyone understands why we are doing certain things, it’s way easier in the actual collaboration.
The reasons why we chose Tink in the first place were first and foremost their PFM product and the experience they had with aggregating other banks. With the highly skilled developers that work on the Grip app every single day, we managed to reach 400.000 users within 13 months from launch.
I do believe there is much more to gain out of the relationship, both within ABN AMRO and Tink. I can certainly envisage using Tink’s APIs in other parts of the bank as well. Like using the categorization engine for lending application, where we could improve our risk calculation after consent of the client.
What advice would you give other banks and financial institutions that are about to enter into a partnership with a fintechs?
For me, the partnership is never the goal, it’s only the means to achieve a certain goal. Be clear about what that goal is, discuss this in detail and keep on challenging yourselves on how to get there.
As a bank or financial institution you will have to do everything you can to make the partnership work. Most likely, bank employees will need to change their mindset and you must be willing to challenge the status quo. Existing processes might have to change and certain risks need to be accepted.
Remember to stay focused on your end goal; delivering a one-of-a-kind killer product for your customers.
ABN AMRO has partnered with Tink since 2016, launching their stand alone personal finance management app Grip, built entirely on top of the Tink platform. Read more about the case study here.