An advise to banks willing to work with fintech startups:

Start not with rosy cushions in your digital labs but in strategy and purchasing departments KPIs

Daniel Gusev
Jun 28 · 3 min read

Bank A recently hired a fintech star to lead a new unit to build a digital bank inside the bank: a pet project by a global CEO bent on demonstrating to the bank’s shareholders it is not sitting still, bold plans have been outlined to do whatever necessary to win fintechs lunch of fame and fortune .

As the motivated small team was researching the grounds, another senior executive decided the team does not the personnel they have said they need: cutting the very reason why and how removed teams are set-up. Where executive motivation is to control every step teams under him take, the motivation for startups is different. Teams are responsible for the overall budget they are given and not ask for permission for each step using standard hierarchies of a big bank. Surely the setback pains the fintech champion first asked to help the bank to adopt fintech culture but then been burned by the Byzantium approach.

Bank B and C stipulated they are willing to work with startups and develop products together, signing LoIs and promising contracts — but their sense of time and their insular build — protected by liquidity, thick cushions of overhead — their own reality — allows them to stop time — and live by months without moving forward, while startups, often in their early stage, are burning cash being on stand-by to guarantee uptime from the 1st expected day of a joint project.

For both banks, the motivation born out of fintech delirium of senior executives who said “GO!” is different from motivation of middle-managers in their purchasing or IT department pushing contract who say “whatever”.

Bank D and E had several people in charge of innovation, who, while being intelligent and smart and capable, did very little (polite way to say: nothing) to make an impact — while being named head of innovations or other otherworldly titles. Some even changed seats and continue with different institutions who, while promoting their digital credentials, are not seen as successful in this field. Both banks failed. Both opt in to present failures as “unseen ways of succeeding” and continue to mask them — because it will ruin the house of cards of producing bullshit — manufacturing press-releases.

Being an innovation leader is a like being a psychiatrist for a bipolar patient. You cater to both sides — either trying to say a cure is needed, or playing the other side saying everything is good.

Executives are either incompatible with their structures — believing that becoming a digital bank is equal with producing tons of PR and so should seek cure in mending the structures, not painting windows that most innovation labs in these banks are.

After one sets a strategy of fintech collaboration, as outlined by recent CapGemini report, expected more by fintechs as a steep incline in growth stage bites, banks, while siding with the supposition, do very little on the back-end of their organization. It is not the digital lab with free attire and flexible attendance that ultimately delivers the bottom-line, but the ability to scale the identified creative spark inside the whole organisation.

Daniel Gusev

Written by

10+ years, 2 labs, 1 bank, 2 startups, 1 exit. Digital banker, wishful tinkerer, amateur father. Fintech VC @gauss_vc and co-founder of @finfitapp.