An (extremely personally biased) guide to selling to banks

I’ve updated this a bit for 2017 as things have changed pretty drastically since 2015 :).

While at JPMorgan, I spent a few years meeting and evaluating FinTech start-ups and thought it might be helpful to offer some tips that I usually gave as feedback. I also wanted to note ahead of time a few of the biases that I have:

1. I mostly focused on wholesale related start-ups, aka technology that would be relevant to Investment Banking, Sales and Trading, Treasury Services, and Corporate Banking. I did a little bit of retail towards the end across payments strategy too.
2. These are by no means representative of my former company, just the way I thought and framed things. It’s probably more relevant if you’re trying to sell to a very large bank.

So with that, here we go.

1. Don’t try to sell to banks unless you are willing to put up with the following: year long sales cycles, archaic tech infrastructure, huge bureaucracy, arduous compliance processes, 100 page legal contracts, that at the end of the all of this a deal will probably fall apart, executives that don’t understand technology, etc
2. If you’re still committed to pitching to a bank, good for you! Make sure that the value proposition is extremely obvious and that you’re addressing one of two things: how to make the bank $XYZ millions of dollars or save the bank $XYZ millions of dollars.

• Too many times I would talk to a start-up and they could only make a business case for $3MM of top-line growth or cost savings, in which case it just wasn’t worth the headache of trying to push them through the various processes required for integration. The pitch should be super obvious and the solution should be glaringly clear: if I still have no actual clue what your product does, there’s no way I could convince senior management.
• Also, make sure you aren’t directly competing with an existing product. If you are, make sure your product is 500x better and 500x cheaper to use.

1. Make sure you understand your banking partner: often times, these deals will be done in very silo’ed environments and you won’t get the full resources of the bank to further sell to that you think you might. Every group and division will be it’s own sales cycle (unless you somehow managed to convince the CEO ala Palantir).
2. Come prepared with a deck that looks clean and a demo that’s flashy and works. A majority of the selling will occur outside of the sales meeting, make sure that the demo and deck can stand alone in selling your product.
3. This is more relevant for companies trying to sell to the wholesale side of the house, but cloud-based solutions are often a non-starter (depending on the bank). There were several times when I met a start-up that was awesome and solved an obvious pain-point, but then heard the word “cloud-based” and it would be a non-starter. Especially if you’ll be handling any sort of the data that the bank deems private, proprietary, or sensitive, cloud-based is often a hard sell. Then again, I hear Goldman has been open to cloud-based solutions so what do I know… (Update for 2017, this has changed significantly).
4. Get in front of the right people. Banks are huge and it’s super easy to waste months talking to everyone and anyone in a bank. For example, let’s assume you’re a payments related start-up: most start-ups try to meet with someone in payments. That could lead you through to payroll, payments integration, payments technology, etc which all are (probably) the wrong groups to be talking to. Try and set up meetings with someone senior in relevant “innovation” groups, strategy groups (e.g. JPM has an Integrated Payments Strategy Team that also deals with emerging technology), strategic investments groups, business developments groups, and digital strategy groups. Often times, these groups will all live in different divisions of the bank; your goal is to actually find someone that has enough clout (and more importantly, their own balance sheet) to actually make a decision and force an integration. Sadly, the easiest way to do this is trying to figure out how many levels removed are they from the C-Suite — VP’s in banking don’t really mean what you think they do…and you can even have multiple levels of Managing Directors. You want to be talking with someone that has the ear of a senior executive. Try and get as much of a sense of a bank’s org structure: if you’re selling a mortgage servicing tool, it probably doesn’t make much sense talking to someone in the private bank or asset management; talk to someone in the mortgage retail division. It’s very rare that the strategy or innovation group will make the buying decision, but they should be able to guide you to the right group that would.
5. Be so good that they can’t ignore you. Honestly, it’s probably an awful idea to rely on a bank for anything that is core to things such as product, customer base, etc. This is more of a subullet to having an obvious use case, but I just want to hammer the point across even more - banks are slow and many have been burned by “innovative tech” integrations and acquisitions in the past. Your best bet to getting their attention would be focusing on product to create increasing inbound interest.
6. Find a champion within the bank. You’ll always have executives that just don’t understand technology, whose sole jobs are to say no (aka “vendor onboarding & due diligence”), or who just don’t want to give you the time of day. Find someone that believes in your solution and work with them to push a deal through. Obviously, this champion needs to have seniority and if not their own balance sheet, direct access to someone that does that needs to be convinced.
7. Know your market, bankers love nothing more than to test and probe, whether that be name dropping to see if you know the main relevant industry players, testing numbers, or waxing poetic on previous solutions. Know your shiz.
8. Being relevant to everything is the same as being relevant to nothing. If you’re seeking a partnership, make sure that it makes strategic sense for both the bank as a well as your company. Once again, probably more of a sub-bullet to the being relevant, but the easiest way to to verify this is if you can point to a specific group in the bank that your product will help make more money, or save costs. For example, something like a platform for identify market makers through inventory discovery would be extremely relevant (and needed) for the fixed income desk. A data discovery platform that creates a unified data model is relevant to all, but tough to fit where it belongs.