Supporting Fintechs in engaging with financial institutions

Towards the end of 2018, the British Standards Institution (BSI) published a set of guidelines, advising Fintechs how best to engage with financial institutions with the goal of delivering a successful outcome for all: banks, Fintechs and end customers. The report includes recommendations and common pitfalls to avoid. It’s a useful reference guide for Fintechs starting on their journey. Here I’m calling out some of the key recommendations and advice in relation to presenting the Fintech’s proposition and its positioning in the market. 

Articulating the proposition

It’s essential to get the basics right. This includes clearly articulating and communicating your proposition. What problem does it help to solve? How does it assist the end customer or the financial institution? Does it complement or alter an existing business process? What are the key benefits of implementing the solution? Be prepared to also address any concerns that banks might raise with you regarding risk and how this would be mitigated. 

When it comes to pitching the solution to a financial institution – it’s important to understand who will attend the meeting and prepare accordingly. Are you speaking to individuals who are focused on tech innovation, or to experts representing a specific line of business? Is it a mixture of both audiences?

Any deck or presentation should focus on the core value proposition for the target audience: setting out what the solution does clearly and concisely, together with some sample use cases that demonstrate the benefits. The initial meeting could be just the first of many. Engagement and sales cycles in financial institutions can be lengthy, so it’s important to be able to build your business case over time with all stakeholders.

The financial institution is a potential partner and collaborator. Building a relationship can take time, but it’s essential to be open and honest and ensure trust. For example, be clear about what is part of your solution today and what is part of your roadmap going forward.  

Addressing pain points and sharing insight

Financial institutions recognize the importance of innovation in meeting customer expectations and addressing their pain points. Fintechs that can demonstrate a firm understanding of a customer need and can articulate how they can help the bank to better serve customers, or solve internal problems, are best placed to succeed. 

It’s essential to demonstrate that you understand the bank’s target markets – and exactly which segments of those markets and customer pain points you’re addressing. Be as specific as possible and demonstrate your knowledge to build credibility. Don’t try to address a wider group of audiences and then fail to show a strong understanding of all areas. It’s much better to be realistic about your expertise and stay focused.

Competitive positioning

Understand the competitive landscape and where your solution fits. Be able to highlight exactly how your solution differs to others in the space and highlight anything that’s unique about your approach or functionality. Do your research thoroughly – it’s very unusual to be able to claim you have ‘no competitors’. Even if you feel your approach is completely different, call out the existing solutions used in that business area, and from there articulate what’s unique about your proposition and the added value it will bring. If the return on investment isn’t immediately clear banks might decide to stick with the status quo, so you need to put together a strong business case. Ideally, this should be backed up by good quality data and analysis, together with details of any customer references, showing traction already gained in the market.

Collaborating to succeed

Open banking, PSD2 and the pace of change in today’s digital economy are heralding new opportunities for Fintechs. Banks are keener than ever before to collaborate with the right partners. Fintechs need to create a compelling proposition – but how they go about marketing that offering is just as crucial to success.  Don’t rush in before you’re fully prepared. It’s essential to be meticulous in setting out your value proposition and articulating the benefits so that you project the company as a serious player from the outset. 

When it comes to collaboration, don’t limit your horizons only to working directly with financial institutions – consider how other partners such as technology vendors can help support you on your journey, and help you get a foot in the door with target institutions.