| What we learned at this year's LendIt Fintech Europe |
At this year's LendIt Fintech Europe conference, held in London from September 26-27, companies across the banking, fintech, and investment industries discussed the key trends and developments shaping the financial services landscape.
At the conference, Business Insider Intelligence identified four emerging themes that we expect to set the tone for the space for the next year: further proliferation of partnerships between banks and fintechs, increased focus on digital banks' sustainability, accelerated innovation and disruption from small- and medium-sized business (SMB) lenders, and more challenges ahead for the UK's P2P lenders.
Players across the space are teaming up to enhance existing propositions or cocreate new ones for their clients. Much of the conversation at this year's Lendit Fintech Europe was centered on partnerships between fintechs and banks — a trend that's been present for a while but will continue to accelerate, driven by open banking initiatives and customer demand for innovative propositions that help them better manage their financial lives.
- CYBG bank and price comparison site GoCompare recently partnered to offer an energy compare and switch service for all of CYBG's B customers. In a panel discussion I moderated, Head of Innovation at CYBG Samantha Bedford and VP of Corporate Development at GoCompare Kulchetan Sanga discussed the difficulties of making their partnership work:Success necessitated a cultural shift internally that embraced openness across the bank, constant revisions of their go-to-market strategy — including considerations about whether they'd bring the solution under CYBG's brand, cobrand, or even white-label it — and learning how to best utilize data in a post-GDPR world. Bedford noted that she leads an accelerator team within the bank that offered a methodology for how to approach this collaboration and allowed them to experiment and fail in a safe environment, which was critical to the project's success.
- Barclays bank partnered with SMB finance fintech MarketInvoice last year to give Barclays' SMB clients access to MarkeInvoice's solutions. Barclays also took a strategic minority stake in the fintech. In a fireside chat, MarketInvoice CEO and Cofounder Anil Stocker discussed the difficulties of dealing with a big bank, especially when trying to build something new. The early success of their tie-up, however, enables them to have bold ambitions for deeper integration — SMBs are currently recommended to MarketInvoice's products via relationship managers, but going forward this will also become possible via in-app discovery, for instance — and collaboration on more products. Strategic investments can give fintechs confidence that they'll receive continued support and operating collaboration from their bank partners since it's in the banks' interest to maximize the value of their investment.
- French Banking-as-a-Service platform Treezor was acquired by Société Générale last year, as the bank looked to enhance its ability to innovate and decrease time to market. In a panel discussion between COO of Treezor Eric Lassus and CIO at Société Générale Claire Calmejane, Lassus highlighted that there are several complementarities between banks and fintechs since banks are resource-heavy while fintechs are flexible and fast. But he also stressed that for partnerships to succeed, fintechs working with banks — even after an acquisition — must maintain independence. This likely helps partners ensure that fintechs' nimbleness isn't stifled by incumbents' long processes.
Collaboration comes with many benefits, especially when unencumbered by legacy thinking.Partnerships between banks and fintechs can lead to the development of innovative products and services, bringing desirable and fresh propositions to banks' clients while helping fintechs level up and integrate new data into their models that will further improve their tech solutions.
But what becomes clear across all the examples above, whether looking at partnerships with or without strategic investments, or even acquisitions, is that success is conditional on both parties being able to leverage their respective strengths unburdened by each other's weaknesses.
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