Israel is a hot bed of technological innovation that was evident last week at the Bank Innovation Israel. Royal Media hosted Bank Innovation Israel in Tel Aviv at the Dan Hotel. The location could not have better with the beautiful backdrop of the Mediterranean Sea, delicious Mediterranean cuisine, which brought together passionate and knowledgeable financial services thought leaders from all over.
Bank Innovation conference was well attended by banks and fintechs, and provided excellent educational treks and discussions about challenges and transformations in financial service industry and technology. The liveliest discussion ignited was in the Bank Startup Collaboration a panel moderated by Paul Schaus, President and CEO of CCG Catalyst. He steered the discussion across an enthusiastic and passionate panelists, who included Gilles Gade, Chairman, President & Chief Executive Officer, Cross River Bank, Mariano Belinky, Managing Partner, Santander InnoVentures, Michal Kissos, Head of Innovation and Digital, Bank Leumi, and Michael Dooijes, Executive Director, Head of Ventures & Innovation, Rabobank.
Banks entering into an innovation or transformation strategy will do so from the perspective of self-involved, collaboration and or acquisition. There is plenty of challenges involved from each of these directions. The most challenging is with the collaboration of a fintech startup. Evaluation and assessment of the fintech opportunity will be essential in addressing collaboration and next steps with the fintech startup.
Highlights and learnings:
Paul Schaus opened session with an overview of the history of fintech, latest news and investments put into fintech startups. Paul discussed the intenseness of the velocity of change and growing volume of Fintechs in comparison to banks globally, which set the stage for meaningful conversation on Bank Startup Collaboration.
Michal Kissos, Head of Innovation and Digital at Bank Leumi, gave advice on identifying fintech fit – there has to be a fit for the bank whether utilizing the fintech as a technology or acquiring a fintech firm. The fit starts with aligning values to ensure both businesses have a similar ethos.
Mariano Belinky, Managing Partner, Santander InnoVentures, revealed that Santander reviewed 800 fintechs in a year. In the final cut only three fintech firms make it. The twitter verse exploded with catcalls from users questioning why so much scrutiny. I applaud Santander for putting fintech firms through a rigorous process to determine validity. Most established firms remember lessons learned from the challenges from the first wave of technological innovation circa late 1990’s. Startups fail at a rate of 8 out of 10, Santander and all investors should proceed cautiously when evaluating fintech startups.
Gilles Gade, Chairman, President & Chief Executive Officer, Cross River Bank, discussed the challenges with investing in fintech. And noted that smaller players can profitably serve segments that larger banks ignore.
Michael Dooijes, Executive Director, Head of Ventures & Innovation, Rabobank, hit the nail on the head when he discussed the need to create a new banking mindset. A mindset that will be open to new opportunities, mindful of customer’s needs and rather than being just the backend utility, leaving money and relationships on the table.
To sum it up:
- Banks need to keep up with the trends that are affecting the velocity of change. Ecosystem of change includes customer needs and adoption, technology, geography and economy.
- Get an expansive view of the ecosystem – banks are no longer about transactions they must think about new opportunities to secure their feasibility.
- Foster a deep evaluation process and assess market viability and validate the fintech opportunity regardless of collaboration or acquisition. Aligning values and ethos are key to creating collaboration and long-term relationships.
As challenges and changes come into focus from the velocity of change for established financial services firms, banks need not spend time feeling left out and take the lead on reinventing the industry.