Fintech and large groups: let's focus on the ecosystem, everyone will benefit!
To succeed in their partnerships with fintechs, whatever the nature of the relationship, banking players have transformed their approach and structured their organization by distinguishing between M&A and corporate venture.
Despite a tumultuous context, nearly 455 million euros were raised by the fintech France in the first half of 1. While we are still far from the amounts posted across the Atlantic or in Asia in the financial sector, France is starting to play a significant role on its own scale.
In turn considered as short-term troublemakers or enemies to be stifled, fintechs are now seeing the doors of large groups open! Since the start of the year, nearly 700 partnerships have been concluded within the ecosystem between historical players and new entrants… Sign of a new trend? How did we go from the era of absolute mistrust to understanding cordial? And how to achieve a new level of growth for the financial sector?
Birth of a start-up nation
What has changed ? With practice and experience, after having suffered greatly, each link in the chain has found its place, to give birth to a true start-up nation. Business angels and early-stage funds participate in the emergence of new players by selecting relevant value propositions and teams capable of fully focusing until reaching a “market fit”, a strong desirability with its target market.
French accelerators no longer have anything to envy those of North America in terms of attractiveness and aggregates of skills and help to hatch the best initiatives until they take off. The first successful founders reinvest in their original ecosystem and share their experience.
To support the growth of these French champions, public and private actors of the funding coordinated in a relevant way. The role of the BPI should be emphasized here.
The most advanced technical expertise from our universities, prized for decades on the other side of the Atlantic, now naturally integrates young French shoots and constitutes an essential breeding ground for their success.
The French ecosystem has reached a level of maturity that allows key players in the territory to mobilize to provide ad hoc financing and allow these initiatives to scale up, including large French companies, particularly banking.
Banks regaining their pioneering spirit
However, the subject of relations between “historic” banks and fintechs remains complex. On June 30, Maddyness headlined “Shine goes under the control of Societe Generale to enrich its offer”. And the news has caused a lot of ink to flow within the startup world. Some saw this takeover as a great success, others as too rapid a divestiture, and finally others as a reflection of our inability to create the next Google. However, it is difficult to say without knowing the bottom line.
On the one hand, the motivation, ambition and resilience of the founders and their teams have made it possible to generate enough value in the eyes of a buyer and it is therefore an undeniable success. They now face a challenge, no less complex, which will consist in continuing their development in a new environment, and which, because the rules are different, might not leave them all the necessary autonomy, as we sometimes have. seen.
On the other hand, the large banking groups, often criticized, are now committed to playing their role in all benevolence. They became aware of the value of creating the conditions for lasting cohabitation. They now ensure to collaborate more effectively, in a win-win spirit.
To succeed in partnerships with fintechs, whatever the nature of the relationship, the main historical players in the financial market have transformed their approach and changed their mindset. They have structured their organization by distinguishing between M&A and corporate venture and by associating specific teams and profiles. They recruited former entrepreneurs to speak the same language. They also created specific processes to facilitate collaboration with the fintech ecosystem. Lastly, their governance now allows rapid decision-making and respectable financial conditions for young shoots knocking on their door. They finally returned to their raison d'être, to the pioneering spirit that justified their existence and their growth through the ages. They now fully participate in the growth of the ecosystem.
Open banking, the future of fintech?
This return to the pioneering spirit was not without pain. Shaken by the successive crises of the 21st century, the historical players in the banking sector have been relentlessly “attacked” by new entrants: on their economic model, on the customer experience, on digitization, on investment tools , access to trading, currency risk management or their operational infrastructure. They had to challenge themselves ... sometimes forgetting to refocus on their strengths. Because banks and insurers house latent assets that no fintech can afford! Assets that can become the key instruments for effective cooperation.
Historical infrastructure, even though it is sometimes perceived as dilapidated from an internal point of view, remains an essential asset. Infrastructure As A Service (IaaS) is a playing card for these players. The opportunity both to modernize and to attract the best partners. Standard Chartered's initiative in Asia is interesting in this regard because it allows the region's fintechs to rely on the bank's assets in a sustainable, secure and efficient manner. In addition, IaaS also allows them to imagine for their own account the products or services that they could develop on their own according to their strategic priorities.
Through these investments, which they are the only ones able to make (Gafam set aside), historical players in the financial sector may create a comparative advantage for decades to come. Generating the growth of the ecosystem, by facilitating access to their systems and infrastructure, will encourage the emergence of new players. With an adapted economic model, the infrastructures thus made available will no longer be cost centers for the banks but rather profit centers.
Beyond the simple historic “Make or Buy”, banks and insurers have learned to forge partnerships of trust, to co-construct relevant solutions within ever shorter deadlines contributing to the renewal of the sector. The 700 partnerships concluded since the start of the year within the ecosystem are the best proof that the “historic” banks are now in working order.
Open banking is one avenue to explore. Each actor will be able to play his own card. It is undoubtedly a driver of sustainable growth for the FinTech ecosystem, although it does take time to measure the results.
SOURCE> The Internet Journal
The entire France FinTech team, its members and partners wish you a happy new year 2021!
By Geraldine Russell, for Maddyness