My Skype profile says, “Saving the globe or at least the banks”. I think that this is a time when banks and insurance companies need to join forces with startups in order to survive. Cooperation with startups is a way for the traditional financial world to respond to changing market conditions and stay competitive. It’s not the small startups and fintech that are going to take business away from the banks and insurance companies – the real disruption, aided by the arrival of PSD2 (Payment Services Directive), will more than likely come from technology giants like Google, Apple, Facebook and Samsung.
Also, it’s not just about survival. I’m convinced that the future growth of the financial sector will come from cooperation with startups. Often startups don’t have ready-to-use solutions but they do bring interesting raw innovations to the table. By working together with the banks and insurance companies, these bright startup ideas can be developed into killer products that the customers actually want. Both parties have their strengths: the corporations know how to scale business whereas startups are better at iterating things together with the big players and their customers.
Learning to work together
All the ingredients are there to for a win-win collaboration. The only problem is that startups and big financial companies are rarely compatible. This is where a business accelerator like Nestholma comes in; we have created a model that does make them compatible in three intensive months. So far Nestholma has organised 26 accelerators for big financial organisations and we have ongoing partnership activities in the Nordic countries, Hungary, Turkey, India and the United States. Most of the major banks and insurance companies in Europe are discussing with us.
The results of our accelerator model have been very encouraging, with 40-75% of the participating startups continuing to collaborate with the bank, insurance company or corporation after the process, whereas the industry standard is 25%. Nestholma is now Finland’s biggest fintech investor and we have 25 fintech startups in our portfolio.
Transforming processes and efficiency
Startups are great for renewing the organisational culture of big corporations. Through the accelerator process, the banks and insurance companies learn not just to work with startups but also to operate more like startups. This cultural change also enables the transformation of corporate processes. As a result, we have seen significant efficiency improvements. With one corporate partner, we calculated that the efficiency of certain activities had increased by 800% compared to the situation before the cooperation with startups.