FinTech Breakfast: How to innovate in uncertain times?

Early morning on the 31st October 2017, Rainmaking Innovation London hosted a FinTech Breakfast at Rainmaking Loft with 40 banking professionals from P&L Managing Directors, to CIOs and Heads of Innovation. Representatives from HSBC, RBS, Barclays, Santander, Investec, Goldman Sachs, and many more, assembled to discuss how financial services corporates can innovate in a world where their traditional business models are being reconfigured.

“There is a feeling of frustration surrounding corporate innovation.”

Nektarios Liolios (Startupbootcamp FinTech, InsurTech and Rainmaking co-founder) opened the event, sharing his feelings of frustration with current corporate innovation approaches. Over his years of experience in the space, corporates have been very slow to change. Activities such as accelerator programs often don’t serve the motivation that many corporates think they do. Many innovation activities have run their course in mature markets, and the feeling that corporates need to wake up to new approaches to see commercial impact, resonated around the room.

One Innovation Director supported this sentiment stating that “too much corporate innovation is circus or PR, there is a lot of learning left to do.”

One of the biggest issues for financial services firms is the unbundling of the tightly coupled, vertically integrated bank as startups unpick their traditional business models. Jordan Schlipf (Rainmaking co-founder) introduced this unbundling model, giving example of startups attacking each layer of the banking stack. Unregulated capital is bringing new liquidity into the system disrupting the capital layer. The next layer: platforms, have formed around startups, with accounting startup Xero representing best in practice. Its API enables integration with a whole community of external applications from which Xero selects the best in breed. The outside layer: applications, are startups targeting a focused niche allowing them to beat banks at their own game.

Jordan emphasised that financial services firms need to choose where to play, with each layer requiring a different set of capabilities. Some banks are already making these decisions. For example, when it came to developing a new online loan service for small business, J.P. Morgan turned to unlikely outsider On Deck to provide the platform. The partnership helps the bank process applications inexpensively and quickly, in hours instead of weeks.

Technological innovations hitting different areas of banking was also open for discussion. But Jordan pointed out that “business model innovation is becoming the unit of competition - the tech is the easy bit!”

But where do banks fit into this new world of business model innovation? Where do banks choose to play in these three layers to stay relevant? When should banks compete directly with startups through developing their own capabilities and where is it better to partner with startups, taking elements from the landscape and plugging them in and playing?

Ghela Boskovich (founder of FemTech Global and Head of FinTech and RegTech partnerships at Rainmaking) joined the discussion, with contribution from the audience. There was consensus in the room across companies and roles that there is too much “innovation theatre”, with no clear strategy and a mishmash of events and hackathons. These might provide an interesting break from the corporate day job, and a more interesting 9-5, but they don’t deliver any real commercial value.

“If innovation doesn’t make you money at some point, then it isn't real innovation.”

At Rainmaking, from our wealth of corporate innovation experience we have learnt that each business unit needs its own Innovation Compass - an innovation strategy, tailored for application in each Business Unit, and aligned with group strategy, to guide innovation activities. Innovation strategy is about developing an ambidextrous approach to explore new business models whilst still milking your existing cash cows.

“The company that practices innovation without an up-to-date, market responsive strategy is like the sailor who boards his ship without a map or compass.”

 A discussion between two P&L professionals and Jordan raised several interesting points:

  • “Corporates are too big and complex for one innovation strategy, but there needs to be some structured consensus between business units and group strategy.”
  • “Innovation teams can act as librarians, sharing best practices and keeping everyone in the loop, to guard against too much of a silo mentality.”

The portfolio approach to innovation strategy is data driven, informed by external disruption mapping of startup activity in the area. The beauty of using startups to inform decisions is that they are an indicator of both tech and business model trends. Organisations should compete with startups when the disruption in the market is less mature, giving you more time to build the organisational capabilities required to win in the space. Collaboration through pilot programs is preferred when the market has been significantly disrupted already, and there is sufficient density of solutions to make collaboration faster, cheaper and lower risk than creating your own venture.

Several banking professionals and Nektarios agreed upon the key issues regarding startup-corporate collaboration and why only 1 in 10 engagements yields commercial results:

  • “Many corporates aren’t ready to meaningfully engage with startups, they don’t have the necessary procurement processes.”
  • “Too often corporates see a ‘you-win vs I-win’ situation with startups and there is a lack of genuine collaboration, but good startups know that collaboration increases the chances of success for both parties.”

The Innovation Compass guides longer term renewal: navigating disruption, identifying possible directions of growth before they become obvious, and creating structures to be able to do that, in parallel with business as usual. This then powers Engines of Growth - the mix of activities needed to navigate the changing landscape and create real commercial value from your innovation approach. This requires balancing focus across an Internal Innovation Framework; Structured Pilot Programs to collaborate with startups; and Venture Development, to build your own ideas from scratch to compete with existing startups.

Two key learnings from Jordan’s experience of combining the strengths of corporates and startups offer a good conclusion to the discussion:

  • “In our experience, genuine commercial collaboration with startups gives quick commercial results, which creates buy in to scale the innovation across the firm."
  • “We know that building startups with corporates creates an unfair advantage, creating a startup with financial power, distribution networks, regulation on its side and domain expertise.”

If you would like to get in touch, please do at We’d love to connect over coffee and discuss perspectives on corporate innovation.

By Rob Morris

Managing Director, London Corporate Innovation

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