Collaboration in FinTech

“Collaboration” is a notion that is bandied about very liberally nowadays in the FinTech space – “lets collaborate”, “we are open to collaboration”, “we are seeking collaborative partners”. It’s nothing you haven’t seen or read before, but have we ever stopped to consider what our respective definitions or expectation of collaboration are?

col·lab·o·rate: (verb) work jointly on an activity, especially to produce or create something.

By definition it would seem that this is exactly what is needed in the FinTech space, and there is a lot of talk about collaboration. But is it just empty talk?

At a recent payments conference in North America, a prominent leader of a high profile infrastructure provider didn’t mince his words in accusing the Blockchain entrepreneurial community of over emphasizing the disruptive possibilities of Blockchain technology, almost dismissing it as overinflated hype. This attitude reflects a not-uncommon overtly hostile stance in the face of FinTech entrepreneurs.

To be fair, as an incumbent with a history of success in the industry, one could empathize with this leader for adopting a somewhat hostile view. His own successful organization is often on the receiving end of continual bashing by the startup community for being an “old school” or legacy software, subject to imminent disintermediation. While this anecdote is not an accurate or sweeping description of the ecosystem as a whole, it does cut to the core of the matter. There is a critical need to “work jointly on an activity,” as the definition says. This recurring rhetoric reflecting a standoff between large incumbents and new startups is not helping anyone.

It is no secret that the bitcoin, and consequently the Blockchain community, is based on libertarian ideological principles. At the outset, they would very gladly have seen the total disintermediation of governments and banks. Along the way, the industry has begun to mature and the reality of building technology and gaining adoption is no different for Blockchain than it is for any other software vendors be they in HealthCare, Artificial Intelligence or Internet of Things. Startups in the FinTech space realized they need the consistent regulation, and the ensuing stability, that government regulation provides to attract more capital to the party. They also need the domain knowledge and the distribution capabilities that the banks have to offer if, for example, Blockchain, is going to make it to main street. Likewise, the banks and some of the infrastructure providers that enjoy long standing and old school tie bonds in the banking industry, have realized that they are not agile enough to adapt to the rapidly changing landscape.

So it’s all teed up for a perfectly collaborative environment – but why does it still feel so empty? Startups have discovered the technology and can bring transformation and progress but lack access to the real pain points the banks want to work on. Banks have known pain points but sheer size and overhead mean they lack agility to act fast in unison with the startups.

In the midst of this, everyone is playing the “collaboration” card, but there is very little collaborative success to speak of. The number of success cases is very limited, and we should all be looking to these as leading examples for future collaboration. In the meantime, there are a lot of frustrated entrepreneurs wanting to work with incumbents, and a lot of incumbents not willing to show any cards based on skepticism of the startups.

So does everyone have their own view of “collaboration”? For banks, is having a meeting with a startup and getting as much education as possible from them on new technology seen as “collaboration”? For startups, is an idea to hold a beer and pizza fueled weekend hackathon in a plush corporate boardroom seen as “collaboration?” How do we crack this nut? Is it time for all the players to introspectively define what their respective expectations are from “collaboration”?

If the people around your meeting table are not changing, if the agenda and conversation remains largely the same, it’s fair to say collaboration has not taken root. Inevitably, we will have to acknowledge that the more things change the more they stay the same.

Gary Boddington,
FinTech Executive-in-Residence
BC Tech Association