Even though cooperation between fintech startups and financial institutions is growing, collaboration still emerges as the most challenging and time-consuming affair, a survey from the players of both sides reveals.
After engaging to form the Fintech Innovation Lab in 2010, the Partnership Fund for New York City and Accenture have compiled a report with a view to evaluating feelings of financial institutions and participating startups while passing through the technology onboarding process.
The report received mixed perceptions among the 35 FI sponsors (from London, New York and Hong Kong) and 52 lab alumni about the working of four key partnership phases – implementation, proof-of-concept, prospecting, and procurement.
The report says, “Overall, onboarding technology products at financial companies appears complex and under-resourced from the fintech perspective. And while financial institutions are moving to streamline internal processes, fintechs suggest they aren’t as far along as they think they are. But fintechs also may not be as sophisticated as other large contractors that are accustomed to working with financial institutions, which means it is sometimes difficult for fintechs to move through the implementation process smoothly.”
Talking about shifting from prospecting to PoC, 60% of New York FIs mentioned compliance, security or regulatory issues as the primary impediments. However, only a small fraction of fintechs finds a problem in such areas. In a larger perspective, competition with internal rivals and lack of budget are the main issue.
There is a consensus among the group that procurement takes considerable time, as over 60% saying that it may takes up to six months.
As far as implementation is concerned, more than 50% of respondents admit that compliance, security, and processes for vendor approval slow down the efforts.
The report proposes both the partners to develop a roadmap to finalize the process by nominating a leader for each phase.
Sandboxes should be used to facilitate PoCs and decision making should be simplified and streamlined. Whereas, the importance of clear communication stands out as the clearest findings of this report.