This post first appeared on the New Statesmen as part of London Fintech Week 2016.
Over the last few months there have been many reports of the great partnerships that are emerging in the fintech space.
Transferwise partnered with Estonia’s biggest bank, BBVA invested in Atom Bank, and tech companies like Apple and Google are also upping their game in the space, most notably via payments.
But when I joined Canary Wharf’s fintech accelerator Level39 back in March 2013, the appetite to partner was different. The finance sector was not really geared to engage with technology startups.
Over the last few years, though, this has changed and there are a number of great opportunities driving this transformation.
Technology is impacting all parts of the business process and finance companies are already some of the biggest spenders on tech globally.
In 2015 alone, financial services companies spent $114 billion on mobility, cloud, and big data and analytics. Over 25 percent of financial institutions’ IT budgets went into these three transformative technologies in 2015 according to IDC Financial Insights.
This is only set to grow and with this growth, partnerships are now key for organisations seeking to drive the greatest value across their business.
Large tech companies are now enthusiastically engaging in partnerships with finance companies.
When Tim Cook announced Apple Pay in September 2014, mobile money was catapulted to the forefront. This was driven heavily through partnerships with established companies such as Visa, Mastercard and American express, and startups also started building off of the API, driving engagement across their customer bases too.
The API model is just one example of the partnerships and alliances that are common in the tech world. Google introduced Android Pay at Google IO in 2015 and in 2016 announced a number ways for in-app and web app integrations.
Technology companies will continue to drive new partnerships to create better products in finance.
Not to miss out on the action, banks are also directly engaging with fintech companies through their own strategic investments and corporate venture capital.
Recent examples include Santander InnoVentures, a $200 million fund with investments in Ripple, MyCheck, Digital Asset Holdings, iZettle, Cyanogen and Kabbage.
Citi Ventures, founded in 2010, has made investments in companies such as Square and Betterment. Goldman Sachs and JPMorgan are investors in Square too.
Banks co-investing in fintech is also becoming more common and is another form of partnership that will continue to drive growth over the coming years.
The banking technology network SWIFT launched the Innotribe Startup Challenge in 2011 – allowing startup companies to engage with SWIFT’S global community of almost 10,000 banking organisations, securities institution and corporate customers in 209 countries.
For a startup, the network effects of accessing SWIFT across the banking industry makes them ideal partners.
A number of startup bootcamps have launched over the years, from the Barclays Powered by TechStars programme launched in London in 2013, to Startupbootcamp backed by Lloyds, Rabobank and Mastercard, which launched in 2014.
The most established fintech bootcamp programme was started in 2010 by consultancy firm Accenture with the Partnership Fund of New York City.
The London chapter of the Fintech Innovation Lab launched at Level39 in 2013 and gives startup companies the chance to engage with a mentoring program that brings in financial services CEOs, CTOs, CIOs, venture capitalists and technology luminaries.
This type of partnership offers access to high-level technology executives, which saves startups time and money. The mentors, in turn, are able to understand the latest innovations in financial technology.
Over the last few years EY, PwC and Deloitte have all launched dedicated fintech teams to engage and partner with new and interesting companies.
The growing number of new and interesting partnerships, rather than companies going it alone, will continue as finance companies see many areas of their own business ready for disruption.
But those that provide long-term value to their customers, rather than simply partnering just to knock out competitors or disruptors, will ultimately win the day.