Buying from Fintech (and Selling to Banks): Key Takeaways from TTV Capital’s Bank LP Summit

Last week, Alex Johnson from Fintech Takes shared that the No. 1 piece of advice he gives to early-stage fintech startups is to sell their products to banks. While it seems obvious on the surface, most fintechs aren’t prepared to sell to banks — and most banks aren’t prepared to buy from fintechs. 

This was the main topic of our panel conversation on stage at TTV Capital’s recent Bank LP Summit, featuring Alex, Clarence Chio (Coverbase), Patrick Cadic (FairPlay), and myself. Thank you to the TTV Capital team for hosting such a valuable event for venture capital partners, portfolio companies, and the fintechs they work with! Here’s a few key points that I shared as food for thought: 

1. Make it Easy for Banks to Buy

Financial institutions often have very detailed procurement, third-party risk management, and due diligence processes that require a mountain of forms and audits. Fintechs can do a lot of the heavy lifting in these processes by: 

• Getting ahead of the process on common security, risk, compliance, and infrastructure questions, along with any supporting documentation. 
• Making sure they understand the bank’s technology infrastructure and can successfully integrate where they need to do so. 
• Considering how to start small if a bank is hesitant to say yes to an untested (for them) solution. For instance, offer a proof of concept or a widget to show the solution in action to help them justify the investment. 

2. Cover Your Security and Risk Management Bases

Security and risk management requirements are usually a “Do Not Pass Go” scenario for financial institutions. Fintechs who don’t meet these basic requirements won’t even be considered. So, invest early in ensuring these table stakes requirements are covered. 

3. Remember Selling Cycles are Long  

Sales cycles at large financial institutions are long — sometimes requiring years of relationship building and conversations before a sale comes to fruition. So it’s important to sow seeds early and often. Even if it’s a no today because budgets are set or vendors are locked in, it could become a yes later. Keep the relationships alive after an initial no and make sure you keep these contacts apprised of new developments as your business grows.

4. Be a Value-Add, Not a Competitor, to Internal Teams

Alex pointed out that sometimes fintechs are seen as a threat by internal IT teams so how can fintechs work to avoid triggering this threat response? It all comes down to collaboration — be a partner to the internal IT teams and not just a vendor. For them, it’s almost always faster and easier to partner versus build your own solution. And, partnering with a fintech can deliver new improvements and innovations faster over time rather than them having to build it themselves. Collaborate with them on requirements and TPRM processes. Enable them to go beyond tactical implementation to uplevel the value they deliver. Provide additional services like change management and marketing ideas to help them get the most value from working with you. 

Like most industries, success in financial services still relies on people and trust. Building trust with bank leaders and driving career-amplifying innovation takes time and significant effort. But, the effort is worth it for fintechs and banks. And, the ultimate winner is always the consumer. By partnering together across the financial ecosystem, we can create finances the way they should be — data-driven, innovation-forward, and outcome-oriented solutions for financial wellness.