High-scale disruption through partnerships

Technology
3 min READ

Posted 21. Dec 2018
By Jørgen Christian Juul
Jørgen Christian Juul
CEO & Founder

Jørgen Christian Juul is the founder of Cardlay and has extensive experience from holding Executive positions in listed companies and other corporate organisations, and at the same time being an entrepreneur. In his most recent position, he served as Executive Chairman at Wallmob, which he founded, operated, and sold to the Nordic IT Conglomerate Visma.

The global fintech industry is growing rapidly, driven by a galloping market demand.

Over the last two years, banks have changed their views on fintech companies. Considering fintechs as the “direct competition” before, to now where they are embracing them and acknowledging the need for cooperation.

This has revealed never-before-seen opportunities – banks bring the portfolios and distribution power which is what fintechs lack while fintechs bring innovation and agility that the banks sorely need.

So, what is the fabled gordian knot in this relationship?

The banks are still busy working out how to benefit the most from deploying fintech products across their organizations and how to integrate it with their existing infrastructure.

None are final and work is still ongoing but solutions are being launched now. Because of this, the number of cooperations between banks and fintechs will continue to increase through 2019 and 2020

Another obstacle for the banks is: with more than 5.000 fintech companies globally – Who do you choose to work with? Which technology do you “bet” on? And, after choosing the right partner, how should the partnership be constructed? Banks, because of their complexity, huge scale and siloed nature often grind gears with the creativity and agility of the fintechs.

The key word here is compromise. It is necessary, on both sides, to build a bridge between the two.

The fact is that today, large global banks are utilizing a multitude of approaches when engaging with fintechs. They strategically choose the cooperation to secure delivery for their portfolio demands, build digital relationships, secure retention and build new revenue streams.

The most important need for establishing the cooperation is that the innovations tap into existing business needs and can be distributed through purely digital solutions with a minimum need of change for the banks.

Because banks already have large organizations and hierarchies, they have very little desire for larger changes. So fintechs need to determine what they are, what they intend to be and what problem they solve. Are they disruptive, incremental or significant?

The innovation pyramid

The larger global banks have now established dedicated innovation teams to introduce fintech firms to business sponsors. A lot of the same banks have established venture arms that invest in fintech firms, but it comes with a price of continuous questioning about strategy, whether their investments are strategic or more tactic and if the technologies are right for their own organization. Nevertheless, fintechs face an increasing number of opportunities and funding proposals.

These are very exciting times for fintech companies. The growing desire and demand from the banks lead to huge, rarely-seen opportunities for fintechs.

The banks want to disrupt themselves for the benefit of their customers and themselves.

For fintechs, their opportunity is to scale – hard. Because of how local demands often match the demands of a big international market, and most banks operate in a country or a region, fintechs can scale their operation many times over much quicker.

There are many strong opportunities for international contracts without having to compete with existing partners.

The conclusion is easy… Why disrupt banks when you can grow quicker by partnering with them.

About the author

Jørgen Christian Juul
CEO & Founder

Jørgen Christian Juul is the founder of Cardlay and has extensive experience from holding Executive positions in listed companies and other corporate organisations, and at the same time being an entrepreneur. In his most recent position, he served as Executive Chairman at Wallmob, which he founded, operated, and sold to the Nordic IT Conglomerate Visma.

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