Why do we enjoy going to the zoo so much?
Because we can see animals and creatures that don’t really exist in our normal environment. We are curious to find out more about these unfamiliar species, read their descriptions, understand more about their origins and are fascinated by the way they behave and live. We even sometimes get close enough to have a ‘touch and feel’ moment, but only if the animal isn’t too dangerous and is considered cute!
Having been around early-stage fintech for quite some time now in different parts of the world, I can’t help but draw the follow comparisons.
How visitors behave at the zoo
Financial institutions are very keen to engage with the creatures called fintech startups as early as possible because they fear missing out on the next big thing — let’s say a new species called blockchain.
They send delegations to co-working spaces (still dressed in suits and ties), visit demo days (maybe no suits and ties here), come to meetups and mingle at Hackathons (this time in jeans). I know it’s crazy. They read one-pagers, try to understand the dynamics of a fintech startup, hand out business cards and promise to follow up.
It is a bit strange how banks, just like zoo visitors, are very excited about experiencing this new environment, being thrilled by the opportunities and this oh-so-great lifestyle. However, just like in a zoo, it is not possible to take these funny animals home and actually integrate them in the real environment.
Somehow, it feels better to keep the animals where they are and not have them break out of this startup world. So these startups stay in their co-working spaces/incubators/accelerators and keep working on changing the finance world.
Bridging the gap between visitors and inhabitants
So, has there been any value-add anywhere?
For sure, banking employees have been exposed to some kind of innovation and probably understand that they have got to change their mindset – otherwise known as the ‘winter is coming’ theory.
The benefits of a ‘fintech zoo’ are clearly on the educational side, and open-mindedness only comes with as much education and exposure to new things as possible. This zoo has clearly kick-started a necessary process to bring banks closer to startups.
However, it is also a one-way process for now — where banks are able to understand what the startup is doing and the startup has no clue as to what pain points the banks want solved. It is time to make this situation a two-way approach. Why don’t banks start sharing where their challenges are? How can you create equal relationships where there is such visible difference between the visitor and inhabitant?
Overall, there is a gap between these two different worlds where, especially the financial institutions, perceive the startups as animals living in a zoo and approach them with fear than with respect.
There is a lot of excitement in the institutions to be innovative, engage with early-stage companies and be part of the startup circus, but it then comes down to actually delivering on these promises. Right now, there is too much of a wait-and-see approach where the risk of working with early-stage companies is still too high.
Fintech can only be successful if you actually see real partnerships established, revenue generated and value to customers added. Otherwise we get stuck in this situation where institutions think they can do it themselves and fintech companies are not taken seriously.
In order to create a mutual understanding (dissolving the glass partition), banks have to open up their backend systems — for example, provide application programme interfaces (APIs), change the compliance, procurement and risk frameworks to onboard new solutions and start hiring talent with entrepreneurial skillsets.
What we need is a secure environment of fast failure where innovators and incumbents are able to iterate quickly (within a few weeks time) to see if a solution fits into the bank’s business and technology lines. At the same time, entrepreneurs should be able to understand the complex challenges banks have to deal with, research how to solve those and create a win-win situation for all concerned.
It is time to meet each other with mutual respect, understand each other’s challenges and find ways to leverage everyone’s strengths.
Otherwise, soon enough the zoo guys will break out…and take over.
This article first appeared on LinkedIn.
The views expressed here are of the author’s, and e27 may not necessarily subscribe to them. e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, please send us an email at writers[at]e27[dot]co