May 28, 2018
Better together: Why fintechs and banks are collaborating more often
As the pace of innovation intensifies and new technologies continue to reshape the banking world, financial institutions and financial technology companies (fintechs) are increasingly looking for opportunities to work together to solve emerging challenges and delight customers.
Dean Tseretopoulos, Associate Vice President, Emerging Capabilities and Digital at TD, recently took part in a "reverse pitch" event at the Canadian Fintech 2.0 Summit aimed at bringing financial institutions and fintechs together. Unlike traditional pitching events where startups attempt to woo investors, this reverse pitch event featured Tseretopoulos and other financial institution executives pitching fintechs on the merits of working with banks.
Today, he shares his thoughts on the advantages — and a few of the drawbacks — fintechs face when working with larger financial institutions, and how successful collaboration will impact how Canadians bank in the future.
Q: Why should fintech companies work with financial institutions (FIs)?
A: Like many companies, banks are focused on evolving to meet and exceed the changing expectations of our customers. Part of this comes down to embracing new ideas, and being able to deliver exciting experiences for customers faster and more efficiently. At TD, we believe fintechs can help us achieve those goals. What many fintechs are looking for is access to a bigger network; a place where they can scale their new approaches. Banks can provide fintechs with a much larger customer base, while enabling them to tap into the FIs existing brand credibility.
TD has more than 12 million digitally active customers and more than 6.8 million regular mobile users. That's a massive market for fintechs and startups to tap into across Canada and the United States. While fintechs are innovative, we have tremendous financial strength, dedicated investment dollars and offer customers privacy, security, trust and safety.
Q: For a nimble fintech company, could partnering with a large financial institution slow them down?
A: Sometimes our size as a large financial institution can be perceived as a liability, especially when compared to more nimble, lightweight fintech players. However, our size, stability and experience are really advantages. Safety and security are primary concerns for customers, and banks can help fintechs better navigate a highly regulated industry and guide them toward better risk and control, compliance standards and other processes that help pave their own way to success.
Our ultimate goal is to partner, collaborate and deliver innovation that meets customers' needs on a large scale. We know that partnering with creative fintechs enables us to innovate more quickly and bring new products to market that will delight our customers.
Q: Why should fintechs consider partnering with TD specifically?
A: TD is constantly on the lookout for the next dynamic product or service offering to delight our customers. And sometimes, those transformative products and services are accelerated through our relationships with fintechs.
For example, our agreement with Moven led to TD MySpend — a mobile money management app that makes it easier for more than 1.3 million customers to track spending habits and gain more control over personal and family finances. We are giving them the tools they need to make real-time, informed decisions about their financial well-being while deepening their relationship with us.
Other relationships with Flybits, Kasisto and the acquisition of the world-renowned artificial intelligence (AI) company Layer 6 last January are just a few other examples of our investments in technology that support our strategy and deliver increasingly connected and personalized experiences for our customers.
Q: How does TD address some of the biggest challenges facing fintechs and startups as they look to partner with a larger financial institution?
A: One of the most unique aspects of our approach to startups is our patents for startups program, which protects young companies and their innovative ideas throughout the patent application process in Canada, the United States and around the world. Any fintech or startup that is part of our program retains control over their patented idea – we provide them with financial resources and legal bench strength to guide them through the patent filing process.
This critical support at the seed stage is based on the understanding that it can be time consuming and costly for startups to go through the patents process, so this program frees them up to stay focused on rapid growth and innovation.
Canada has an opportunity to be a leader in innovation, and when our country, economy and talent thrive, we all benefit. To ensure a healthy innovation ecosystem, we need to fuel the transformation of our business and help start-ups flourish and in order to drive future value for our customers.
Q: What knowledge can TD offer based on current partnerships with fintechs and startups that better prepares the bank for future relationships?
A: We are constantly learning from our fintech partners, whether it's about how to collaborate more effectively, how we can adopt their practices to be more agile, or how we can nurture a culture of innovation within the bank. We have learned we need to move faster to develop innovations that can be delivered to our customers more quickly. This knowledge and open mindset helps foster innovation because it injects new thinking—it shows that we are working more collaboratively with fintechs and are better prepared to continue that journey with the next group of startups we engage.